and is expected to reach an installed capacity of 8000 MW in 2027 from 123 MW in 2021. COVID-19 has adversely affected the growth of floating offshore wind power projects due to disruptions in European and global trade, which restricted the project construction and further resulted in increased CAPEX for the projects.
New York, Sept. 27, 2022 (GLOBE NEWSWIRE) -- Reportlinker.com announces the release of the report "Floating Offshore Wind Power Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)" - https://www.reportlinker.com/p06321497/?utm_source=GNW
The major factors driving the market studied are the increasing cost-competitiveness, with an average Levelized Cost of Energy 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 technological advances and cost reductions already achieved within the bottom-fixed wind turbines have been hindering the growth of the market.
- The cost of wind energy has significantly declined during the past decade. The leading cause behind the declining price is the use of taller and larger-sized wind turbines. Earlier, the wind industry mainly depended on components made of steel and aluminum. These heavy materials can be damaged if used for large-sized wind turbines. Thus, it may lead to rapid future growth in the offshore wind power market.
- Moreover, the integration of artificial intelligence, internet of things, robotics, and data analytics in offshore wind power will enable advanced condition monitoring and predictive maintenance, which result in increased efficiency and reduced operational and maintenance costs, which is likely to provide an opportunity to a growth in the deployment of floating offshore wind farms in coming future.
- Europe is expected to be the largest floating offshore wind power market and is likely to grow further during the forecast period.
Key Market Trends
Declining Cost of Wind Energy
- In recent years, the wind industry has developed more reliable and lightweight materials, such as fiberglass composites and other polymers. Besides that, earlier wind industry mainly used steel to build large towers, but now wind towers are made of steel and concrete, allowing manufacturers to build large towers.
- Further, the improvements in the technology, including longer blades, the bearing materials for wind turbine gearbox, and access to better wind resources as wind farms are moving further from shore, are likely to support the growth of the floating offshore wind energy market. Additionally, the designs and manufacturing processes have significantly improved in the last few years. Due to these developments, manufacturers can build large-sized wind turbines at a relatively lower cost.
- According to the International Renewable Energy Agency (IRENA), the global weighted average Levelized cost of electricity (LCOE) of newly commissioned offshore wind declined by 60% between 2010 and 2021, from USD 0.188/kilowatt hour (kWh) to USD 0.075/kWh. In 2021 alone, there was a 13% reduction, year-on-year.
- Between 2010 and 2021, global weighted average total installed costs fell 41%, from USD 4,876/kW) to USD 2,858/kW. At its peak in 2011, the global weighted average installed cost was USD 5,584/kW, which is twice its value in 2021. In Europe, the weighted average LCOE of newly commissioned offshore projects fell 29% between 2020 and 2021, from USD 0.092/kWh to USD 0.065/kWh. Driven by project economies of scale, there was a 25% reduction in total installed costs year-on-year and an increase in new projects’ weighted average capacity factor from 42% to 48% in 2021.
- The total installed cost and LCOE reductions have been driven by both technology improvements and the industry’s growing maturity. Additionally, the growing developer experience, greater product standardization, manufacturing industrialization, service hubs, and economies of scale have contributed to cost declines
- Therefore, the declining cost of wind energy in the offshore industry is expected to drive the adoption of floating offshore wind power technology during the forecast period.
Europe to Dominate the Market Growth
- Europe holds the highest share of offshore wind energy installations across the world. According to European Union, Europe represents a quarter of global installations of the total offshore wind market, Europe (primarily North Sea countries) is likely to be at the helm of the offshore wind market.
- Globally, around 85% of the total offshore wind installations are in European waters. The governments of the European region, particularly in the North Sea area, have set an ambitious target for the installation of offshore wind farms in their respective territorial waters.
- In 2022, Europe has an installed capacity of 112 MW of floating offshore wind power capacity, with the United Kingdom, France, Norway, Ireland, and Spain being the major markets in the region.
- In August 2022, Cerulean Winds and Ping Petroleum UK signed an agreement on offshore oil and gas facilities powered mainly by offshore wind. Under the agreement, Cerulean Winds with its consortium of Tier 1 industrial partners will provide a large floating offshore wind turbine which will be connected, via a cable, to Ping Petroleum’s Floating Production & Storage vessel. The project is expected to come online in 2025. The project was enabled by a grant to Cerulean Winds through the Floating Offshore Wind Demonstration Program.
- In February 2022, Norway announced plans for its first auction for offshore wind. The tender, scheduled in the second half of this year, at first would look for bids to develop at least 1.5 GW of offshore wind capacity to supply the country, with subsequent tenders designed to provide an economic boost by providing more electricity for export to Europe.
- Furthermore, eight new offshore wind projects reached Final Decision Investment (FID) in 2020, with construction due to start in the coming years. The projects have an investment cost of USD 29.67 billion.
- These recent trends, in turn, are expected to present Europe as an excellent business destination for players involved in the floating offshore wind farm business during the forecast period.
The floating offshore wind power market is moderately fragmented due to many companies operating in the industry. The key players in this market include General Electric Company, Doosan Enerbility, Siemens Gamesa Renewable Energy, BW Ideol SA. and Vestas Wind Systems A/S among others.
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