China has continued its rampant offshore wind installations of late 2021 into this year. While a total capacity of 6.8 GW was added worldwide through the first half of 2022, China accounted for 78% of new additions, as it continues to build on its leading position in the market.
The figure, presented by World Forum Offshore Wind, represents a sharp upturn from the 1.6 GW installed globally in the first half of 2021, and marks the busiest start of the year for the offshore wind market. In fact, the 6.8 GW dwarfs the entire figure for the full year of 2020 (5.2 GW).
In total, 33 new projects went into operation over the six-month period. Twenty-five of these were in China, followed by five in Vietnam – including nearshore projects – as well as one in South Korea (with just 8 MW of capacity).
Outside of Asia, only two projects were installed: one in the UK and one in Italy. These are notable, however. The UK’s Hornsea 2 was the largest project to be installed through the period by a factor of three, weighing in at 1,320 MW. Italy’s 30 MW Taranto project also marks the first offshore wind project in the Mediterranean, as well as the first project in Europe to use turbine technology from China, comprising ten MySE3.0-135 turbines from MingYang.
The new capacity brings WFO’s count for global offshore wind capacity to 54.9 GW by the end of H1 2022, distributed among 248 projects, with 45% of this now installed in China. In total, 134 of the projects in operation are located in Asia, followed by 112 in Europe, and 2 in the USA.
With the emergence of new markets, like Korea, Vietnam, and Italy, the average project size has fallen year-on-year, due to the inauguration of several pilot projects. In H1 2021, the average project size was 261 MW, compared to just 205 MW this year.
Behind China (24.9 GW) and the UK (13.6 GW), Germany (7.7 GW) remains the world’s third largest market for offshore wind, despite having installed no new capacity so far this year.
The country is also being outpaced by many others in terms of capacity under construction. Once again, China leads this field, with 3.2 GW in advanced stages of development, led by the 1 GW Yudean Yangjiang Qingzhou I and II offshore wind farms. This is then followed by Taiwan (2.5 GW), the Netherlands (2.3 GW), the UK (1.6 GW), and France (1.5 GW). In total, 11.9 GW of capacity is under construction worldwide, and expected to come online in the next two or three years.
The interesting thing about the WFO’s reporting of China’s offshore wind market is its contradiction with the country’s own reporting. In its own state media, China reported just 270 MW of offshore wind additions through the first half of the year, marking a significant slowdown from the rush it reported at the end of 2021.
At the start of this year, China’s National Energy Administration (NEA) released figures showing that it had installed more capacity in 2021 that the rest of the world had managed in the past five years combined. The 16.9 GW it reportedly installed over the year more than doubles the cumulative offshore wind capacity in China, bringing it to 27 GW in total – nearly half of the global total of 54 GW.
However, with WFO suggesting that just 54.9 GW has been installed as of the end of June, it’s likely that around 6 GW of the 16.9 GW China claimed to have installed by the end of the year, was not in fact brough online until 2022. China may be wishing to convey a high level of compliance with its Feed-in-Tariff deadline, which expired on December 31 2021, and offered a generous subsidy of $130 per MWh.
High wind speeds in the Taiwan Strait, which are typically 20% greater than those in the North Sea, are a key driver behind the rapidly emerging offshore wind market in China. Rethink Energy predicts that over 70 GW of offshore capacity will be installed by 2030. Throughout the period, offshore wind is set to account for just under 14% of total wind power installations, driven by energy-hungry coastal regions in the East such as Jiangsu, Guangdong and Fujian.
While Capex for offshore wind in China has been halved over the past ten years, the current levelized cost of energy from the technology is still around $98 per kWh – due to the use of more expensive turbines from domestic manufacturers. This is still, however, lower than the global average of $105 per MWh.
With coal still being relatively inexpensive in China – accounting for 68% of power generation – there is a certain element of uncertainty in the medium term for offshore wind in the country. This is currently being compounded by the supply chain disruption through Covid-19 for blades, bearings and cables as well as a distinct shortage of installation vessels.
However, as turbines become larger and more powerful, the cost of offshore wind power will continue to fall and will undercut the cost of fossil-fuel generation. Chinese wind OEM Ming Yang recently unveiled a new record 16 MW generator for use in next generation turbines.
This marks a broader disruption that could be coming from Chinese turbine manufacturers in Europe. While Western OEMs like Vestas and Siemens Gamesa struggle with high commodity prices, a large backlog of inflexible supply agreements, and squeezed profit margins, China dominates the commodity production for much of the wind turbine supply chain. Current estimates place the cost of wind turbine production in China at just half that of Europe, with OEMs sitting on a wealth of production capacity following a boom in domestic installations.