2016 was not only a record year for global wind installations with a massive 62.3GW of new installations but it was also a record year for offshore wind which at 4.1GW made up 7% of global installations. The largest market for offshore wind last year was Germany which installed 2.3GW and the good news for offshore wind is that finally the turbine suppliers such as Siemens and MHI Vestas look like they will begin to deliver on all those promises about low cost wind and growth.
I must admit I was never positive about offshore wind. It started the first time I saw the Repower 5MW turbine many years ago. I did not see a Moore’s Law effect with offshore wind and I did not see how the turbine manufacturers could reduce the cost of what are in fact vast lumps of metal. I was right that costs did not come down as many industry insiders had expected. I was also right that the wild projections for growth (40GW installed in Europe by 2020) would never be reached. On the positive side, there have been substantial cost reductions largely through the use of higher capacity turbines with better energy capture and improved reliability as well as improvements around supply chain logistics and O&M.
The other piece of good news is that there are further cost improvements on the horizon largely thanks the many years of experience in building, erecting, operating and servicing offshore wind turbines and grid equipment. In addition, performance data from offshore turbines has been very good with capacity factors well above expectations. We also have solid companies with strong balance sheets such as Vattenfall, Dong Energy and Statoil on the developer and operations side and Siemens, ABB and MHI Vestas in terms of equipment suppliers. If you add the fact that most of our major cities in the world: London, New York, Tokyo, Shanghai to name but four, are all situated near to the coast and where land is a premium price it seems logical that offshore wind will stay as part of the energy mix. But we have to get costs down and in fact the extent of future large scale deployment depends on how fast offshore wind companies can do that. Which is why we need China, and the good news is that China is now doing offshore wind and that in turn should have a positive impact on costs, competition as well as yearly installations…
Like Europe, China had a record year for offshore installing some 360GW which brings the installed base there to just over 1GW. This is still well behind the 11GW installed in Europe but the good news is that China is coming and between now and 2020 the country is expected to install as much as 10GW of offshore wind. At the same time Europe will install a similar amount and we will see some growth in markets such as Japan, South Korea and the United States. However the caveat is that if this growth does not manage to enable offshore wind costs to fall towards onshore wind levels then sadly offshore wind will only ever be a small niche market power generation technology.