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Offshore wind will become ‘the trillion dollar industry’

In the coming years a renewable technology, with an incipient development to date, will become a strong competitor in the world renewable market: offshore wind, especially in Europe, USA and China. Although this global market grew by almost 30% annually between 2010 and 2018, with 150 wind farms operating worldwide, mainly in the UK, Germany and Denmark, it is not even close to exploiting its full potential.

That’s what the International Energy Agency’s (IEA) latest report on this technology says. Offshore wind energy will expand dramatically over the next two decades, helping to decarbonize the world’s energy system and reducing air pollution as it becomes a necessary part of the electricity supply. In fact, it says it has the potential to generate more than 420,000 TWh/year worldwide.


The Offshore Wind Outlook 2019, the most comprehensive study of the subject to date, includes a geospatial analysis that maps wind speed and quality along hundreds of thousands of kilometres of coastline around the world. The report is an excerpt from the agency’s flagship World Energy Outlook 2019, which will be published in full on 13 November.

The IEA estimates that the world’s offshore wind capacity can increase 15-fold and attract around one trillion dollars (more than 900 billion euros) in cumulative investment by 2040. This is due to falling costs, support policies, state aid and some notable technological advances, such as larger turbines and floating foundations. And it’s only the beginning: the IEA report points out that offshore technology has the potential to grow much faster and stronger if it receives clear support from government policies.

Europe has been a pioneer in offshore wind technology, and the region is positioned to be the power of its future development. Today, the offshore wind capacity in the European Union is almost 20 GW. According to current policy, it is expected to increase to about 130 GW by 2040. However, if the European Union meets its carbon neutrality targets, offshore wind capacity would increase to around 180 GW by 2040 and become the largest source of electricity.

An even more ambitious vision, in which policies greatly boost the use and consumption of clean hydrogen produced by offshore wind, could boost European offshore wind capacity even further.

China will also play an important role in the long-term growth of offshore wind energy, driven by efforts to reduce air pollution. The technology is particularly attractive in China because offshore wind farms can be built close to major population centres in the east and south of the country. By around 2025, China is likely to be the country with the largest installed offshore wind capacity in the world, surpassing the United Kingdom. China’s offshore wind capacity is projected to increase from 4 GW today to 110 GW by 2040. Policies designed to meet global sustainable energy targets could push it even further to more than 170 GW.

The United States has good offshore wind resources in the northeast and close to demand centers along the densely populated east coast, offering a way to help diversify the country’s energy mix. Floating wind would increase the possibilities of resources on the west coast.

“In the last decade, two major areas of technological innovation have changed the game in the energy system by substantially reducing costs: the shale revolution and the increase in photovoltaic solar energy,” said Fatih Birol, executive director of the IEA, “and offshore wind energy has the potential to join its ranks in terms of strong cost reduction.

Birol presented this report in Copenhagen, Denmark, where offshore wind energy was born, together with Danish Minister for Climate, Energy and Utilities Dan Jørgensen.

The key to the take-off of this technology is that the great promise of floating platforms is already a reality and allows their development in marine locations that were previously unthinkable. In theory, they could allow offshore wind power to meet the electricity demand of several key electricity markets, including Europe, the United States and Japan, several times over.

“Offshore wind currently provides only 0.3% of the world’s power generation, but its potential is enormous,” Birol said. “More and more of that potential is within reach, but governments and industry still have a lot of work to do to make it a pillar of clean energy transitions.

Governments and regulators can pave the way for the development of offshore wind energy by providing the long-term vision that will encourage industry and investors to make the major investments needed to develop offshore wind energy projects and link them to onshore power grids. This includes careful market design, ensuring low-cost financing and regulations that recognize that the development of land grid infrastructure is essential for the efficient integration of offshore wind energy production.

The industry needs to continue the rapid development of technology for wind turbines to continue to grow in size and power capacity, which in turn offers the highest performance and cost reductions that make offshore wind more competitive with gas and onshore wind energy.

In addition, there are great business opportunities for oil and gas companies to leverage their expertise. It is estimated that 40% of the 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 $400 billion or more in Europe and China over the next two decades.

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