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The Top 10 Offshore Wind Energy Trends to Watch in 2023
The drivers for global offshore wind growth look good for 2023. Global offshore wind is forecast to grow from over 60 GW at the end of 2022 to 240 GW by 2030 and over 410 GW by 2035. But the sunny outlook must be balanced with some building dark clouds. As we prepare for the new year, let us look at ten factors that will shape the offshore wind sector in 2023.
1. Solid foundations: Optimism for the supply
chain is founded on declared and inferred offshore wind
deployment targets by a growing number of countries of over 400
GW, driven by energy transition and energy security policies.
2. New kids on the block: Offshore wind activity
is expected to remain strong in all established markets - China,
the UK, the European Union, and Taiwan. Commercial-scale wind
farms will advance in the US, new European Union markets (Greece,
Ireland, Italy, Poland and the Baltics, Portugal, Spain, etc.),
Japan, and South Korea. Governments in Australia, India, the
Philippines, Canada, Brazil and Columbia will all take steps to
advance offshore wind project permitting.
3. P2X is a game changer: Power-to-X in offshore
wind terms means converting electrons to moveable and storable
molecules. Initially producing green hydrogen, the electrons will
be converted to a range of hydrogen-based energy carriers such as
methanol and hydrogen for use in the industrial, residential, and
transportation segments. Offshore wind-to-hydrogen production is
moving from demonstration to commercial-scale projects within
this decade. P2X is the driver for zero-subsidy wind farms,
initially in northwest Europe and expanding further in the
future.
4. Shifting foundations: The overall foundations
for growth are positive, but what type of foundations will be
deployed? Bottom fixed (mainly monopiles but also jackets and
gravity bases) will dominate on projects installed within this
decade, but 2023 will see an increased focus on the development
of commercial-scale floating wind farms, which will come on
stream at the very earliest at the end of this decade but mainly
after 2030.
Floating wind drives different manufacturing supply chain
opportunities and challenges to bottom-fixed projects. We are
focusing on a potential shortage of large AHTSs, offshore
construction vessels with suitable cranes and deck space and
crew. The shortage will become a global phenomenon accentuated by
local content requirements.
5. The impacts of inflation: Inflation and
supply chain disruptions will result in delays and possibly
cancellations. Several developers have issued project warnings
and are seeking to balance rising costs with power offtake
commitments.
6. Supply chain restructuring: The three
traditional international turbine OEMs (Siemens, Vestas, and GE)
are struggling to make money as they continue to develop
ever-larger turbines. These larger turbines drive bigger
foundations, power cables, and installation vessels, all
requiring supply chain investments…and for the supply chain to
make suitable returns on investments.
7. The expansion of the Chinese OEMs: As the
Chinese market settles down after an exceptional 2021, Chinese
turbine OEMs and other suppliers are looking to export to
overseas markets. With large new turbines being offered, one can
expect the big three international players to face stiff price
competition in their core markets.
8. Vessel (and other supply chain) shortages:
With the evolving technical, client, and local content
drivers, how many companies will invest in new vessels without
long-term commitments? Outside of some established players, the
answer is "relatively few." The key driver for construction or
support vessel investment is project commitments coupled with
developer financial investment decisions. Delays in vessel
investment in several key markets will pose a problem from the
middle of the decade in delivering forecast capacity.
9. Vessels are evolving, but many questions remain
unanswered: Vessel operators understand that they need
to decarbonize, but what is the solution to future-proof a
vessel? Will it be biofuels, hydrogen-based fuels such as
methanol, ammonia, or other hydrogen carriers? How to convert the
energy carriers - multi-fuel internal combustion engines or fuel
cells? What about battery-based hybrid vessels or even fully
electric for SOVs and CTVs? How to secure "green" fuel or
electricity supply? So many questions with no firm consensus. The
answer will be an individual choice based on availability of
energy carriers.
How to secure "green" fuel or electricity supply? So many
questions with no firm consensus. The answer will be an
individual choice based on availability of energy carriers.
10. More local content: Governments want a
return on their investment in offshore wind in terms of local
employment. We anticipate increasing local content barriers in
the U.S., Taiwanese, Japanese, and South Korean markets. In some
markets, like the United States, local content is established at
a local and state level in addition to federal policies. Local
restrictions will create barriers for developers and may result
in project delays and cancellations. The established European
market's open trade framework will support ongoing cross-border
activity and supply chain confidence.
2023 should be a good year for offshore wind…but players in the segment need to be aware of ongoing challenges.
Philip Lewis is Director Research at Intelatus Global Partners. He has extensive market analysis and strategic planning experience in the global energy, maritime and offshore oil and gas sectors. For more information about Intelatus Global Partners, please visit www.intelatus.com or contact Philip Lewis at +44 203-966-2492
Jan 6, 2023