We said last week that the Global Offshore Wind Report from the Global Wind Energy Council (GWEC) was out, but got a longer version sent to us this week. It says that the offshore wind sector has grown 21% on average every year since 2013, taking its total installed capacity to 23 GW globally. GWEC sees potential for the sector to add between 190 GW and 200 GW by 2030. China is expected to become the largest offshore region globally
But upon looking at this graph it seems like this is small beer, and that if any group of countries target zero emissions by 2050, that they should be relying on offshore wind for an awful lot more than this report suggests. Sliding from a CAGR that is now less than that 21% down to 8,2%, is all about what we call pipeline – instead of forecasting what might happen, the first years of the report say that if we take all of the companies operating in this area and look at how rapidly they take on staff, grow their effort and grow their customer base, then the smart money will chase only these players, and the market cannot grow faster than their pipeline. We cannot agree.
It then says that as those companies attract more and more investment, they can accelerate, and shift to 12% CAGR. This is not the stuff that “climate emergencies” are made from, this is much more like business as usual. In offshore wind in particular the swept area of next generation of wind turbines, will achieve this much more electricity. This is a graph that says, “We will install the same number of turbines every year and never accelerate, but because they are bigger this will mean more electricity.”
We cannot accept that the limiting factors of offshore – only a certain number of testing centers, only few ships with the right cranes built in, can slow the development of the business for more than ten years. Investors will invest in the supply chain and create extra capacity. At Rethink Energy we believe this means we will go beyond the GWEC forecast. If anything and we looked at this from the point of view of a company wanting to develop a new pipeline, we would say, that there is only enough business for those who have already been in development in this area, and not enter. So this report does a disservice not shooting for a bigger number.
We’re not criticizing GWEC here, and we’re sure its new service will develop, but it is almost certain to be right for a few years, then under shoot the market by a significant amount and then adjust its forecast accordingly.
The GWEC report says that offshore wind is already a mainstream source of energy, generating 65 TWh of during 2018 and it warns, quite rightly that project developers, investors and operators need to adopt to and evolve technology to create an efficient and global supply chain.
And given that GWEC is saying it sees this growing up to 200 GW by 2030 and that half of that will be in Asia and that China wants to support its own indigenous suppliers, this almost seems to suggest that non-Chinese players will actually shrink or install less turbines.
Permitting has to accelerate, project planning has to shorten, new engineering firms will need to be attracted into this market, governments will have to change their rules and undertake bigger installations with more support. This is why GWEC has two scenarios, it’s business as usual forecast and its upside scenario, basing the first purely on government targets, auction results and pipeline data – that gets us 156 GW of new capacity between now and 2030. It doesn’t consider technological developments or disruptions.
When it factors in 10 GW of floating technology and those markets already engaged with it France, Ireland, Portugal, Scotland, S Korea, US it sees a steep learning curve making the pipeline much fatter around 2030 and sees accelerated upside post 2030, when markets like South Africa, Australia, and Brazil begin to see the obvious advantages in offshore wind. Also existing markets will see the financial upside of greater scale.
Our own report Floating Wind on the verge of liftoff; Ten year forecast; bright future, just out this month, shows that most of the government targets are going to be missed, through delays or performance uncertainties and yet floating wind will still beat that 10 GW target by opening up more markets more rapidly. And that by 2035, just five years later floating alone would be 3 times that at around 28 GW.