Growing, with huge potential


Globally, the total installed energy capacity for both onshore and offshore wind farms at the end of 2019 totalled 651 gigawatts (GW), or about 10% of global electricity generating capacity, according to the WER report. While just 25.5 GW, or less than 0.5%, of that installed capacity is currently located at sea, the rate of new installations offshore has been growing at a much faster rate since 2010: 26% compound annual growth rate (CAGR) compared to 14% for onshore. Even amid the current coronavirus pandemic, WER expects this trend to continue, with 16 GW of additional offshore capacity to be added in 2020 and 2021, driven primarily by ongoing activity in the well-established Northern European sector as well as the newer, fast-growing Chinese market. China, already the leader onshore, emerged as a major offshore wind player in 2018 and has continued to expand its substantial project pipeline.


When comparing onshore wind vs. offshore in terms of untapped potential, it’s clear that offshore is simply unmatched. The WER report estimates global offshore


wind potential to be technically capable of supporting more than 120,000 GW of electricity production capacity (equating to approximately 420,000 TWh), which is more than 20 times greater than current world demand.


By 2040, WER forecasts offshore wind capacity will increase to somewhere in the range of 340 GW- 560 GW, led by Europe and China, with newer entrants the U.S., Japan, South Korean and India among top markets. The report identifies some 500 GW of projects and development zones currently in the planning and development stages, mainly coming from Europe, Asia and the U.S. Details for each project are laid out in the report as well as in a corresponding online database.


Lower costs


Offshore wind farms are not new; they have been around for decades. So why is offshore wind taking off faster now than ever before? WER’s report points to a combination of factors helping to grow offshore wind’s role in the word energy mix. The simplest but most important reason for growth is that offshore wind has made great strides over recent years to become increasingly cost competitive compared to


other energy sources, including fossil fuels. In the years ahead this momentum will only build as costs continue to fall.


The growing volume and size of offshore wind projects, along with improving supply chain competencies larger, more efficient turbines (the current largest is 14 megawatts (MW)), and the utilization of offshore transmission substation hubs have all helped to reduce offshore wind’s levelized cost of energy (LCOE). According to WER, LCOE has declined from a global average $170/MWh in 2010 to strike prices of $60/MWh to $110/ MWh in 2016 to 2018 European and U.S. auctions. Recent prices have been seen as low as $47/ MWh in recent European auctions. WER says declining LCOE is allowing offshore wind to compete with fossil fuel projects in European and Chinese markets. It’s still a different story in the U.S., but WER sees cost parity by the end of next decade. Today, installation capital expenditure (capex) cost for bottom-fixed turbine projects averages just over $3,000 per kilowatt (KW) with transmission. WER projects this will fall to fall to $2,500/KW by 2030 and $1,900/KW by 2040.


The Report • September 2020 • Issue 93 | 71


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