Cost Remained Offshore Wind's Key Challenge in 2024

 

2024 could be characterized as another year of recovery for the offshore wind sector, which is still working through inflationary pressures from the Covid pandemic period. Amidst headwinds in the U.S. and EU, the Asia-Pacific (APAC) region is now the world’s largest wind market, with more than 51 percent of global total wind power installations by the end of 2023. The region is expected to make up 61 percent of the new installations worldwide from 2024-2030.

Despite encouraging news in the sector this year, major challenges are still slowing the deployment rate. To hit industry targets of about 500 GW by 2030, cost reduction in the offshore wind sector must be the top agenda.

“It is my 22nd year in the industry and I have never been so concerned about our future. Offshore wind costs are stuck in their post-Covid highs, roughly 30 percent up from pre-pandemic levels, a case in point being Hornsea contracts for difference (CfD) prices. The cost of our only long-term competition, solar PV and battery energy storage system (BESS), have more than halved in this period,” commented Chris Lloyd, a UK-based offshore wind expert.

Fortunately, some of the factors driving up the cost for offshore wind development could be easily resolved, especially by streamlining policy, experts say. Take the case of seabed access, which remains prohibitive for many developers. Numerous reports have indicated that the costs embedded in seabed lease agreements have been trending upward in the past decade - and could be reduced.

Chris Lloyd also argues that governments should stop asking the offshore wind sector to take steps that others do not. For example, the cost associated with some risk mitigation measures such as offshore bird boxes appear as a constraint to some developers. Lloyd argues that these offshore wind regulations appear to force the sector to solve wider environmental, economic and social issues, which is not the case with other technologies.