Offshore wind is a mainstream energy source in Europe and is really taking off in China.
After what it described as a ‘spectacular year’ for offshore wind in 2017, the Global Wind Energy Council (GWEC) anticipates that 2019 will be another record year for offshore wind in Europe but said other markets are also taking now off, not least China.
In the latest issue of its Global Wind Report, GWEC said it expects activity to be concentrated mainly in the UK, with 3.3 GW of new grid-connected capacity between 2018 and 2020, followed by Germany with 2.3 GW, Belgium with 1.3 GW, the Netherlands with 1.3 GW and Denmark with 1.0 GW.
There are 400 MW currently under construction, which are expected to be connected to the grid throughout 2018. Germany will connect turbines from Merkur and Borkum Riffgrund projects in 2018 and Belgium will connect turbines in the Rentel and Norther windfarms. Winning projects of recent tenders in Denmark and the Netherlands are expected to start to connect capacity towards the end of 2018.
Significant construction activity will continue. By 2020 WindEurope expects a total European offshore wind capacity of 25 GW.
Projects expected to achieve FID in 2018 are estimated to have a combined capacity of 3.9 GW. This includes several projects in the UK, Denmark and the Netherlands, as well as floating offshore wind projects in Portugal and France. Financing needs could top €9Bn (US$11Bn) based on disclosed transaction costs.
“The rapid maturing of the technology has meant that offshore wind is taking shape as a mainstream energy source,” said GWEC, noting that as of the end of 2017, nearly 84% (15.780 GW) of all offshore installations were in the waters off the coast of 11 European countries. The remaining 16% is largely in China, followed by Vietnam, Japan, South Korea, the US and Taiwan.
With all the focus on the dramatic success in the offshore sector in Europe, it’s worth noting that China’s offshore industry is also taking off. 1.16 GW of new installations in 2017 brought the cumulative total to 2.78 GW, putting China in third place globally, behind the UK and Germany.
The new installations in 2017 are spread across 18 offshore windfarms, and nine of them (totalling 968 MW) are in Jiangsu Province, which continues to be the major focus of offshore development. There were four projects totalling 65 MW in Fujian Province, and the remaining five were spread across Guangdong, Zhejiang and Hebei Provinces.
“Unlike China’s onshore targets, which have been regularly exceeded, we have come to expect the offshore targets not to be met, especially the very ambitious ones set nearly a decade ago,” GWEC said. “Now, however, it seems the industry is on track and it will easily meet the national 2020 target of 5 GW, probably well ahead of time.”
In addition to the national target, Jiangsu has set itself a 2020 target of cumulative installations of 3.3 GW, Guangdong has a 2020 target of 2.0 MW, as does Fujian province. These alone would exceed the national goal.
According to analysis by BVG Associates, offshore wind has reached maturity in Europe, both technically and commercially. It is now seen as an attractive investment opportunity for pension funds, investment houses and banks. Costs have fallen decisively, with committed projects scheduled to start generating in the early 2020s likely to produce at a levelised cost of energy (LCOE) below €70/MWh (at 2017 prices), including the cost of offshore to onshore grid connection.
This has led to increased confidence in the deployment of offshore wind around the world and BVG Associates forecasts 120 GW total installed capacity by 2030, with an installation rate of over 10 GW per year being achieved before then.
Although much of this growth will come in Europe, building on the establish capability and proven low cost, as highlighted above we will also see significant capacity in China, and in the US, with smaller but significant volumes in Japan, Taiwan and South Korea.
“By 2030, LCOEs below €60/MWh will be achieved by many newly installed offshore windfarms, which could be well below the average wholesale power price in many electricity networks, driving higher levels of deployment and the spread to currently uncharted waters,” said the company.