Offshore Wind is Expanding to new Markets as Prices Decline: Report

According to a new report, offshore wind is expanding to new markets as technology costs decrease and renewable energy becomes more attractive

A decade ago, in the infancy of offshore wind, there were concerns that it would be too expensive to grow at a large scale and compete with traditional market prices. Today, though, factors such as higher wind speeds, higher plant load factors, more stable power generation, almost limitless offshore space for turbine installations, as well as rapidly declining costs, are moving the market forward. According to a new report by Navigant Research, offshore wind is expanding to new markets as technology costs decrease and renewable energy becomes more attractive to governments, power utilities, and other stakeholders.

“Offshore wind is growing rapidly, as it offers a unique value proposition: It is an abundant clean energy solution for many coastal load centres where a greater proportion of population and energy demand is located—often areas where onshore wind or solar is more difficult or costly to develop,” said Jesse Broehl, senior research analyst with Navigant Research. “Projects in multiple markets are moving toward construction without subsidies and with a willingness to take fluctuating market prices.”

According to the report, stakeholders looking to succeed in this market should be prepared for offshore wind to buck the decentralisation trend occurring in the broader electricity generation sector. Industry players should also look for increased offshore wind placement in close proximity to dense population centres where large-scale solar PV is at a relative disadvantage, while countries and companies looking for cost-effective resources to satisfy clean energy demand should recognise fast-decreasing offshore wind costs.

Recently, a report published by the Renewables Consulting Group (RCG) had shown that the United Kingdom (UK) had cemented its status as the global market leader in offshore wind, followed by Taiwan and the United States.

A reduction in the costs of offshore wind power generation has been driven by technological advances and increasing efficiency in the global supply chain. The introduction of larger turbines has reduced the levelised cost of energy for prospective projects. Overall, RCG’s outlook, from its Global Offshore Wind: Annual Market Report, is that the global market will hit, and maintain, a 6 GW per annum commissioning rate from 2022 onwards at least. Just under 20 GW of capacity has been brought online by the industry to date. Europe has been the dominant market so far; accounting for 98 percent of the global commissioned base.