Installations and investments in the global offshore wind industry are set to surge this decade as nations seek to transition to cleaner sources of energy, with total capital expenditure projected to more than double from $46 billion in 2021 to $102 billion in 2030, Rystad Energy research shows.
Driving this growth is a significant uptick in capacity installations in Europe, solidifying the region’s place as the global leader in the offshore wind space. Capital expenditure in Europe in 2030 is forecast to approach $53 billion, up from $15 billion last year. The Americas have been slow to enter the offshore wind market, but that looks set to change from this year onwards. The region is projected to spend $3.3 billion this year, up from $700 million last year, and rise further to almost $15 billion by 2030.
China has been a major player in the offshore wind market to date, but the powerhouse’s investments are set to slow as we approach the 2030s. In 2020, China invested almost $25 billion, double what Europe spent in that year, but the country’s total expenditure is forecast to gradually decline to a comparatively small $7.7 billion in 2030. This is due to feed-in tariffs, which encouraged infrastructure investments being phased out in 2021, along with emerging market dynamics that will result in lower costs for any new capacity additions in the region.
“The offshore wind industry is set for substantial growth this decade, with over 265 gigawatts of operational capacity expected by 2030. As the world moves towards a greener energy mix, investments in the offshore wind sector are set to soar and provide ample opportunities for suppliers to cash in,” said Anubhav Venkatesh, offshore wind analyst with Rystad Energy.
Of the billions of dollars of capital expenditure that developers are lining up for projects, more than 50% will go towards the manufacturing and installation of turbines and foundations, the two largest financial components of an offshore wind farm.
While some players were early movers and now enjoy a competitive advantage, new companies are entering the market. With high ambitions for offshore wind in the US and Asia, excluding China, new offshore wind projects will emerge through to 2035 as auctions pick up in these regions.
Early mover advantage
The European region was an early mover in the offshore wind space and currently leads the world with the largest number of installations. With over 26 GW of operational capacity, it represents more than 50% of the global total. Europe is expected to have an installed base of over 57 GW by 2026 when Danish giant Orsted is expected to remain the region’s leading offshore wind developer.
Over 8,500 turbines are expected to be operational in Europe by end-2026, of which almost 60% are likely to be Siemens Gamesa units. Rival Vestas is expected to be the second-most successful turbine manufacturer by end-2026, contributing to around 20% of the forecast installed base.
Asia, excluding China, and the US, relatively new regions to the offshore wind market, are expected to commission their first large-scale projects in 2022 and 2024, respectively. The US is set for a wave of project commissioning towards 2030, as it targets 30 GW of operational offshore wind capacity, although the country is likely to fall short and install only around 21 GW.
The Biden-Harris Administration has accelerated lease sales in the US, with eight leases being sold so far this year, with the Final Sale Notice (FSN) for another five released towards the end of May.