A closer look at 2023 worldwide Offshore Floating Wind Market Trends

Global offshore

A closer look at 2023 worldwide Offshore Floating Wind Market Trends

By 2030, global offshore wind is expected to growth to 271 GW, states 4C Offshore, and 14 GW of floating wind power should be installed or in construction.

Drivers for this market are very positive and offshore wind is expected to remain strong in all existing markets. Increasing uptake of renewables, and offshore wind in particular, is being driven by policies in the areas of energy transition, environmental protection, and energy security.

The International Energy Agency (IEA) Government Energy Spending Tracker from last December shows that investments in clean energy by nations transitioning to a renewable energy infrastructure exceeded US$ 1.2 trillion since the start of the pandemic. According to IAE, this government spending should stimulate substantial private investment, which could raise global clean energy investment by another 50% to over USD 2 trillion per year in 2030.

In order to achieve ‘net zero’ and limit global temperature increase to 1.5°C IEA and the International Renewable Energy Agency (IRENA) expect offshore wind capacity will need to exceed 2000 GW in 2050, from just over 60 GW today, to Celsius and achieve net zero, which is affecting policies worldwide. At the COP27 last November, nine new countries including Belgium, Colombia, Germany, Ireland, Japan, the Netherlands, Norway, the UK, the US joined the Global Offshore Wind Alliance (GOWA), pledging to ramp up offshore wind rapidly to tackle climate change and energy security issues. According to McKinsey, global installed offshore wind capacity is expected to reach 630 gigawatts (GW) by 2050.

ResearchAndMarkets described offshore wind technology ‘as one of the most rapidly increasing renewable energy sources’ in a study published in January and expects this trend to continue, largely driven by increased increasing private and public spending, technological advancements, and greater supply chain efficiency reduces CAPEX and OPEX.

Besides a booming global project pipeline a key indicator of prolonged growth is the fast-growing demand for offshore wind vessels. In addition to yards across Europe, the US and Asia have also started building vessels.

Recent research by Brand Essence states that Europe, with its established offshore wind markets in countries including the UK, Germany, and France is expected to dominate the offshore wind energy market in the coming years. North America should be following closely. Furthermore, economic development in China and India is expected to drive offshore wind uptake in the Asia Pacific region. According to Global Market Insights study ‘Offshore Wind Energy Market Size by Component’ offshore wind energy market revenue share in APAC is set to grow by more than 12% by 2032, driven by demand increase. The report shows that this demand is leading to an increase in the number of new offshore installations in the region. Furthermore, developments in Australia and the Philippines are forecast. McKinsey predicts that the vastly increasing capacity in APAC, which had 11 GW of installed offshore wind in 2020, will result in the region surpassing EMEA by the mid-2030s.

However, partly owing to financial constraints, Latin America, Middle East, and Africa will presumably develop at a much slower rate, even though Brazil and Columbia are set to support offshore wind project permitting. With this in mind, it is worth pointing out that 95% of the US$ 1.2 trillion increased clean energy spend is accounted for by advanced economies. In November 2022, for example, the U.S. Department of Energy unveiled a US$ 550 million funding for clean energy initiatives from the Biden-Harris administration, targeting reduction of energy costs for over 250 million Americans.

2023 will see increased focus on the development of floating wind farms. Most of these are expected to be commissioned after 2030, although a significant proportion s hould be online before then. Floating wind makes up a significant proportion of current wind energy leases.

A total capacity of 54.9GW was awarded in 2022 and more offshore wind lease rounds are scheduled to be launched in 2023, such as the 4GW Celtic Sea floating wind auction in the UK and 500MW Floating Mediterranean auction in France and the Central Atlantic. Auctions in the Gulf of Mexico and Oregon are scheduled, as well as in several new markets: up to 10GW of floating wind projects in Portugal, 4GW of offshore win in India’s Tamil Nadu State, and 700MW in Lithuania.

In recent years, lockdowns, geopolitical tension, and the post-pandemic energy crisis negatively affected supply chains and markets. Of course, factors such as inflation, volatile raw material and energy costs, the vast complexity of projects, and supply chain disruptions might result in delays. Much of this can be alleviated, however, by utilising smart product design and project planning experience and continuous government investments in clean energy and legislative support will help the industry prosper. Technological developments also have an important role to play. New types of floating foundations may be viable for water depths of more than 1,000 meters, thus increasing the area for offshore wind by a factor of five, according to the US Office of Energy Efficiency and Renewable Energy.

An especially interesting trend going forward is the use of offshore wind farms to enhance the environment. In the Netherlands, NGO De Rijke Noordzee has completed projects that show how offshore wind can cost-efficiently enhance the environment.