Offshore renewable energy industry outlook - until 2030
Wind energy projects are characterised by a significant time lapse between the developer being granted a support mechanism (e.g. tender results announcement) and the time that the wind farm starts to operate (grid connection). In the case of offshore wind projects, this time is typically approximately five years. However, the overall project timeline is much longer: this includes site investigation, resource assessment, environmental impact assessments and other technical studies and consultations with local communities and other administrative procedures. It is therefore crucial for developers to have good visibility on upcoming tenders and the regulatory framework. Once a support mechanism is granted or the capacity is awarded to the developer, the time allowed to realise projects is largely dependent on the regulatory framework. As a result, time lapses of offshore wind energy projects are considerable and should be taken into consideration in sectoral planning.
Figure 19: Wind energy (on-shore & off-shore) projects’ development timeline (Source: WindEurope)
Wind energy has contributed and will make further significant contributions towards achieving energy policy commitments in the global power sector, allowing countries to reach their targets and continue their energy system transformation. Year 2020 will mark an important milestone for the European Union, including the North Sea region countries, as Member States will be tested on their climate change and energy commitments. Although Europe will represent only a quarter of global installations of the total wind market, Europe (primarily North Sea countries) will be at the helm of the offshore wind market worldwide until 2020, followed by China. Considering all new expected additions between 2017-2020, wind power will account for more than half of new renewable energy installations during that period in the EU (Wind 52%, Solar PV 37%, Bioenergy 7%, Hydro 4%).
Figure 20: Global wind installations in 2017-20 (Source: WindEurope)
The biggest part of wind energy contribution in Europe comes from on-shore projects. However, offshore wind has been growing significantly over the last 10 years and its share to annual installed capacity is expected to grow further.
Figure 21: European wind energy (on-shore & off-shore) market outlook up to 2020 (Source: WindEurope)
WindEurope’s Central Scenario provides a best estimate of the installed capacity in Europe in the next 3 years (up to 2020) With an average 3.1 GW/year, offshore wind will represent about one quarter of the total market by 2020. The offshore market will concentrate mainly in the UK with 5.2 GW or 42% of the new grid-connected capacity. Another four countries will see offshore installations: Germany (3.5 GW), Belgium (1.5 GW), the Netherlands (1.4 GW) and Denmark (1.0 GW). By 2020, total European offshore wind capacity will be 24.6 GW.
Figure 22: Expected cumulative European installed capacity until 2020 under WindEurope’s Central Scenario (Source: WindEurope)
Figure 23: Five-year outlook of offshore wind farm project by NSR countries (Source: WindEurope)
The largest capacity of net annual installation in 2016 was in the North Sea basin (72%). An additional 11 projects (all in the North Sea) are currently on-going (reached Financial Investment Decision or under construction). WindEurope has further identified 24.2 GW of projects which have been obtained consent to construct and a further 7 GW of projects that are applying for permits. The UK has the highest share of offshore wind capacity (48.1%) that has received government consent to construct, followed by Germany (24.6%), Sweden (8%), and Denmark (4.6%). Besides Sweden, projects in North Sea countries are expected to be constructed within the immediate outlook. A total of 65.6 GW of projects are currently in the planning phase. As a result, the offshore market will grow at a higher rate over the coming years and North Sea countries are expected to see significant capacity additions.
Figure 24: European share of consented offshore wind capacity (MW) by country (left) and by sea basin (Source: WindEurope)
Many projects started construction in 2016 and grid-connected activity is set to increase noticeably in 2017 and 2018. However, the number of project starts will fall towards 2019 as European member states complete their National Renewable Energy Action Plans (NREAPs) under the current Renewable Energy Directive which covers the period up to 2020. Similar to 2016, capacity additions will stall in 2020, though a good level of construction activity will still be on-going. The figure below shows the expected cumulative installed capacity of wind (both on-shore & off-shore) for each NSR country up to 2020.
Figure 25: Wind energy (on-shore & off-shore) cumulative installed capacity by NSR country and WindEurope’s central scenario of added capacity between 2017-2020 (Source: Windeurope)