Make has released its sector report Global Offshore Wind Power Market 2017. Installations have picked up in 2017 and positive momentum in the global offshore wind market continues to build, following a slow-down in new grid-connected capacity in 2016 that was driven by the UK’s transition from the Renewable Obligation (RO) to the CfD support scheme.
Developments in China are starting to speed up and 12 projects are currently under construction. China will gradually increase its role in the global offshore market and is expected to account for approximately 30% of global grid-connected capacity in 2020, up from 22% in 2017. Annual growth in emerging markets in Taiwan, South Korea, Japan and the US will start to exceed 100MW in the 2020-2021 timeframe.
The very low subsidy prices witnessed in 2016 and 2017 in tenders across key European offshore wind markets have greatly brightened the prospects of rising long-term offshore wind deployment levels. Zero-subsidy bids in Germany and the recently opened subsidy-free auction round in the Netherlands, which will lead to projects coming online already in 2022, emphasize the immense advancements of the offshore industry in recent years.
Pressure mounts on the offshore wind supply chain as strike prices drop, project sizes increase and project site conditions become more challenging. These developments reverberate throughout the entire supply chain motivating innovation. Consolidation across suppliers in Europe will also intensify as firms expand into new segments and seek to get established in emerging markets. Under cost-out pressure, labour intensive manufacturing will migrate from Northern Europe.
Large European developers dominate 2016 and 2017 tenders and have accumulated a 19GW development pipeline outside of Europe. The advent of merchant projects will alter the hitherto growing pool of institutional investors in Europe and in turn existing asset rotation strategies. In China, state-backed developers are rapidly accumulating offshore assets under their ownership.