Offshore wind power will expand impressively over the next two decades into a $1 trillion (£780bn) industry, suggests a new International Energy Agency (IEA) report.
Published this week, IEA’s Offshore Wind Outlook 2019 examines offshore wind market developments.
According to IEA, global offshore wind capacity may increase 15-fold and attract around $1 trillion (£780bn) of cumulative investment by 2040.
“Offshore wind currently provides just 0.3% of global power generation, but its potential is vast,” Dr Fatih Birol, the IEA’s Executive Director, said.
“More and more of that potential is coming within reach, but much work remains to be done by governments and industry for it to become a mainstay of clean energy transitions.”
IEA sees the rise of the offshore wind power to be driven by falling costs, supportive government policies and technological progress, such as larger turbines and floating foundations.
“In the past decade, two major areas of technological innovation have been game-changers in the energy system by substantially driving down costs: the shale revolution and the rise of solar PV,” Dr Birol commented.
“And offshore wind has the potential to join their ranks in terms of steep cost reduction.”
Today, offshore wind capacity in the European Union stands at almost 20 gigawatts. Under current policy settings, that is set to rise to nearly 130 gigawatts by 2040.
If the European Union reaches its carbon-neutrality aims, offshore wind capacity would jump to around 180 gigawatts by 2040 and become the region’s largest single source of electricity, the report finds.
China is also set to play a major role in offshore wind’s long-term growth, driven by efforts to reduce air pollution. The technology is particularly attractive in China because offshore wind farms can be built near the major population centres spread around the east and south of the country.
By around 2025, China is ‘likely’ to have the largest offshore wind fleet of any country, overtaking the United Kingdom. China’s offshore wind capacity is set to rise from 4 gigawatts today to 110 gigawatts by 2040. Policies designed to meet global sustainable energy goals could push that even higher to above 170 gigawatts.
The United States has good offshore wind resources in the northeast of the country and near demand centres along the densely populated east coast, offering a way to help diversify the country’s power mix. Floating foundations would expand the possibilities for harnessing wind resources off the west coast.
The huge promise of offshore wind is underscored by the development of floating turbines that could be deployed further out at sea. In theory, they could enable offshore wind to meet the entire electricity demand of several key electricity markets several times over, including Europe, the United States and Japan.
Governments and regulators can clear the path ahead for offshore wind’s development by providing the long-term vision that will encourage industry and investors to undertake the major investments required to develop offshore wind projects and link them to power grids on land.
That includes careful market design, ensuring low-cost financing and regulations that recognise that the development of onshore grid infrastructure is essential to the efficient integration of power production from offshore wind.
Industry needs to continue the rapid development of the technology so that wind turbines keep growing in size and power capacity, which in turn delivers the major performance and cost reductions that enables offshore wind to become more competitive with gas-fired power and onshore wind.
What’s more, huge business opportunities exist for oil and gas sector companies to draw on their offshore expertise.
An estimated 40% of the lifetime costs of an offshore wind project, including construction and maintenance, have significant synergies with the offshore oil and gas sector.
That translates into a market opportunity of USD 400 billion or more in Europe and China over the next two decades.
Offshore Wind Outlook 2019 is a part IEA’s World Energy Outlook 2019, which will be published in full on 13 November.