Europe is one of the leading regions in offshore wind energy and one of the most severely affected by the COVID-19, which has restrained the ongoing growth due to delays in projects. The disruption in European and global trade restricted the project construction, which also resulted in increased CAPEX for the projects. According to IEA post-pandemic offshore wind energy is expected to witness higher growth than onshore wind. The major factors driving the market studied are the increasing cost-competitiveness, with an average LCOE of USD 50/MWh being within reach. Additionally, the governments of the existing offshore markets intend to increase their targets and volumes toward 2030, which may lead to a significant increase in offshore installation and the new projects being awarded. However, the movement of heavy and large equipment to the offshore location resulting in the high cost of the offshore wind power system is a major factor that is expected to restrain the market during the forecast period.
The floating offshore wind is expected to create a scope for relishing the projects in deepwater, where the high wind speed creates a much favorable environment for operation, thereby driving the offshore wind energy market.
The emerging markets in Africa and South America offer a robust business opportunity for the wind power business, as countries, including Brazil, South Africa, and Chile, are on the cusp of development, and there is an increased demand for electricity, which is expected to provide market opportunities for wind power development in the coming years.
Europe is expected to have a significant share in the market during the forecast period, as different European countries are exploring the offshore wind energy segment.
Key Market Trends
Floating Structure to Dominate the Market
The decreasing prices are helping wind power to increase sales, but the highly competitive environment is causing a decrease in the number of wind turbine manufacturers. The global transition from FITs to more-competitive mechanisms, such as auctions and tenders, has further intensified the intense price competition.
Moreover, through technological innovation, turbine equipment manufacturers have been able to limit the rise in turbine cost (USD/kilowatt) and manage the decrease in mass (kilogram/kilowatt), to allow the turbine growth to continue upward to at least 12 MW.
The weight reduction has opened the prospects for the increase in the installation of floating-type offshore wind turbines. With the advancement in technologies and reduction in cost, the total installed capacity of offshore wind energy reached 28 GW in 2019, with the floating platform having a major share.
The offshore wind resource with the highest potential is in deep waters, where the installation of a fixed structure is not feasible. The floating offshore foundations offer the potential for use of less foundation material, and, on the other side, greatly simplify the installation and decommissioning. The floating foundation can also be attractive for mid-depth projects for the countries where the onshore installation has reached saturation.
Europe to Dominate the Market
Europe dominated the overall market share for the net offshore wind power installation in 2019. The region reported around 22 GW of offshore wind energy in 2019 in comparison to 11 GW in 2015.
The United Kingdom is going to start construction on Dogger Bank Wind Farm in three phases in 2021. Each phase is going to have an installed generation capacity of up to 1.2GW. Such large-scale projects are expected to maintain the dominance of Europe.
The countries are trying to reduce their dependence on fossil fuels for energy generation by increasing the share of renewable in the energy generation mix. Furthermore, the current fleet of wind power plants in Europe is aging, and decommissioning is anticipated to increase significantly from 2020, which, in turn, is anticipated to drive investments for bridging the gap created by decommissioned projects.
Therefore, the aforementioned factors are expected to provide an opportunity for the growth of the wind energy market, and the limited availability of land, in turn, paves a path for the growth of the offshore wind energy market.
Competitive Landscape
The offshore wind energy market is fragmented in nature. The major companies include Siemens Gamesa Renewable Energy SA, MHI Vestas Offshore Wind, and Xinjiang Goldwind Science & Technology Co. Ltd (Goldwind), Ørsted A/S, E.ON SE, and others.
