A recent report by S & P credit analysts, “Offshore Wind Projects Take Off as Technology Improves and Costs Fall”, discusses the future of offshore wind power in the US and in other regions of the world. The report ties in with research in Proceedings of the National Academy of Sciences (PNAS) by Anna Possner and Ken Caldeira on “Geophysical potential for wind energy over the open oceans”, indicating the greater potential for higher wind speeds over open ocean areas can help to exceed onshore wind power generation by a factor of three or more.
In the United Kingdom, a leader in offshore wind power generation, costs of energy from offshore wind have decreased by a third in the past five years. These decreased costs have been mainly due to technology, such as bigger, more effective turbines, increased collaboration with supply chains, and costs in electric grid transmission. The UK connected 1.6GW of offshore wind power generation last year, making the country to lead with 70% of the offshore wind power capacity worldwide.
The first offshore wind farm in the US was the Block Island Wind Farm that went online the end of 2016, and produces less than a tenth of an average sized European wind farm. As Europe has demonstrated, as the industry develops, power costs will decline. Wind speeds, water depths, and distance to shore will affect the economic benefits of offshore wind turbines. Having supporting infrastructure close to wind projects is also important in keeping costs down. According to the 2016 Offshore Wind Technologies Market Report, the U.S. offshore wind project development pipeline includes over 20 projects totaling 24,135 MW of potential installed capacity. Many of the projects are offshore wind farms off the northeastern and mid-Atlantic seaboards. This region’s shallow continental shelves and favorable regulatory initiatives combined with the dense population with a high energy need and higher electricity prices are all strong assets in offshore wind farm development.
While China is the global leader in onshore wind farms, the government intends to increase offshore capacity to more than 5 GW by 2020 with another 10GW in construction. In the period of 2016-2020, China is investing $92 billion and $9 billion into onshore and offshore wind projects respectively, which will increase their wind capacity fourfold.
In Latin America, renewable energy is growing. While Brazil and Chile have the first and second longest coastlines in this region, offshore wind at this time is a viable long-term project.
As costs for offshore wind development continues to decrease due to technology, and as companies understand the risks and adjust accordingly, this industry will continue to grow.
For additional information on offshore wind:
2016 Offshore Wind Technologies Market Report by National Renewable Energy Lab
S & P Global Ratings “Offshore Wind Projects Take off as Technology Improves and Costs Fall”
Geophysical potential for wind energy over the open oceans
Bureau of Ocean Management