Floating Offshore Cost Drop to Spur Demand

Floating Offshore Cost Drop to Spur Demand

Sharply decreasing costs for floating offshore wind projects could lead to a new wave of development, spurring breakbulk activity across the sector, according to a new report from industry association WindEurope.

The trade body forecasts that costs for floating wind farms could fall to €40 per megawatt-hour by 2030, vastly undercutting alternatives and creating a strong business case for investment.

“With the right visibility in terms of volumes and industrialisation, floating costs could tumble even faster than for bottom-fixed offshore wind, down from today’s €180-200 per megawatt-hour to reach €40-60/MWh by 2030,” a spokesperson for WindEurope, said.

Formerly the European Wind Energy Association, WindEurope represents over 600 members active in over 50 countries.

“As demonstrated this last decade with bottom-fixed offshore wind, speeding up the commercialisation process means driving down costs and contributing to European competitiveness,” WindEurope states.

Changing economics to reshape trade flows

At present the main markets for floating offshore turbines are in the UK, Germany, the Netherlands, France, Belgium, and China. Consultancy Navigant forecasts at least 24 gigawatts will be added at a compound annual growth rate of 33.1 percent to reach a cumulative capacity of more than 32 gigawatts by 2020.

At the start of this year, Norwegian energy major Equinor announced that its Hywind wind farm in the North Sea, the first commercial floating offshore development, had achieved 65 percent capacity factor, surpassing levels seen by thermal power generators, and highlighting the profitability of such developments.

Asia – Europe trade to increase

Longer term Asia is expected to be a major driver of breakbulk activity as low manufacturing costs in China create a new demand for shippers transporting turbines from Asia to Europe.

“it is only a matter of time before Asia will have the required skills and quality of fabrication… Then it will be a matter of cost,” Henrik T. Pedersen, Chief Operating Officer of BBC Chartering, said.

In the face of increased competition globally for expertise and components, WindEurope called for greater focus from European supply chain actors.

“Member states should set their ambitions for capacity, project pipelines and supporting policies for floating wind in NECPs to 2030... Member states should co-ordinate their schedules of deployment and supporting policies for floating offshore wind in order to maximise regional co-operation in the development of a European supply chain,” Wind Europe states.

Photo: Floating offshore turbine. Credit: Wikimedia