More than 200 GW of new offshore wind projects have been announced since the beginning of 2020, accounting for more than 44% of all global capacity at the pre-construction or early development phase
According to the 2020 Global Offshore Wind Annual Market Report from The Renewables Consulting Group (RCG), despite the global pandemic, 2020 was a year of many significant milestones for global offshore wind.
With new projects announced from Colombia to Brazil in the Americas, Spain to Estonia in Europe and Australia to the Philippines in the APAC region, the technology has been adopted by a fast-growing number of countries.
Through to early 2021, new projects exceeding 500 MW in capacity were announced in Spain, Ireland, Norway, Taiwan, South Korea, Italy, Brazil and Vietnam and floating offshore wind continues to emerge as a utility-scale option for markets with deep water.
RCG chief operating officer Dr Lee Clarke said, “This year’s report clearly demonstrates that global offshore wind continued its impressive growth in all sectors in 2020.
“With a steady and predictable framework, we continue to see positive developments emanating from emerging markets, such as in the APAC and the Americas regions.
“The ongoing maturation of technology and declining costs for offtake have inspired governments and investors to embrace offshore wind, with many authorities touting offshore wind as a cornerstone to a green economic recovery in the wake of a global recession.”
RCG said 2020 was a record year for capacity investment. The total offshore wind capacity financed in 2020 reached 8.37 GW across the European, Americas and Asia Pacific (excluding China) regions, eclipsing the previous total of 6.44 GW financed in 2018. Global investment for offshore wind also set new highs last year as investment reached US$30Bn, surpassing the previous high of US$22Bn set in 2018.
For the first time, the APAC market portfolio surpassed the EMEA region in project development capacity. Vietnam, with just 99 MW of inter-tidal capacity operational, has a massive development pipeline of 64.9 GW. Its early-stage development capacity is almost entirely comprised of projects proposed under the recent national power development plan (PDP 8). Of the offshore windfarms proposed under the PDP 8, many have not disclosed site characteristics beyond prospective capacity. It is therefore expected that large projects located in areas of prominent resources will overlap. As a result of potential overlapping boundaries, as well as other constraints such as grid availability and demand, it is unlikely all projects will advance to operation.
China, which has 8.5 GW of offshore wind operational and 30.2 GW under development – has a total portfolio of 63.6 GW. Project commissioning took place at an unprecedented rate during 2020. The offshore wind feed-in-tariff supporting rapid development and installation timelines is due to expire in 2022, with no new subsidy mechanism announced to date. Developers, meanwhile, race to install projects by the commissioning deadline.
RCG said floating offshore wind continues to emerge as a utility-scale option for markets with deep water. “The floating market expanded rapidly in 2020 and early 2021, embracing more innovative technology concepts at a large scale,” RCG said. “The first competitive tender for a commercial-scale floating site is currently underway in France, while more projects are set to be offered in competitive processes in Scotland and Norway later in 2021, with plans to lease projects in California also ongoing. Development of new projects of over 100 MW in capacity across at least eight different countries to date has shown floating technology to be a viable power generation option in a wide range of environments.”
RCG said leasing headlines in 2021 were dominated by the results of the Round 4 auction for new sites in England and Wales. The cost-based competitive allocation drew in bids from oil and gas majors exceeding £230M (US$320M) per year in option fees.
“An explosion of growth in the portfolio capacity of projects in the APAC region was encouraged by the prospect of new leasing rounds and offshore wind frameworks. However, not all projects will proceed beyond an auction round and there is heavy risk associated with pre-tender project development,” said RCG. It noted that the success of offshore wind allocation frameworks has encouraged the formulation of new policies supporting development in markets such as Brazil, Sweden, Ireland, Australia, Spain, Romania, Greece and Vietnam.
The Brazilian market flourished in 2020, with more than 31 GW of new projects announced. Despite a slowdown in federal permitting and new leasing in the last year of the Trump presidency, state authorities issued solicitations for offtake contracts in New Jersey and New York. The first project installed in federal waters, the 12-MW CVOW demonstrator, was commissioned by Dominion Energy in October 2020. The development and operations of the project will inform the build out of the adjacent 2.64-GW CVOW Commercial offshore windfarm.
Other project developers also advanced sites, with construction and operations plans submitted for three projects on the north-eastern coast of the country. There was also increased interest in pursuing offshore wind projects off the coasts of California, Louisiana and Oregon.
Offshore wind has also come to other South American countries, and projects were explored in both Colombia and Chile in 2020. Local onshore renewables developer Prime Energia submitted plans for a 200-MW project near the Port of Cartagena to Colombian authorities in late December, and in September 2020, turbine supplier GE Renewable Energy announced it was exploring floating wind opportunities off the Chilean coast.
However, RCG warned that although offshore wind enjoyed a transformative year in 2020, there remain significant challenges to the industry if it is to meet ambitious targets. “Supply chain constraints across all regions, as well as undefined development frameworks and route to market mechanisms, will limit deployment of capacity across the sector through to 2030,” said RCG. “The rate of deployment in the near-term should not be underestimated, however the ambition of government authorities and investors may exceed sector capability in some areas.”