Wood Mackenzie expects offshore wind to represent a trillion-dollar business opportunity for the offshore sector by 2030. As installation costs fall and political commitment increases in the countries of the around the world, the sector is taking off and attracting the attention of the oil industry. the majors as well as new entrants to the market.
“By 2030, as much money will be invested in offshore wind as in onshore wind,” WoodMac wrote in a notice. “We expect nearly $1 trillion to flow into the offshore wind industry over the next decade.”
By the end of the decade, the consultancy expects 24 countries to have large-scale offshore wind farms. Total capacity will increase tenfold from 34 GW in 2020 to 330 GW in 2030. And as Europe strives to break free from dependence on Russian gas, there is also “additional growth potential” for further development.
This growing opportunity is attracting more bidders and the project development landscape is becoming more competitive. WoodMac noted that the giant ScotWind auction round held earlier this year attracted more than 60 bidders – 60 times more than the world’s first commercial lease tender in 2010. As auctions become more competitive, Lease payments for development rights have soared into the billions – the kind of territory reserved for large, well-capitalized corporations.
However, competitive offers require more than money. Governments are seeking more local content to gain approval, including commitments to workforce development and local manufacturing. Additionally, regulators are sensitive to the environmental and social impact of wind farm installations, both during construction and throughout the operating lifetime.
“Addressing environmental impact and coexistence with fisheries and aquaculture will be key to quelling stakeholder opposition to projects,” WoodMac noted.
There is also growing interest in life cycle sustainability, including recyclability. The vast majority of every wind turbine structure is recyclable at the end of its life, but until recently composite wind turbine blades were not. This is changing with recent technology, and recyclability is going to be part of the bid evaluation in some future offshore wind tenders in Europe.
All of these factors require trade-offs, and as government regulators set policy on what matters most when conducting lease auctions, the winning combination for a project depends on national priorities. “Essentially, decision makers also need to consider the impact the introduction of new metrics may have on the number of competitors that come up for auction or tender and the overall cost impact on customers” , warned WoodMac.