Sector spending for offshore wind is set to average almost €15 billion per year over the next 10 years, with a peak of €18 billion in 2016, according to a new report from energy advisors Douglas-Westwood.
With forecast offshore wind installations averaging 3.2 GW per year for the next decade, cumulative offshore wind capacity is expected to reach over 37 GW by 2022. The market as a whole is anticipated to grow steadily, with the UK, Germany and China set to account for 64% of all offshore wind installations, and emerging markets such as France and Sweden are expected to overtake established markets such as Belgium and Denmark.
However, with this growth comes rising capital costs, which have more than doubled in the last 10 years. Contributing factors include an immature supply chain, lack of standardisation, rising cost of capital, commodities price escalation, and increasing technical difficulty associated with more recent projects.
Despite these challenges, the drivers for low carbon energy are strong, and the potential of a new industry and the accompanying jobs is attractive to politicians.
Furthermore, project scale in terms of capacity and size of wind turbines has been continually growing, and industry studies forecast that increasing the size of projects can be a substantial driver for cost reduction.