GLOBAL FLOATING WIND ENERGY MARKET & FORECAST

Volume 2

(2019 – 2034)

 

EXECUTIVE SUMMARY

  • The global energy transition to a lower carbon footprint presents many opportunities across industries to tackle new challenges through innovation and applied technology.

  • Renewables are set to penetrate the global energy system more rapidly compared to any other fuel in history.

  • Renewable energy is the fastest-growing energy source, accounting for nearly 50% of the increase in primary energy. By 2040, renewables surpass coal as the largest source of global power, but during the Evolving Transition (ET) sufficient oil and gas supplies will be required to meet global energy demand growth.

  • Renewables led by wind, offshore wind and solar are growing exponentially and delivering bigger capacities and cheaper economic solutions. Investment in offshore wind in 2018 represented about 25% of global investment across the wind sector and 6% of all renewable energy investments.

  • By 2040, the IEA projects total offshore wind energy generated electricity to reach 1,281 TWh in the Stated Policies scenario compared with the Sustainable Development scenario where projected capacity growth is much faster reaching 2,072 TWh. At the same time, projections indicate that cumulatively installed offshore wind capacity worldwide will reach 562,000 MW. This compares to 23,100 MW at the end of 2018.

  • Wind energy is a growing form of cheaper energy supply in many markets. According to the Global Wind Energy Council in 2018, wind capacity installations outpaced new fossil fuel capacity in a number of mature and emerging markets.

  • Cheap renewable energy and batteries are remaking electricity systems globally and will take a growing share of power generation from fossil fuels which could reach parity by 2050. Modern natural gas power plants can provide the flexibility needed to integrate more renewables into the grid.

  • Advanced technology will continue to be an enabler for wind energy. Digitalization shows great potential for its ability to transform the power sector by offering demand-side flexibility including opportunities to integrate power sources. Digital technologies and Artificial Intelligence can also aid-in reduced TotEx and drive lower operation and maintenance costs in large wind parks.

  • Pundits’ projections for onshore wind indicate over 50 GW of installed wind capacity on an annual basis in addition to more than 15 GW of offshore wind capacity additions each year in the Stated Policies Scenario. Quest has identified projects representing more than 17.5 GW of Floating wind scheduled for commissioning worldwide to 2034, a number that will grow exponentially following the addition of newly sanctioned projects and their accelerated commercialization.

  • The wind industry continues to deliver value to enhance wind’s cost competitiveness and efficiency with steady improvements in the Levelized Cost of Electricity (LCoE). Since 2016, offshore wind particularly has pushed reductions in LCoE in excess of 50%.

  • The top five onshore wind markets delivered 75% of new capacity in 2018 (China, USA, Germany, India and Brazil). Ninety-one percent of new offshore wind installations were led from China, United Kingdom, and Germany. Image Source: PPI 6

  • The IEA’s World Energy Outlook sees increased spending on offshore wind power projects through 2040 benefiting in part from the decline in offshore oil investments in the Sustainable Development Scenario.

  • The European Union is leading projected installed capacity additions in offshore wind (Floating and Bottom-fixed) totaling 92GW at 2030n in the Sustainable Development Scenario growing to 175GW by 2040.

  • Ranking second is China which the IEA projects will total 65GW of installed offshore wind capacity at 2030 and a whopping 177GW by 2040. Similarly, the highest growth rates for annual additions under either scenario is led by China followed by the European Union.

  • Offshore globally, there have been more than 1.4 GW of offshore wind auctions Planned in 2019 following a strong showing of 3.3 GW in 2018.

  • The offshore wind segment is projected to become a one trillion dollar industry within the next two decades.

  • The offshore Floating wind industry was in its infancy only five years ago, an ‘inner circle’ that met more naysayers than believers. This industry has come a very long way in just a few years delivering new floater designs, scaled Demonstrators, Pre-Commercial projects and new players. The entry of companies such as Equinor, Shell, Repsol, SBM, Aker Solutions and Total has led to a step-change for this young industry’s viability and ultimate capability to produce 50 or 100 Floating Turbine Units (FTUs) on a serial manufacturing
    basis.

  • Offshore wind energy is quickly becoming a relevant adjacent industrial sector to offshore oil and gas for numerous supply chain  companies. Their advanced engineering capabilities, project management skills and technology solutions will be required to meet rapid demand growth over the two decades and beyond.

  • Offshore Floating wind energy is a fast-moving market. Europe has been the ‘test bed’ for Floating wind and the success of these projects is driving export of this technology to South Korea and Taiwan now and to the USA well before 2025. Planned development of large-scale projects aided with ample financial backing will continue to drive efficiencies and lead to significantly reduced costs. We see this trend in turn making European projects more feasible buoyed by additional government support of long-term Floating wind
    energy developments.

Robust Outlook For Offshore Floating Wind

  • State incentives increasingly are a driver for offshore Floating wind. Of note, both California and Hawaii have targets to reach 100% renewable energy generation by 2045, perhaps sooner. In Asia/Pacific, Taiwan and South Korea are accelerating their Floating activity levels.

  • Ten potential super-sized Floating offshore wind projects, each ranging between $2.2 billion and $10.8 billion in CapEx, represent a sizeable share (over 60%) of the $63 billion total addressable market presently identified.

  • Near-to-medium-term projects with statuses Under Development and Planned total $15.9 billion in CapEx led by Asia/Pacific with $6.8 billion, USA-Pacific with $6.2 billion, Northern Europe with $2.1 billion, and Southern Europe with $0.7 billion. Over this period, $6.1 billion will be allocated to turbines, $3.5 billion to substructures, $2.5 billion for cabling, $1.8 billion in moorings, and $402 million on installation.

  • Near-term the Asia/Pacific region leads total FTU activity volumes with a 63% share of the projects Under Development representing 65 floaters and a total CapEx spend of $22.9 billion. As a whole, the Asia/Pacific opportunity sees potentially 815 Floating units by 2033 representing 5.5 GW of installed capacity. Asia Pacific developers and their supply chain, on par with their Northern Europe counter parts, are leading the charge towards improved project economics and more optimized CapEx/MW and ultimately lower LCoEs.

  • Off Southern Europe 913 MW of offshore Floating wind projects are presently identified denoting an average of $5.5 million CapEx per MW, one of the higher unit costs across regions led from the disproportionate mix of both Demonstrator and Pre-Commercial projects (relative to the smaller number of Commercial projects that received Final Investment Decision). These 10 projects exceed $3.9 billion in CapEx with 39% allocated to turbines, 25% substructure, 9% cabling, 15% mooring system and 3% installation.

  • Nearly six GW of projects comprising 622 FTUs are identified for the USA-Pacific and Atlantic waters averaging $4.2 million CapEx per MW and representing a total spend of about $20 billion. The segmentation by supply chain shows turbines at $8.3 billion (42%,) substructure at $4 billion (20%), cabling $3 billion (15%,) mooring $2.2 billon (11%) and installation $518 million (2.6%). The majority of USA-Pacific’s offshore Floating wind projects are Commercial scale with the first project stated to be Online in 2023 or 2024.