Offshore Wind Could be Worth $1 Trillion by 2040
Offshore wind power capacity could increase 15-fold by 2040 and attract around $1 trillion of cumulative investment, according to an International Energy Agency report.
Offshore Wind Outlook 2019 combines the latest technology and market developments with a specially commissioned new geospatial analysis that maps out wind speed and quality along hundreds of thousands of kilometers of coastline around the world. The report is an excerpt from the flagship World Energy Outlook 2019, which will be published in full on November 13.
The IEA finds that the global offshore wind capacity increase is being driven by falling costs, supportive government policies and technological progress, such as larger turbines and floating foundations.
Today, offshore wind capacity in the European Union stands at almost 20GW. Under current policy settings, that is set to rise to nearly 130GW by 2040. However, if the European Union reaches its carbon-neutrality aims, offshore wind capacity would jump to around 180GW by 2040 and become the region’s largest single source of electricity.
An even more ambitious vision – in which policies drive a big increase in demand for clean hydrogen produced by offshore wind – could push European offshore wind capacity dramatically higher.
China is also set to play a major role in offshore wind’s long-term growth, driven by efforts to reduce air pollution. The technology is particularly attractive in China because offshore wind farms can be built near the major population centers spread around the east and south of the country. By around 2025, China is likely to have the largest offshore wind fleet of any country, overtaking the U.K. China’s offshore wind capacity is set to rise from 4GW today to 110GW by 2040. Policies designed to meet global sustainable energy goals could push that even higher to above 170GW.
The U.S. has good offshore wind resources in the northeast of the country and near demand centers along the densely populated east coast, offering a way to help diversify the country’s power mix. Floating foundations would expand the possibilities for harnessing wind resources off the west coast.
“In the past decade, two major areas of technological innovation have been game-changers in the energy system by substantially driving down costs: the shale revolution and the rise of solar PV,” said Dr. Fatih Birol, the IEA’s Executive Director. “And offshore wind has the potential to join their ranks in terms of steep cost reduction.”
The huge promise of offshore wind is underscored by the development of floating turbines that could be deployed further out at sea. In theory, they could enable offshore wind to meet the entire electricity demand of several key electricity markets several times over, including Europe, the U.S. and Japan.
“Offshore wind currently provides just 0.3 percent of global power generation, but its potential is vast,” Birol said. “More and more of that potential is coming within reach, but much work remains to be done by governments and industry for it to become a mainstay of clean energy transitions.”
Huge business opportunities exist for oil and gas sector companies to draw on their offshore expertise. An estimated 40 percent of the lifetime costs of an offshore wind project, including construction and maintenance, have significant synergies with the offshore oil and gas sector. That translates into a market opportunity of $400 billion or more in Europe and China over the next two decades.
The report is available here.