Offshore wind is likely to be the fastest growing renewable energy market by capacity growth, as countries look to diversify their energy portfolio, Alexander Flotre, VP and head of offshore wind research at Rystad Energy told Al Arabiya.
Renewable energy has experienced significant growth in recent years, particularly through solar and onshore wind power installations, as prices have dropped substantially. This cost reduction has led to renewable energy now becoming the cheapest option for new electricity installation in most of the world.
Offshore wind power, however, has not seen as significant a growth as onshore variants, with costs remaining higher, although the technology is not constrained by the same size limitations as on-land variants.
“Towards 2025 we still think the that on-shore wind and solar will remain [to have] the larger share of the renewable energy market in terms of capacity, but off-shore wind is definitely the most fastest growing market in terms capacity growth,” Flotre told Al Arabiya’s Naser El Tibi.
“That has to do with the fact that on-shore areas are starting to get very populated in the most established regions and that most of the developments need to be moved off-shore to enable the continued growth of renewable energy,” he added.
While COVID-19 slowed down most of the global economy, the offshore wind market conversely saw investments increase, Flotre went on to explain, with $35 billion in investments heading to offshore wind farms – a 300 percent year-on-year growth.
“It’s been very robust. We have seen nations and developers sticking to their ambitions and even raising their ambitions throughout the pandemic … We definitely see a very strong offshore wind market and that’s due to the accelerated energy transition that we see as a means to reboot different economies around the world,” he said.
While the UK and Europe are currently the global leader in offshore wind power, boasting around 70-80 percent of global capacity, China will lead the market until the middle of the decade, Flotre said.
“We definitely see China driving the global offshore market in the short to medium term. But then towards 2025 as we expect China to start begin ramping down its activity due the phasing out of the feed-in-tariffs. We also expect Asia, like Taiwan and Vietnam, especially in the short to medium term, but also other Asian countries like South Korea and Japan to start off-setting that slowdown in China,” he said.
New technology: Floating offshore wind, green hydrogen
A key drawback offshore wind power has faced in deployment is the expense relating to placing wind farms in the ocean, a problem that continues to plague the sector. However, new developments in floating offshore wind power technology could help solve the issue.
“If we are talking about the potential for floating offshore wind, the sky is the limit … I think that it will enable us to move further out from the shore into more areas with higher wind speeds, to raise the capacity factors of these developments, which is clearly a benefit for these developments to improve project economics and get more output from these large installations,” Flotre commentated.
However, while promising, the technology is still a distance away from reality, with Flotre noting that Rystad does not expect it to impact the market until the 2030s, although adding that development of floating wind power will be a sector to watch now.
“This is a pivotal decade for floating wind in the sense that we expect to see large cost reductions in the floating industry as it matures towards reaching commercial levels and become more competitive with the bottom fixed segment,” he said.
Another new technology that could be paired with offshore wind power and benefit the sector is green hydrogen, Flotre explained. Green hydrogen is a climate-friendly energy source, making use of renewable energy technology to split water and create hydrogen. This differs from other hydrogen extraction methods, such as blue hydrogen which is created through splitting methane, creating greenhouse gases which are then stored to prevent climate damage, and grey hydrogen, created in a similar way to blue hydrogen but with greenhouse gases released into the atmosphere.
“I think it’s a longer-term solution to solve a lot of the intermittency issues with off-shore wind, I think we are seeing a trend of a lot of hub solutions in the off-shore wind space … Its a means to storage to solve the fact we are not able to make use of the full potential from off-shore wind due the intermittency and the variance in demand as well, so I think it is an important piece,” Flotre said.
However, the technology has yet to be fully realized, with Flotre warning that Rystad does not foresee, in the short term, decreasing costs of combined utilities of offshore wind and green hydrogen, despite expected cost reductions forecast at the end of the decade driven by a falling cost for hydrogen electrolyzers.