GLOBAL OFFSHORE WIND REPORT 2020

GWEC.NET 1 2 GWEC I Global Offshore Wind Report 2020 Table of Contents

Foreword 5 Market Status 2019 9 Market Outlook 2030 13 Taking Offshore Global 31 Offshore Wind Technologies 80 Conclusion 95 Appendix 98 Abbreviation 99

Global Wind Energy Council Lead Authors Published Sponsored by Rue Belliard 51-53 Joyce Lee, Feng Zhao 5 August 2020 1000 Brussels, Belgium T. +32 490 56 81 39 Contributing Authors Design [email protected] Alastair Dutton, Ben Backwell, Aspire Design, New Delhi www.gwec.net Liming Qiao, Shuxin Lim, Anjali Lathigaralead, Wanliang Liang

GWEC.NET 3 4 GWEC I Global Offshore Wind Report 2020 Foreword

Rapid Growth world. Given that more than 70% September 2018, has brought of the planet is covered by sea, together the major industry It’s been quite a journey since I first and wind speeds are considerably players in offshore wind. Key got involved in the offshore wind stronger offshore than onshore, the interventions have been in industry 20 years ago. fundamentals are promising. Taiwan, Vietnam and Japan to assist market development. Offshore wind energy took its first Going Global steps in the 1990s and has been • The World Bank’s ESMAP growing in scale ever since. In Offshore wind is going global, Offshore Wind Development recent years, however, growth has country by country. This piecemeal Program, launched in March Alastair Dutton accelerated. From being 1% of global development is unhelpful for a supply 2019, is focused on expanding Chair of Global Offshore wind installations by capacity in 2009, chain which is seeking to make sound offshore wind to developing Wind Task Force, GWEC countries. The program is offshore wind has grown to over 10% investments and continue to reduce [email protected] in 2019. Measured in investment costs. However, there are a number engaging numerous countries terms that figure is much greater. of initiatives which aim to accelerate which will form part of the offshore wind’s deployment: wider global market in years to Offshore wind is now a mature GWEC’s Global Offshore Wind come. industry, but is only just beginning • Task Force, established in • The Ocean it’s expansion in earnest around the Action Coalition (OREAC), launched in Dec 2019, targets Themes 1.4 TW of offshore wind by 2050. This industry body is in As we push through 30GW global capacity for offshore wind we see a number of answer to the UN High Level themes. Panel for Sustainable Ocean • In Europe, the market that started it all, the installation rate is accelerating. Economy call for action in Sept • Asia is picking up the pace with China installing more capacity in 2019 than any 2019. other country. This leadership is expected to continue through this decade. These initiatives are in co-operation The message that the price of power from offshore wind has fallen to out-compete • and complement each other for fossil fuels and nuclear, has been understood in many parts of the world. greater effect.

GWEC.NET 5 Future Markets • Floating technology will come • One of those lessons is the UK • Existing markets are hungry of age this decade, tripling the Sector Deal which outlines targets for more, notably UK, Germany, technical potential for offshore and plans for government and , Netherlands, wind across the world. Initially industry to work together to Belgium and China. As an the key markets are France, dramatically progress the sector example, the UK is targeting 40 Japan, South Korea, Scotland, for the benefit of all. This best GW by 2030, up from 10 GW Norway, Portugal, Spain and US practice is now being adopted in today. Pacific Coast. Once commercial other markets such as Japan and scale projects are established Poland. Emerging markets include • and costs come down many Taiwan, US Atlantic Coast, other locations will come into COVID-19 Japan, South Korea and play, for example South Africa, Vietnam. Not only do these To date offshore wind has been less Canada, Philippines and many markets want low cost impacted than most energy sectors island states. electricity to decarbonize by the pandemic, and stands ready to their footprint but they are Lessons Learned be a material part of a green recovery package. keen to establish their own • Much has been learned from supply chains to benefit their the last 30 years of offshore Conclusion economies. However, inflexible wind deployment in Europe. local content requirements Those lessons are being taken The potential of offshore wind to could frustrate those economic worldwide by developers and achieve the energy transition within hopes by raising the cost consultants. Governments the right time frame and contribute to of electricity and creating are adapting those lessons in post-COVID recovery is increasingly inefficient local suppliers not the context of their particular being understood around the world. able to compete on a regional political and fiscal backdrops. At GWEC, we look forward to working or global market. with you all to realise this potential • New markets are in the preparation phase. Examples include Brazil, Mexico, India, Sri Lanka, Australia and many From being 1% of global wind installations by more. In Europe the existing market will expand into Ireland, capacity in 2009, offshore wind has grown to over Poland, Lithuania and others. 10% in 2019

6 GWEC I Global Offshore Wind Report 2020 Offshore Wind – The technology that is changing the world

We tend to seek in every crisis an transformative impact that offshore one of the key pillars to ensuring opportunity, inspired by the dual wind would have on the world’s that they successfully reach their meaning of the word in Chinese. The energy mix. decarbonisation strategies, necessary COVID-19 crisis is not over yet, but to keep global warming under 1.5°C. 30 years ago, there was not a single it is already bringing to centre stage Philippe Kavafyan the offshore wind industry as one MW installed offshore, but with From the pivotal role offshore wind key element of the response to the current market predictions, there will play in delivering the European CEO, MHI Vestas global challenge we are all facing. By could be up to 1,400 GW installed Green Deal and in the UK economic revealing the previously unheralded worldwide over the next 30 years. recovery plan, to rapid growth in the achievements of offshore wind Asia Pacific region, now home to the Offshore wind technology has largest market in China, to continued technology and operations, the focus advanced dramatically over the on economic recovery is creating one progress in US federal and state past few decades. A single offshore waters, offshore wind is beginning to of these moments in history when now has more capacity things suddenly accelerate. It is a time witness exponential growth across the than the output of the world’s first world. of positive disruption, because the two offshore wind parks combined. need is clear and the solution readily New technologies such as floating GWEC and its partners are also available and scalable. foundations enable installation in working tirelessly to ensure that the A pioneering industry deeper waters, paving the way next round of emerging markets such for another range of geographical as those in Latin America and India, The offshore wind pioneers of the opportunities for offshore wind. capitalise on the lessons learned from early 90’s might have known that they the three decades of experience. were creating something special Exponential growth ahead This will increase our chances as by unlocking the power of wind at 2020 was always destined to be an industry of reaching the global sea, but not even the most optimistic a big year for our industry. Many potential of offshore wind by 2050. at the time could foresee the truly nations now see offshore wind as

GWEC.NET 7 Lessons learned and draw upon the cheapest, highest conditions for construction and role to play guiding the world through quality suppliers of components from service. these exceptional circumstances, What learnings can be shared as an the region. setting a practical course to reach increasing number of countries look Having risen to the initial challenge, global decarbonisation targets. to deliver many more projects further There is also an ever-increasing gap the industry now has the opportunity out to sea whilst reaping the industrial between the “raw” MWs that many to direct funds set aside for green This GWEC report provides a benefits of offshore wind? nations are targeting ahead of 2030- recovery stimulus packages to snapshot of the industry today, and 2050 renewable energy plans and the accelerate the investments in the the potential we have to realise The gradual, organic build up in the “qualified” MWs that can actually be necessary infrastructure that will help together in partnership to ensure the European supply chain has seen the installed by 2030-2050. As the size unleash the potential of the oceans future of our planet. rejuvenation of coastal communities, and complexity of projects increase, and the economic potential of many the growth of second and third tier greater emphasis must be placed countries. suppliers across the continent, and on reducing inefficiencies during skill development pathways to help the permitting process to ensure Investment in grids, ports, Power-to- transition workforces from sunsetting projects can be delivered on time Green Hydrogen projects all have to sunrising industries. and reach these targets. The industry the potential to rapidly increase has clear vision on the stakeholders deployment of offshore winds. If the With such valuable social and and challenges that typically cause delays in the permitting process can economic value and the continual delays, and these challenges must also be minimised through renewed reduction in cost of energy, it is easy be addressed and resolved by political willpower, then offshore wind to see why offshore wind is becoming collaboration with the industry and is ready to deliver on its potential. so appealing. The success seen in policymakers before MW targets can Europe has created expectations Rising to the challenge be considered qualified and offshore around the globe that offshore wind wind can grow as a sector. John F Kennedy once said, “these will generate economic value as well are extraordinary times. And we face as deliver a low cost of energy to The COVID-19 effect an extraordinary challenge. Our power sustainable, green economies, strength as well as our convictions regionally. Without a doubt, COVID-19 has changed the world forever. When have imposed upon this nation the The industry has demonstrated that the pandemic first hit, the industry’s role of leader”, and while he may the supply chain will come with focus was on ensuring continuity of have originally been speaking volume organically. As turbines business in both the supply chain about freedom, it is an apt quote for become even larger and more and in operating offshore wind parks. the offshore industry to adopt. The powerful, offshore logistics dictate The industry demonstrated strong green energy transition needs our that supply chains have to be regional resilience, notably in the challenging leadership, we have a very important

8 GWEC I Global Offshore Wind Report 2020 MARKET STATUS 2019

GWEC.NET 9 Annual installations • In The Netherlands, Vattenfall won the second Dutch zero-subsidy With 6.1 GW new capacity added, offshore wind tender, totalling 2019 was the best year in history for 760 MW, in July 2019 (repeating the global offshore wind industry. the zero-priced bids of the first • China achieved a new record in round in 2018 and meaning that 2019, installing 2.4 GW offshore the project will only receive the wind in a single year. The United wholesale price of electricity and Kingdom came in second place, no further support/payment). although it also had record Those results prove how offshore installations of 1.8 GW in 2019. costs have come down through With 1.1 GW of new installations, technology innovation and Germany took the third place, economies of scale. followed by Denmark and Belgium. • The US offshore sector made great • The results from the UK CfD progress last year. The country’s Allocation Round 3 announced in total offshore wind procurement September 2019 showed record targets increased from 9.1 GW low strike prices ranging from in 2018 to 25.4 GW in 2019 £39 to £41/MWh (in 2012 prices), after New York and New Jersey which is about 30% lower than the upgraded their offshore targets, auction held in 2017. In total, more and more states released their than 5.4 GW offshore wind projects offshore wind targets. Six states were awarded. had selected more than 6 GW of offshore wind through state-issued solicitations as of December

With 6.1 GW of new capacity added, 2019 was the best year in history for the global offshore wind industry.

10 GWEC I Global Offshore Wind Report 2020 2019 and more solicitations are Cumulative installations • However, the activity level in Asia expected to be issued in New keeps increasing with China York and New Jersey in 2020. The The global offshore market grew taking the lead followed by Taiwan, industry is now moving a phase of on average by 24% each year since Vietnam, Japan, and South Korea. 2013, bringing the total installations to project construction planning and North America has only 30 MW 29.1 GW, which accounted for 5% of • execution as more than 15 offshore offshore wind in operation in the total global wind capacity as the end projects are expected to be built US as of 2019 but deployment will of 2019. by 2026. accelerate in the coming years. Europe remains the largest • Development in the Asian offshore • The top five offshore wind market offshore market as the end of 2019, • markets was also positive in in total installations are: The UK, making up 75% of total global 2019 – Taiwan connected its first Germany, China, Denmark and offshore wind installation. utility-scale offshore project to Belgium. the grid. On top of the 5.6 GW

offshore wind to be installed by - 0.1 Rest of world China Europe 2025, a further 10 GW is planned GW, affshare 6.1 to be built offshore from the island 0.1 between 2026 and 2035. Positive CAGR* -0.03 2.4 4.5 4.3 steps were also made in Japan last +24% year to accelerate offshore wind 3.4 1.2 0.4 1.6 development with its first offshore 0.1 wind auction launched in summer 0.1 0.2 2.2 0.1 1.7 1.7 3.2 3.6 2020. 0.1 0.2 1.3 3.0 0.6 1.0 1.0 2.7 0.6 1.6 Globally, offshore wind installations 0.5 1.2 1.5 1.6 • 0.1 0.2 0.6 0.9 0.8 have grown from 3.4 GW in 2015 to 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 6.1 GW 2019, bringing its market share in global new installations Offshore share of new 2-3% 4% 8% 10% from 5% to 10% in just five years. installations 1% * Compound Annual Growth Rate Source: GWEC Market Intelligence, March 2020

GWEC.NET 11 FLOATING WIND • 11.4 MW floating wind installed in 2019, of which 8.4 MW is from Portugal and 3 MW from Japan; • As of the 2019, a total of 65.7 MW floating wind was installed global, of which 32 MW is located in the UK, 19 MW in Japan, 10.4 MW in Portugal, 2.3MW in Norway and 2 MW in France

New offshore wind Total offshore wind Total offshore wind New offshore wind installations by region installations by country installations by country installations by region 0.1% 2% 1% 4% 6% 5% 6% 24.7% 6% 33% 39% 41% 18% 59% 24% …

75.2% 29% 26%

China The UK Germany Denmark The UK Germany China Denmark Europe APAC Europe APAC North America Belgium Taiwan Portugal Japan Belgium Netherlands Sweden Taiwan Vietnam South Korea Others

12 GWEC I Global Offshore Wind Report 2020 MARKET OUTLOOK 2030

GWEC.NET 13 Offshore Market Outlook to 2030

The global offshore wind market overall growth of the global wind offshore wind tenders worldwide. For outlook to 2030 has grown more market, and expects offshore wind to the medium-term market outlook, promising over the past year as contribute more than 20 percent of aside from existing project pipelines, governments raise their ambition total wind installations by 2025. a top-down approach has also been levels and new countries join the used, which takes into account market. With an average annual As the world’s largest regional existing policy, support schemes and growth rate of 18.6 percent until 2024 offshore wind market, Europe is national level offshore wind targets. and 8.2 per cent up to the end of the expected to maintain steady growth, decade, new annual installations are but new installations outside Europe, expected to sail past the milestones of predominantly from Asia and North 20 GW in 2025 and 30 GW in 2030. America, are likely to surpass Europe in 2020 for the first time and Global offshore wind growth to 2030

GWEC Market Intelligence expects continue exceeding volume in Europe New installations Other China Europe that over 205 GW of new offshore through 2030. In the near-term GW, offshore North America Asia ex China wind capacity will be added over the (2020-2024), the majority of growth CAGR** 1 1 next decade. Three-quarters of this outside of Europe will primarily come +8.2% 31.9 new volume will be installed in the from China and Taiwan, with the 31.0 2.0 3.0 3.4 latter half (2025-2030), as projects contribution from the US becoming 26.2 25.5 6.0 currently in planning get connected to sizeable from 2024 when the first CAGR* 6.0 3.0 the grid. utility-scale offshore project comes +18.6% 21.5 21.5 3.0 online. 4.2 3.2 5.5 5.5 6.9 7.0 Offshore wind already accounted 1.1 5.0 5.0 4.6 4.7 0.3 13.0 for 10 percent of global new wind Our near-term offshore wind market 0.3 2.0 1.8 3.2 9.7 9.9 1.5 2.9 3.7 power installations in 2019. Buoyed outlook was built using a bottom-up 9.1 14.1 14.5 6.1 6.6 3.5 3.5 11.4 by expansion into new markets and approach and is based on GWEC 5.0 3.0 10.1 11.0 2.4 4.0 8.7 5.5 acceleration of the global Intelligence’s global offshore 4.3 4.6 3.6 2.3 2.7 transition, GWEC Market Intelligence wind project database, which covers 2019 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e foresees offshore wind playing an projects currently under construction, * CAGR = Compound Annual Growth Rate increasingly important role in the global auction results and announced Source: GWEC Market Intelligence, June 2020

14 GWEC I Global Offshore Wind Report 2020 Looking at potential growth in the Global offshore wind growth to 2030 in Europe

decade ahead, GWEC Market New installations Rest of Europe Denmark Netherlands UK Europe Intelligence forecasts that the GW, offshore Belgium France Germany European offshore wind market will CAGR* Europe is the birthplace of the +10.9% 0.5 continue to grow strongly, as new 14.5 offshore wind industry. Since the 14.1 offshore wind projects are both world’s first offshore wind turbine 0.5 0.5 4.0 11.4 3.6 cheaper to build and operate than CAGR* 11.0 was installed in Denmark in 1991, +25.2% 0.0 10.1 new and gas-fired 0.3 2.4 1.8 Europe has been taking the lead 0.5 8.7 2.0 2.0 power plants, making it a core energy 0.7 0.0 2.4 1.0 1.0 in both offshore wind installations 1.7 1.0 1.0 1.0 1.0 0.0 0.0 0.7 0.7 1.0 1.0 1.0 1.0 1.0 source to help Europe to meet its 0.4 0.0 1.0 0.7 0.5 5.5 2.0 2.0 and turbine technology innovation. 0.0 0.8 1.8 2.0 2.0 NDCs and achieve carbon-neutrality 0.0 1.2 0.0 0.0 0.6 4.3 0.0 4.6 0.9 After three decades of research and 3.6 0.8 0.1 0.2 goals by 2050. 2.7 1.1 0.5 0.5 1.5 4.0 3.8 3.8 3.8 4.0 4.0 development in Europe, offshore 2.3 3.0 1.8 1.1 2.3 0.5 1.5 0.9 wind has established itself as a cost- The European Commission estimates 0.0 competitive power generation of that total offshore wind installations 2019 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e choice for governments and a mature * CAGR = Compound Annual Growth Rate between 240 and 450 GW will be Source: GWEC Market Intelligence, June 2020 industry. Through collaboration needed by 2050, making offshore among European markets and wind a crucial pillar in Europe’s EuropeanEuropea executedn execute offshored offsho rtenders/e tender sauctions/ auction 2015-19s 2015-19 experienced stakeholders, a robust power mix. AwardedAwarded capacity capacity (G(GW),W), a vaverageerage win winningning bid (EU bidR /(EUR/ MWh )*MWh)* offshore wind supply chain has been 154 built in countries neighbouring the In GWEC Market Intelligence’s pre- 146 5500 160 COVID market outlook, 2020 and 5500 North Sea and Baltic Sea. In the past 5000 2021 were expected to be relatively 140 decade, the European offshore wind 4500 103 market enjoyed double-digit annual quiet years, with new installations 4000 120 growth (11 percent), making it the below 3 GW in Europe. 3500 81 100 3000 73 world’s largest regional market as of 63 62 80 2500 55 50 the end of 2019. “zero 47 44 46 2000 44 bid” 60 2336 1500 1610 40 1490 860 1000 714 752 600 732 740 448 600 20 New installations are likely to exceed 20 500 400 350 0 0 t

k e e e t t d 4 2 2 D r e r 3 n s ak R - i

e l l F e l er s s C f F 3 + 1 + 1 + - 2nd - 2nd h o s -1 s - 1 s GW in 2026 and then potentially reach 15 R 1 s s - 3rd t R-2 n E e g Re v an-d s i or s E l -Near U K U K r Dun k or s U K U K G U K D 17/1 8 G Ku s D 22/2 3 D 18/1 9 D 21/2 2 DK-Ho r - K D K C f C f C f C f NL - B NL- B GW by 2030 D K NL -Ho l •Tenders above 100MW capacity and no innovation auctions, tenders in order of execution from 2015 to end of 2019 Source: GWEC Market Intelligence, GWEC Auction Database May 2020

GWEC.NET 15 This growth forecast is unchanged projects, is underway with Invitation it establishes a long-term offshore in our post-COVID scenario. After a to Tender (ITT) Stage 1 submission target of 40 GW by 2040. The slow start in the beginning of 2020s, period concluded. In early June, amendment has been welcomed by however, the European offshore Crown Estate Scotland also launched the industry, as it brings in volume, market is likely to bounce back in the ScotWind seabed leasing round scale, jobs and long-term visibility. 2022 when all the UK’s CfD 2 projects for offshore wind projects, followed will come online. New installations in by the UK Committee on Climate France Europe are likely to reach 8.7 GW in Change (CCC)’s recommendation to The Multiannual Energy Programme 2025. the government in June to deliver at (Programmation pluriannuelle de least 40 GW of offshore wind by 2030. Taking into account recently l’énergie (PPE)) that came into force increased or proposed offshore wind Germany in April 2020 shows that France will targets from established markets and tender up to 8.75 GW of offshore wind activities in new European markets, The German wind industry has capacity from 2020 to 2028. The PPE such as those around the Black Sea, been struggling with the federal also increases the intended operating GWEC Market Intelligence expects government’s conservative offshore offshore wind capacity to between 5.2 more offshore wind to be built in wind target. The good news is that GW and 6.2 GW by 2028. The 2023 the second half of the decade. New Germany’s Federal Cabinet has operating capacity target is 2.4 GW. installations are likely to exceed 20 approved the amendment to the From 2024 onward, France will tender GW in 2026 and then potentially Offshore Wind Act (WindSeeG) in 1 GW per year of either fixed-bottom reach 15 GW by 2030. June 2020. Not only does the bill or floating wind capacity, depending increase the 2030 offshore wind on the cost. The United Kingdom target from 15 GW to 20 GW, but Denmark As the world’s largest offshore wind 22 2 market, the UK continues to tell a GW, offshore In June 2020, the Danish parliament successful story through its 2019 approved a new Climate Action Plan which calls for the development of Sector Deal, reached between the Rest of government and industry, through its 20% Europe two “energy islands,” one in the North 34% Belgium new government target of 40 percent Sea and one in the Baltic Sea (with a Denmark of UK power from offshore wind by 3% combined capacity of 5 GW planned France by 2030) and also approves the 2030, and through the 30 percent 9% Netherlands cost reduction achieved from CfD development and construction of one Germany Rounds 2 to 3. CfD Round 4, which more wind farm in the Baltic Sea with 9% UK seeks to award up to 8.5 GW of 14% capacity of up to 1 GW. 11%

16 GWEC I Global Offshore Wind Report 2020 Asia

Japan built Asia’s first offshore wind will continue to decline when offshore project with two units of V47-660kW projects expand to new markets with turbines in 2003. However, the Asian high resource potential, like India and offshore market was not ready to the Philippines, towards the end of the take off in earnest until 2014, when decade. the Chinese central government The average annual growth rate released the National Offshore Wind in Asia will stay at the level of Development Plan (2014-2016). In 1.7 percent in the first half of this 2017, China passed the 1 GW annual decade, but is likely to increase to installation milestone; one year later, 8.4 percent in the second half. The it surpassed the UK as the world’s top top five markets in this region in new market in new installations.

GWEC Market Intelligence’s latest Global offshore wind growth to 2030 in Asia market outlook predicts that China will continue to dominate the Asian New installations, Asia Rest of Asia Vietnam S. Korea China GW, affshore offshore wind market in the first India Taiwan Japan CAGR* 12.9 13.0 hare of hinese half of this decade, with more than offshore aret +8.4% 0.7 0.8 70 percent market share. Taiwan is CAGR* 1.0 1.0 +1.7% 10.1 10.2 0.7 0.7 expected to be the largest offshore 1.0 1.0 8.7 0.1 1.0 1.0 0.1 8.2 0.6 0.7 market in Asia after China in new 0.6 2.0 2.0 7.0 0.6 1.0 1.0 installations in the same period. 0.4 0.1 2.0 1.0 1.0 1.0 1.5 1.5 0.1 0.4 0.5 1.5 0.5 1.0 1.0 0.1 0.1 4.8 0.1 5.0 0.2 1.0 4.3 4.6 0.5 However, the scales will tip from 2025, 0.1 0.4 0.2 0.4 0.8 0.9 0.5 when more utility-scale offshore wind 2.5 0.4 5.5 5.5 6.0 6.0 0.1 5.0 5.0 5.0 projects get connected in Japan, 4.0 3.5 3.5 3.0 South Korea and Vietnam. GWEC 2.4 Market Intelligence forecasts that 2019 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e China’s market share in this region 7 7 77 1 7 is likely to drop to 58% in 2025 and * CAGR = Compound Annual Growth Rate Source: GWEC Market Intelligence, June 2020

GWEC.NET 17 installations in this decade will be GWEC Market Intelligence predicts in total installations by 2021, if not China (52 GW), Taiwan (10.5 GW), that Europe will remain the largest 2020. However, new installations will South Korea (7.9 GW), Japan (7.4 regional offshore wind market in decline dramatically from 2022, when GW) and Vietnam (5.2 GW). terms of total installations by 2025 and the central government will terminate 2030. Nevertheless, Asia’s share of the subsidy for offshore wind. Annual Excluding China, the Asian offshore the global market is expected to grow offshore wind growth in China in wind market is still at the early stage from 24 percent in 2019 to 42 percent the future will depend on whether of development. Each market is in 2025, where it is likely to remain subsidies provided by provincial facing the challenge of developing a until the end of the decade. governments will be available and local supply chain and the necessary whether offshore wind industry can competencies and capabilities to China reach grid parity before 2025. build an offshore wind industry. China was the world’s No. 3 offshore Taiwan market in total installations as of Other Asia China the end of 2019 (after the UK and With 128 MW offshore wind capacity Percentage and GW, offshore Other Europe Germany). At present, project online at present, Taiwan is positioned 29 GW 99 GW 235 GW developers and investors are rushing to become the second-largest 1% to commission their projects before offshore wind market in this region. It 11% 16% 23% the end of the 2021 deadline in order will connect 5.5 GW of new offshore 31% 25% to capitalise on the 0.85RMB/kWh wind by 2025 and another 10 GW FiT for offshore wind. Considering will be tendered by the government 7% 12% extraordinary volume of new capacity through the Round 3 auctions for (4-5 GW/year) will be built in 2020 commissioning by 2035, providing 75% and 2021, GWEC Market Intelligence the long-term visibility needed 51% 48% expects China will surpass the UK as to generate a local offshore wind the world’s largest offshore market industry and supply chain.

2019 2025e 2030e

The early experience from Taiwan China will continue to dominate the Asian offshore has proven that collaboration with wind market in the first half of this decade with European partners across markets in this region is essential for success. more than 70 per cent market share

18 GWEC I Global Offshore Wind Report 2020 South Korea Vietnam

Although the “green growth” strategy More than 500 MW offshore wind announced almost a decade ago projects in the pipeline were has failed to boost its offshore wind expected to come online before the development, the Democratic Party current FiT deadline of November led by President Moon Jae-in seems 2021. Taking into account the recent intent on reviving the green agenda. announcement of a FiT extension To reach the “Renewable Energy to the end of 2023 followed by an 3020” target of 20 percent renewables auction system from 2024, which in the power mix by 2030, South was officially sanctioned by the Korea is targeting 12 GW of new Prime Minister in June, GWEC offshore wind capacity to be built by Market Intelligence predicts a total the end of this decade. of 5.2 GW offshore wind capacity to be built between 2020 and 2030. Japan

The development of Japan’s offshore wind sector has been stymied by a lack of ambitious targets and ProjectsProjects under under construction construction 2020* 2020* MW, offshore (Status as Q1 2020) a cumbersome permitting and MW, offshore (status as Q1 2020) licensing framework, but there has 15,132 been a growth in momentum at 750 both the policymaking and industry level since 2017. In July 2020, the government nominated four offshore wind zones and launched the first offshore wind auction for a floating offshore wind farm offshore from Goto City. GWEC Market Intelligence 130 expects he Japanese offshore wind 60 market to take off from the middle of China Taiwan S.Korea Vietnam this decade. * Construction defined as beginning of foundation work Source: GWEC Market intelligence, May 2020

GWEC.NET 19 North America North America installed its first Based on GWEC Market test offshore wind turbine, a 1/8th Intelligence’s global offshore wind geometric scale of a 6 MW turbine, project pipeline, no utility-scale off the coast of Maine in 2013, and offshore wind project will come connected its first commercial wind online in North America before 2024. project to the grid in Rhode Island In total, 23 GW of offshore wind is in December 2016. As of the end predicted to be built in this region in of 2019, 30 MW of offshore wind this decade, of which less than 1 GW capacity was spinning in North is expected to come from Canada, America, making it the only region despite its high technical resource with commercial offshore wind potential. outside of Europe and Asia.

Global offshore wind growth to 2030 in North America

Canada North America GW offshore

CAGR* +75.9%

4.2

3.2 3.4 2.9 3.0 3.0 0.4 4.2 3.2 3.0 3.0 3.0 2.9 3.0

0.3 0.0 0.01 0.0 0.0

2019 2020e 2021e 2022e 2023e 2024e 2025e 2026e 2027e 2028e 2029e 2030e

* CAGR = Compound Annual Growth Rate Source: GWEC Market Intelligence, June 2020

20 GWEC I Global Offshore Wind Report 2020 United States

The sole demonstration project To realize such potential, however, in the US, a 12 MW pilot project the following key challenges need Offshore wind development targets in the US in Virginia, was completed in to be addressed: June 2020 as the first offshore Slow project permitting Maryland 1.2GW (2030) • Conneticut 2GW (2030) wind project to be approved processes have delayed the Virginia 5.2GW (2034) by the Bureau of Ocean Energy ramp-up of the US offshore Management (BOEM) and installed Massachusetts 3.2GW (2035) wind industry, which has more New Jersey in federal waters. However, the 7.5GW (2035) than 2,000 GW of technical New York 9GW (2035) level of offshore wind development resource potential and must be activity remains impressively high. streamlined. As of the end of 2019, BOEM has Establishing a local supply auctioned 16 active commercial • chain and fostering investment leases for offshore wind and long-term planning in grid development that could support and port infrastructure must be more than 21 GW of generating achieved across states through capacity. a collaborative approach. On the state level, the East Coast cluster consisting of Maine, Connecticut, Massachusetts, New York, New Jersey, Delaware, Maryland, Virginia and North Carolina is driving strong demand for offshore wind energy with the total announced offshore wind procurement targets reaching 28.1 GW as of Q1 2019. GWEC Market Intelligence predicts a total of 22.6 GW of offshore wind could be built in the US by the end of this decade.

GWEC.NET 21 Floating Offshore Market Outlook to 2030

The world’s first MW scale floating After a decade of development, is ready to progress quickly to full offshore wind turbine was grid- floating offshore wind is no longer commercialisation. connected by Equinor in Norway in simply an R&D area. With more oil 2009. As of the end of 2019, a total majors such as Shell and TOTAL At present, the 2030 floating offshore of 66 MW of floating wind capacity starting to focus on floating wind, wind forecast ranges from 3 GW to has been installed worldwide. this sub-section of offshore wind nearly 19 GW, depending on how quickly LCOE can be brought down reland rane oth orea Repbli of MW, floating** to an affordable level and its adoption ora ortal nited indo apan 2000 by new markets. Greee tal pain R hina GWEC Market Intelligence predicts CAGR* 500 6.2 GW of floating wind is likely to +23.2% 1500 be built in the next 10 years. This outlook is primarily based on the 500 500 existing global floating offshore project pipeline as well as announced CAGR* 800 investment plans. Out of the 6.5 GW +37.6% 706 640 500 500 floating wind installations, we expect 150 less than 10 percent to be built in the 50 500 10 15 32 300 64 250 300 first half of this decade; the majority 232 8 17 50 182 5 12 of new volume will come online in the 48 2 96 500 500 3 75 17 250 11 52 88 29 200 200 10 250 300 latter half, when large-scale floating 90 wind projects tendered through Y2019 Y2020e Y2021e Y2022e Y2023e Y2024e Y2025e Y2026e Y2027e Y2028e Y2029e Y2030e auctions are expected to be installed. * CAGR = Compound Annual Growth Rate ** Note: this floating wind outlook is already included in GWEC’s global offshore wind forecast Source: GWEC Market Intelligence, June 2020

22 GWEC I Global Offshore Wind Report 2020 Currently, the UK, Portugal and Japan expects that floating wind will prevail are the top three markets in total when it is commercially viable as floating wind installations. By the end another foundation solution, rather of this decade, South Korea, France than a sub-sector of offshore wind. and Norway are likely to replace Consolidation of floater designs those markets as the top floating and modularisation of production markets. Considering the tremendous will be the keys to bringing down wind resources available at shallow LCOE. GWEC launched its Floating water depths, at present we expect Offshore Wind Task Force in July only demonstration floating wind 2020 to unlock future potential. projects to be built in China.

Floating wind’s current contribution to total wind installations is fairly small, but it will play an increasingly important role toward the end of this decade, accounting for 6 percent of global new wind installations in 2030. GWEC Market Intelligence

Global floating offshore wind resource map

Courtesy of Principle Power. Artist name: Dock90

Source: Q FWE

GWEC.NET 23 Impact of COVID-19 on Global Offshore Wind Market

The COVID-19 pandemic has offshore wind sector, with longer 2020 was on track to be a shocked the global energy sector, project development timelines, record year in global wind forcing projects to suspend work will largely be shielded from the history with more than 76 to comply with social distancing short-term supply chain disruptions GW to be installed. However, regulations, challenging the which impacted project execution in the COVID-19 crisis, which investment conditions of markets onshore markets across the world. disrupted global wind bracing for economic recession and In 2020, the wind capacity lost to the supply chains and project slashing power demand by up to pandemic is estimated by GWEC construction execution, is 10% in some regions in 2020. The Market Intelligence at around 15 GW expected to lead to a more size of that decline is around seven – most of the downgrade will affect modest 61.4 GW this year, times greater than during the 2008- onshore wind, with volume shifting to 19 percent lower than our 2009 global financial crisis, according come online by 2021 instead. pre-COVID forecast made in to the IEA, and has hit demand for oil, Impact of COVID-19 on global Q1 2020. Most of the impact and the hardest. offshore outlook will be felt by the onshore But renewable energy will see an wind sector, and new wind overall increase in its share of global Over the next five years, the leader installations are likely to power generation this year, due to for offshore wind installations by far bounce back to make 2021 its cost-competitiveness and priority will be Mainland China, where 19 a record year with annual dispatch in many markets. And the GW is expected to be commissioned installations reaching 77.7 GW.

COVID-19 will not significantly impact the global outlook, due to longer project timelines and concentration of installations in the latter half of the decade.

24 GWEC I Global Offshore Wind Report 2020 off the coasts of Jiangsu, Fujian, outlook. The projects scheduled COVID-19 pandemic have delayed Guangdong, Zhejiang, Hebei and for commission in both years are projects previously scheduled for Liaoning provinces. Driven by an currently under construction in the commissioning in 2022 and 2023. offshore wind FiT for projects which UK, Germany, the Netherlands and Thus, GWEC Market Intelligence has will be grid-connected by 2021, the Belgium. GWEC members report pushed back the commissioning year market has sufficient runway and that construction work is proceeding for those projects by one year. production capacity to rebound during the pandemic, with the two big from the slowdown in activity during projects Borssele I & II and Seamade the first half of 2020. The delay for generating first power in April and offshore wind project construction in July, respectively. China is estimated at six months, due in part to restrictions on imported In addition, the market leader, the bearing materials from Europe and UK, has maintained its offshore wind imported blade materials like balsa auction timeline for 2021, with the wood and PVC from Ecuador and industry even calling to accelerate Italy. procurement through annual Contract for Difference auctions. Germany, Since the grid-connection deadline the No. 2 offshore market in Europe, extension proposal sent by the local recently raised its offshore wind wind industry to the National Energy capacity target to 20 GW by 2030 and Administration (NEA) seems unlikely 40 GW by 2040, and implemented to be approved at the time of writing, a law streamlining permitting the Chinese offshore industry is procedures for wind projects. The currently running in full steam in government is also making offshore project construction. Based on the wind a cornerstone of its national latest offshore wind market dynamics hydrogen economy strategy. and feedback from leading suppliers and developers in China, GWEC has In the US, the 12 MW Dominion kept its 19 GW pre-COVID forecast Virginia demonstration project was unchanged for China for the next five successfully installed in June 2020, years. but the combination of prolonged lead time to secure federal permits, In Europe, the expected new especially the Construction and installations in 2020 and 2021 were Operations Plan (COP) from already low in our pre-COVID BOEM, and the effects of the

GWEC.NET 25 Green Recovery

The pandemic has highlighted the opportunity to make a cornerstone of economic growth and recovery packages. GWEC’s global statement on “Re-building Better” for the future, signed by leading wind companies and associations representing 98 percent of installed onshore and offshore wind power worldwide, highlights wind power as a source of affordable, clean and zero- carbon electricity, which can bring significant socioeconomic benefits to local communities (see page 26 “Driving millions”).

By mid-2020, as lights around the world flickered back on and assembly lines restarted, global carbon emissions have already sharply rebounded. It is critical for the health, welfare and prosperity of the global community that the clean energy transition becomes a core component of economic stimulus and growth packages. Studies show that investing in renewables will have a multiplier effect on economic growth: $1 spent to advance the

26 GWEC I Global Offshore Wind Report 2020 global energy transition returns $3-8, deployment, through higher capacity according to IRENA, while clean targets, transparent pipelines and energy infrastructure construction policy measures to resolve the generates twice as many jobs per $1 severe existing bottlenecks around million spent as fossil fuel projects. permitting and licensing of new projects. Increasing investment to Offshore wind offers compound value undertake modernisation of grid and for investment, with high capacity transmission infrastructure will also factors and average global costs be key to integrating large volumes of declining more than 50 percent over offshore wind. the last decade. In decarbonisation terms, 1 GW of offshore wind power avoids more than 3.5 MT

CO2 – giving it more potential for carbon avoidance as a technology to displace fossil fuels than even onshore wind, solar, hydro or efficient gas power.

Keeping global warming within 1.5-2 degrees of pre-industrial levels will require at least 100 GW of new onshore and offshore wind capacity to be installed on an annual basis through 2030, with the accompanying scale-up of investment. True “green recovery” by national and regional governments will enable this magnitude of

GWEC.NET 27 Driving Millions of Sustainable Jobs in the Energy Transition

At a time when governments are mechanics, scientists, and offshore considering maximum impact per equipment and vessel operators.” 17.3 direct jobs (defined dollar of economic stimulus, it is worth as one year of full-time Based on data from IRENA, gathered highlighting that offshore wind farms employment for one have greater labour requirements during a 2018 study of nearly 30 person) are created than onshore wind farms, due to more stakeholders, GWEC estimates that complex construction, assembly and 17.3 direct jobs (defined as one per MW of generation installation activities. year of full-time employment for capacity over the 25-year one person) are created per MW lifetime of an offshore Offshore wind offers a range of of generation capacity over the wind project.[1] job opportunities across the value 25-year lifetime of an offshore [1] chain – from project planning wind project. With nearly 51 Nearly 900,000 jobs in and financing to manufacturing GW of new offshore wind capacity offshore wind are likely and transport to construction and forecast to be installed worldwide operations and maintenance (O&M). by 2024, that equals nearly 900,000 to be created over the A 2020 study by the American Wind jobs in offshore wind created over next five years. Energy Association found that the the next five years – a figure which sector offers “good, well-paying can only increase if offshore wind jobs requiring a diverse technical deployment scales up. workforce spanning an estimated 74 occupations… [including] electricians, welders, turbine [1] This is a generalised calculation for demonstration technicians, longshoremen, truck purposes only, and does not account for technology evolution, application of various drivers, crane operators, ironworkers, platforms or installation technologies, economies pipe-fitters, pile drivers, engineers, of scale, productivity rates or learning excellence. Comprehensive studies are required to determine job creation potential for offshore wind for specific markets.

28 GWEC I Global Offshore Wind Report 2020 and supply chains of the offshore oil Maximising local economic activity will require and gas sector. policymakers to make strategic choices on how existing Potential short-term investment areas to support a just and inclusive workers can be leveraged for high-growth areas transition include targeted education and training schemes, industrial upgrades and promotion of public- private partnerships. Long-term For near-term local employment, Maximising local economic activity investment areas include supplier a study by GWEC, Global Wind will require policymakers to make development programmes and Organisation and Renewables strategic choices on how existing national roadmaps to develop Consulting Group found that 2.5 workers can be leveraged for industrial clusters in strategic areas of persons were required to construct high-growth areas. Where possible, need. and install 1 MW of offshore wind – an re-skilling offshore oil and gas indication of potential job creation for workers for the growing wind sector already licensed projects. should be a priority to encourage low-carbon economic growth Once the wind farm is connected, and competitiveness. This is also jobs in operations and maintenance a fair response to labour market (O&M) last over the lifetime of disruptions from the energy transition the project – roughly 25 years for and pandemic, including dislocation offshore wind. O&M spans a variety of jobs for offshore oil and gas of needs, from contract management workers. to wind turbine maintenance to offshore logistics. As well, remote Outside of manufacturing turbine automated control is increasingly components, offshore wind employed in O&M, via a SCADA generates jobs in the manufacturing system, radio telemetry and of steel for foundations, substations artificial intelligence applications. and installation vessels, sub-sea These areas require highly skilled cables to evacuate electricity from workers with a background in data offshore farms to onshore grids and science, mechanical and computer trucks and vessels for transport of engineering and telecommunications. equipment and workers. All these areas can leverage the capabilities

GWEC.NET 29 Looking Beyond 2030

Beyond the next decade, key far beyond current forecasts roadmapping and workshops. (see government and industry bodies from international institutions, but page 74) are setting their sights even according to OREAC, reaching this Progress made over the next ten higher for offshore wind. The EU’s ambitious target would be possible years will lay the foundation for staggering 450 GW aim by 2050 with strong collaboration between how high and how far offshore wind foresees industrial clusters in the government and industry, policy can scale in the decades beyond. North Sea (with nearly half of the stability, market transparency and With strong economics, exciting targeted capacity), Atlantic Ocean, responsible development, allowing technology evolution and growing Baltic Sea and southern European offshore wind to thrive among other interest from coastal markets around waters. Installations will be mainly sustainable ocean uses. the world, offshore wind is set to be a concentrated in the UK, Netherlands, World Bank’s ESMAP Offshore Wind game-changer in the global energy France, Germany, Denmark and Development Program, launched in transition. Poland, with several other EU markets March 2019, targets the acceleration home to double-digit volumes. of offshore wind development in non- The Ocean Renewable Energy OECD countries around the world. As Action Coalition (OREAC) is a global a partner of this programme, GWEC group of leading offshore wind works with the World Bank to engage developers, technology providers policymakers on recognising and and stakeholders including GWEC, delivering the offshore wind potential launched in December 2019 in in their market through national response to the UN High Level Panel for Sustainable Ocean Economy’s call for ocean-based climate action. OREAC envisions offshore wind reaching 1.4 TW of installed Progress made over the next 10 years will lay the capacity by 2050, driven by the foundation for how high and how far offshore wind sector’s ability to drive investment, generate jobs and severely cut can scale in decades beyond. emissions worldwide. This goes

30 GWEC I Global Offshore Wind Report 2020 TAKING OFFSHORE GLOBAL

GWEC.NET 31 Part 1. Lessons learnt

a. Support scheme

From 2 GW of offshore wind installed Support schemes in key offshore wind markets Renewable Obligation Certifications capacity in 2009 to nearly 30 GW Feed-in-Tariff in 2019, offshore wind has grown Key Market Former Schemes Current Schemes Upcoming Schemes exponentially over the past decade, UK n/a Guaranteed price auctions with benefiting from technological Premium Tariff advancements, declining costs and Denmark strong support schemes. Most of Germany Demonstration Incentive Program this growth has been concentrated The Netherlands n/a Contract for Difference (CfD) in the UK, Germany, mainland China, Taiwan Denmark, Belgium and Netherlands. Competitive Bidding China Particularly around the North Sea, Auctions with Zero-subsidy a bedrock of supply chain, finance, Japan n/a innovation and expertise has Centralised Auctions Source: GWEC Market Intelligence, June 2020 emerged. Now, the offshore market is Corporate PPAs with T-REC (Taiwan taking off in Asia and North America, Beginning with federal support for Renewable Energy Certification) with promising developments in demonstration projects, the sector Pacific, Latin America and Africa in has evolved towards Contract for Premium Tariff through Tendering System the medium-to-long term. Difference (CfD) mechanisms and even zero-subsidy bids in certain Auction with celling price regulated Over the last 10 years, policy stability, markets. Of these, the CfD scheme Feed-in-Premium (SDE) financial support schemes and has delivered large volumes in UK, the innovation clusters have improved offshore wind market leader (below), the economics and scalability of accounting for competitive pricing offshore wind, moving it from an and market reference pricing while emerging technology to a critical part granting revenue certainty over a long of global decarbonisation roadmaps. duration.[2]

[2] Probable Upcoming Scheme; GWEC Analysis

32 GWEC I Global Offshore Wind Report 2020 UK Denmark Germany The Netherlands • The Renewables Obligation (RO/ROC), • Denmark financed RE projects through • The FiT was introduced in Germany • During 2003-2007, MEP subsidy a subsidy scheme for large renewable the PSO (Public Service Obligation) under the German Renewable Energy (Milieukwaliteit Elektriciteitsproductie electricity projects applied in 2002, tariff. During the liberalisation of the Act (EEG) that came into force in April subsidie) was implemented through two supported deployment of 5 GW offshore Danish electricity sector (2000-2002), 2000. It provided greater funding policy instruments: FiT and a reduced wind installation until March 2017. a guaranteed price with balancing support to RE operators through two . • Although MEP FiT was effective, it cost • Currently, the UK employs a CfD subsidy for the first 10 years from the FiT funding models: Basic Model and too much for the government without scheme, introduced in 2013 under the grid connection and premium FiT with Acceleration Model. The EEG has been leading to decrease the amount of FiT Reform, which: 1) balancing subsidy until 20 years was modified several times since then and support in five years (2003-2007). Thus, Provides direct protection from volatile provided. This was followed by: 1) remained applicable as the guideline for it was replaced with Sustainable Energy wholesale prices to consumers and Feed-in-premium for up to 22,000 full wind farms. Following the EEG Reform Incentive Scheme (SDE: Feed-in Premium) developers and 2) Incentivises the load hours, with balancing subsidy for (EEG 2017) in 2017, the tariff-based for the period of 2008-2011 intending upfront investment costs for offshore the entire life through the competitive auction was made compulsory for to develop at least 450 MW of offshore project developers. tendering process; 2) FiT for up to offshore wind projects. wind project before 2011. With lead- 50,000 full load hours (i.e. ~11-12 • While guaranteed support schemes time between the submission of three years of operation), wherein connection shifted to an auction-based mechanism application in 2009 and the realization to the grid was an additional subsidy in 2017, Germany had two zero- of a project, Dutch government given to offshore wind farms and paid subsidy bids until 2018. No schedule supposed projects expensive despite by consumers. for offshore wind project allocation was there was sufficient budget hence, it did • In 2016 an agreement established that provided during 2019-2020. not lead to installation of new capacities the PSO tariff would be phased out from • From 2021, Germany plans to hold until 2011. 2017-2022 and projects would be a centralised auction model* to ease • In 2011, the Netherlands established financed through national budget. project financing risk, with the annual a tendering scheme with subsidies • In November 2019, Denmark chose the volume caps of 700-900 MW for (premium FiT) under the Dutch [3][3] CfD model for the Thor offshore wind bids . Sustainable Energy Incentive Scheme farm (800-1000MW) under which (SDE+), targeting 4.5 GW offshore subsidies in the form of a price premium [3] To latest note: German Federal Council wind power capacity by 2023. Through for a 20-year period will be provided. (Bundesrat) did not accept the Centralised the auction competing for lowest price This model would encourage investors offshore wind tendering model with open in a number of rounds, two first offshore arms at its latest session on 3 July 2020. The to invest for upcoming projects for the Council found the new model, introduced in wind projects were secured at Borssele development of two energy islands a bill amending the existing Offshore Wind sites in 2016. totalling 5GW by 2030 and the up to Act (WindSeeG), should go more along the lines of CfDs as Council referred to tendering • Soon after the target announcement, a 1GW Hesselo offshore wind farm. systems such as CfDs as low-risk in terms of prerequisite target of ‘40% cost reduction project costs and its significant contribution to maintaining the diversity of players. https:// over the period 2015-2019’ was www.offshorewind.biz/2020/07/06/ achieved in first phase tenders during germany-federal-council-recommends-against- proposed-offshore-wind-tendering-model/ 2017, following the German precedent of zero-subsidy bids at Hollandse Kust.

GWEC.NET 33 Taiwan Mainland China Japan • For the implementation of targets • The Renewable Energy Law was • Following the approval of the set in its “Thousand Wind Turbines released in 2006, as the foundation for Renewable Energy Bill in 2011, Japan Promotion Project”, Taiwan offered policy of offshore wind power planning introduced a FiT for wind energy in June a “Demonstration Incentive Program” and development, economic incentive 2012. At the time, offshore wind was grant scheme designed to award two policies, grid connection policy and priced the same as onshore, although offshore wind farm projects in 2012. A technical standards. that has since changed. In March guaranteed PPA with the FiT mechanism • China’s first round of concession bidding 2014, the Ministry of Economy Trade was provided since 2013 with gradual started in 2010. In 2014, FiTs were and Industry (METI) announced new reduction in FiT rates. introduced for offshore wind farms (CNY wind tariffs for 2014/15 (¥22/kWh (€ • To capture cost reductions, a competitive 0.85/kWh for offshore projects, CNY 0.17/kWh) for onshore and ¥36/kWh bidding process with lower FiT rates was 0.75/kWh for intertidal projects). (€0.28/kWh) for offshore) for 20 years. Although the purchase prices were high, introduced in 2018 and the offshore • Following the new regulation released complex permitting, and approvals wind target was increased to 5.5 GW in 2018, offshore projects approved in made wind energy development a by 2025, Initial 3.5 GW out of 5.5 2019 and 2020 will go to competitive daunting process in Japan. GW is allocated through FiT and 2 GW auction, with the price cap set at CNY is allocated through the Competitive 0.80/kWh and CNY 0.75/kWh • In November 2018, Japan introduced Bidding to drive down the price. respectively. In January 2020, the competitive bids for pre-identified According to recent announcement, Chinese central government announced promotion zones in a new national the next 10 GW offshore wind it would completely stop subsidies for framework for offshore wind projects. auctions (termed Round 3) will likely be offshore wind from 2022 onward, Under the Act, developers will compete conducted across two phases with the but subsidies provided by provincial not just on tariff, but also on the The seven markets above (the UK, first phase starting in 2021. governments are encouraged to provide suitability of their occupancy plans in Denmark, Germany, Netherlands, • To address the effects of FiT reduction continuity of support. promotion zones. mainland China, Taiwan, and and support project financing, corporate • In March 2020, METI announced FIT Japan) represent more than PPAs can be a driver in Taiwan. prices for fiscal year 2020. This sets 27 GW of installed offshore off from FiT to auction system for fixed capacity, as of 2019, driven by a bottom offshore wind power and floating combination of support schemes. offshore wind at 36 ¥/kWh, to further boost investor interest. As the economics of offshore wind strengthened, permitting timelines eased and capacity targets increased, support schemes gradually transitioned towards mechanisms that encourage market competition while providing long- term price visibility.

34 GWEC I Global Offshore Wind Report 2020 Case study: UK’s CfD model delivering high volumes at low costs

Offshore wind is a monumental (strike price). It therefore creates decline, driven by the affirmed 40 success story for the UK, which is predictability for project owners GW by 2030 target. home to around one-third of the total by guaranteeing a price for power resource potential in the EU[4]. The generated, while reducing exposure The mechanism is being employed Renewables Obligation (RO) was the to wholesale price risk. in other markets too. Poland has first support mechanism for offshore proposed a CfD model in draft wind, coming into effect in 2002 and The CfD model has steadily legislation for its first phase of obligating UK electricity suppliers delivered high volumes of offshore procurement ending December 2022. to source power from renewable wind capacity while driving down Denmark has agreed to award Thor sources. Up to 5 GW of offshore wind costs, including grid charges, to Offshore Wind farm through CfD and was procured under the RO until below €46/MWh (£41.7) in the 2019 will launch a tendering process in 2017. round 3, down from €154/MWh Q3 2020. To reach 20 GW by 2030, (£120) in the 2015 round 1. The Germany is reviewing different Under the Electricity Market UK’s Offshore Sector Deal foresees auction models, with the wind Reform (EMR) planned in 2013, the offshore wind costs will further industry pushing for CfD. government targeted reliable and affordable clean energy sources, introducing a transition from the UK support scheme - CfD rounds leading to cost reduction for offshore wind RO to CfD mechanism. CfD is a 00 private contract between a low- 000 MW EUR/MWh 00 carbon electricity generator and the 000 .9 government-owned Low Carbon . 0

Contracts Company (LCCC), which 000 limits the requirement for subsidies. 00 000 The generator receives support . when remuneration is lower than the 000 agreed tariff (set based on reference .0 0 0 . wholesale prices) and returns the 000 profit to the state when remuneration 0 is higher than the pre-agreed price 0 0 CfD 0 CfD 0 CfD 0 CfD 09 CfD oun oun oun oun oun [4] https://www.irena.org/documentdownloads/ Deliery Deliery Deliery Deliery Deliery publications/gwec_uk.pdf 0 09 0 0 0

GWEC.NET 35 Case study: The Netherlands - specific conditions for zero-subsidy bids

The Netherlands’ Energy Agreement the Hollandse Kust Noord offshore Affairs is targeting bidding with and model has been widely deployed for Sustainable Growth announced wind farm zone in April 2020 that without subsidies to deliver its target as it limits the burden of subsidies a 4.5 GW offshore wind target by is one of three offshore wind areas of 1GW new installations per year for government and consumers and 2023, prompting the inclusion of chosen by the Dutch government from 2023-2030. This scheme would hedges the risk of exposure to volatile offshore wind in the SDE+ regulation to be developed by 2023, as part of account for variance in project site wholesale power prices or negative (Stimulating Renewable Energy). the country’s Energy Agreement for complexity and technical/permitting pricing as well as creating revenue SDE+ is a support scheme wherein sustainable growth. requirements, while recognising the certainty. Such procurement schemes the government provides both role of revenue stability in sustaining which provide long-term visibility and guarantees and risk reductions to The risk profile of zero-subsidy bids investor confidence to generate a stronger investment cases will be key renewable energy developers via a mean higher financing costs – as steady pipeline of projects. to scaling offshore wind to emerging tendering scheme with subsidies. much as 2.5% - making the scheme markets, particularly at the volumes suitable only for specific projects Support schemes have been one necessary to drive system-wide [5] With a 40% cost reduction achieved under the right market conditions. of the drivers of the offshore wind decarbonisation. in the first SDE+ tender in 2016, the In the future, the Ministry of Economic market in Europe to date. The CfD Netherlands launched its first zero- subsidy offshore wind tender in 2017 and awarded it in 2018 (see Figure Falling offshore wind cost to zero-subsidy bids in Netherland 2[2]) to Vattenfall for Hollandse Kust Zuid site mainly due to: the availability MW EUR/MWh 73 of larger turbines which reduced 00 732 740 760 0 capital costs; and reductions in project 752 00 0 risk via the government assuming 00 0 responsibility and cost for grid 55 44 00 0 connections. Following a second zero- 00 0 subsidy bid in 2019, the Hollandse 00 0 Kust Zuid site recently reached 00 Zero 0 FID, becoming the world’s largest Zero 00 bid bid 0 subsidy-free offshore wind farm at 19 0 0 1.5GW, due to be commissioned 2016 2016 2017 2018 2019 in 2023. The Dutch government Borselle 1+2 Borselle 3+4 Hollandse Kust Innovation tender - Hollandse 1+2 Borselle V Kust 3+4 has also organized the tender for

[5] https://renews.biz/59118/negative-bidding-could-endanger-german-offshore/

36 GWEC I Global Offshore Wind Report 2020 b. Industrial development and job creation

Offshore wind has already proven chain through steady public-sector demonstrated that active dialogue itself as an affordable, scalable, zero- steering and investment in R&D. between government and industry carbon energy source. It also has Germany’s offshore wind workforce and a steady pipeline of projects can the capacity to generate enormous has grown with government generate supply chain investments socioeconomic benefits, particularly investment in training programmes to transform local industry. In 2020 for coastal communities in close and apprenticeships, although the alone, new partnerships were proximity to projects. Maximising the industry could develop faster with the announced to domesticate the economic growth potential of offshore right enabling policies. More detailed production of nacelles, wind turbine wind has required a collaborative cases on the UK, Denmark and blades and the first Taiwan-built approach between government Germany are presented below. offshore wind installation vessel, the and industry. This approach aims to Green Jade. upgrade market design, set clear Despite being an emerging offshore long-term capacity targets, undertake wind market, Taiwan has already forward-planning in infrastructure and interconnections as well as People: deliver collective investment in skilled Ideas: Skills; Workforce workforces and a local supply chain. System Management and data; Diversity in Optimisation Task Group workforce; Health and Important insights can be gained (SMOTG); RD&D; UK Business Safety; Knowledge; Intellectual Property from the experience of leading Environment: RD&D workforce; European offshore wind markets, Increase UK Supply Apprenticeship which demonstrate the opportunities Chain and export; Increase UK Content in and potential barriers for fostering the capital expenditure industrial development in the offshore Infrastructure: phase; Improve Places: wind sector. The UK’s “Offshore Cumulative infrastructure access for SMEs Coordinate to Bolster investment of over Wind Sector Deal” emphasises high regional clusters ambition, industrial clustering and £40bn to 2030; Collaborate for government support and dialogue integrated energy system with industry. Denmark, with first- mover status in the wind industry, has fostered an advanced supply

GWEC.NET 37 Case Study: UK Sector Deal steers industrial growth

The trajectory of the UK’s offshore economy and public. As a result hubs in the UK to de-bottleneck wind sector is guided by the of strong collaboration between capacity constraints, allowing Industrial Strategy Offshore Wind government and industry, the first-of- them to deliver large volumes Sector Deal, published in March its-kind integrated approach to sector while meeting non-binding local 2019. The document outlines the development is built on five pillars: content requirements in this deal. In target to reach 30 GW of offshore ideas, people, infrastructure, business partnershop with the government, wind capacity by 2030, which was environment and places (see figure the offshore wind sector supported extended to an ambitious 40 GW below). 7,200[6] full-time equivalent jobs in by the end of 2019 by the incoming communities around the country government, and a roadmap for Scale has been key to successful between 2014-2018. Through delivering benefits to the UK localisation in the Sector Deal. Top manufacturing hub, SGRE’s wind OEMs have invested in manufacturing turbine blade factory works created 1,000 jobs in 2016 at Hull, while in Cumulative jobs in the UK offshore wind sector 2018 MHI Vestas employed 1,100 new employees for its expanded Specialist Transport Construction & Installation Decommissioning/Repowering wind turbine blade factory at Isle of Operation & Maintenance Specialist Support Services & Other Wight.[7] Manufacture & Design Site planning & Development As a result of strong collaboration between government and industry, 40000 36,000 700 the first-of-its-kind integrated 35000 approach to sector development is

30000 10,000 built on five pillars: ideas, people, 27, 4 0 0 500 400 25000 infrastructure, business environment 18,500 8,300 and places. 400 8,300 20000 300

15000 6,300 5,300 4,000 100 2,700 5,800 10000 10,000 250 3,300 50 2,100 4,900 3,300 1400 5000 2,800 6,800 1,600 1400 5,400 2,000 3,500 [6] Low Carbon and Renewable Energy Economy Final 0 Estimates, Office for National Statistics (January 2017 2022 2027 2032 2019) [7] https://www.gov.uk/government/publications/ offshore-wind-sector-deal/offshore-wind-sector-deal

38 GWEC I Global Offshore Wind Report 2020 Case Study: Denmark as a model for public commitment and ambition

The Danish wind cluster has today offers around 30,000 jobs employment all across Denmark. become a world-leading example and is responsible for 4 percent of Wind industry exports accounted for of industrial growth fostered by Denmark’s GDP. nearly 4% of total exports in Denmark long-term political commitment to in 2017. wind energy. Following the global Since landscarcity became a problem energy crisis in the 1970s, Denmark in Denmark, local developers started However, the successful story of pivoted to wind power with early building offshore wind farms from Danish wind industry doesn’t stop subsidies of equipment, and later a 1991. The liberalisation of the energy there. With a net-zero emissions feed-in-tariff. It is now home to top market led to the creation of the commitment by 2050, the Danish turbine manufacturers, top offshore modern DONG Energy. Following the government has set a target to install wind farm developer, excellent R&D divestment of its oil and gas business at least 2.4 GW across three new [8] facilities and strong industrial cluster in 2017 to focus 100% on green offshore wind farms by 2030. In June collaboration. energy, the world’s largest offshore 2020, the Danish parliament approved wind farm owner-operator changed an ambitious new climate act that Apart from subsidies on price, the the name from Danish Oil and Natural includes building two energy islands, government also supported the Gas (DONG) to Ørsted. one in the North Sea and another in sector by investing in R&D. The test the capacity will and certification center for turbines As the world’s largest offshore wind be added before funded by the state were opened port, Esbjerg in western Denmark is Baltic Sea, with a combined capacity 2030. In total, Denmark has mapped by Risoe National Laboratory, which a hub for offshore wind exports, with of 5 GW, and installing another 1 GW out areas suitable for development has become a part of the Danish turbines leaving the port for offshore offshore wind farm, the second of of up to 18 GW of offshore wind Technical University (DTU) since wind farms in the UK, Germany, and the three 1 GW offshore wind farms capacity. Guided by these targets, 2008. These early R&D investments Netherlands. To further support the proposed in the Energy Agreement the government estimates that up formed the bedrock for companies domestic and regional offshore wind 2018. As the world’s first energy to 2,200 temporary jobs and 550 like Vestas and Siemens Wind Power project development, other Danish island, it will connect offshore wind permanent jobs could be created on [9] (now Siemens Gamesa Renewable ports like Grenaa, Roenne and Hvide and host electricity storage and an annual basis up to 2030. Energy). More than 500 suppliers Sande have expanded either to Power-to-X (excess electricity will are present within the current Danish support offshore project construction be converted into green hydrogen wind cluster, spanning the whole or to serve as project O&M base. The and processed into fuels for aircrafts, value chain from lightning tests to Danish wind sector is a powerhouse trucks, ships and heating). It is foundation manufacturing. The cluster for the Danish economy and creates expected that 7 GW of new offshore

[8] https://ens.dk/sites/ens.dk/files/Vindenergi/offshore_wind_tendet_thor_marketing.pdf [9] https://www.groennejob.dk/nyheder-fra-groenne-job/groenne-job.

GWEC.NET 39 Danish wind cluster (and ports), mapping of offshore wind development

Hvide Nordsøen III Sande

Hesselø

Nordsøen II Grenaa Vest Nordsøen II+III

Mid-Jutland: Heart of Nordsøen I Danish Wind Cluster

Roenne

Leading offshore Krigers Flak Nord port-Esbjerg Bornholm I Krigers Flak Syd

Bornholm II

Source: Danish Energy Agency, GWEC Market Intelligence, June 2020

40 GWEC I Global Offshore Wind Report 2020 Case Study: Germany expresses ambition for growth, but needs policy stability and forward-planning

Although its onshore wind market happen by the end of 2019, it was not ports such as Bremerhaven and been rocky, Germany’s offshore implemented.[11] Cuxhaven on the North Sea hosting wind market holds strong promise large turbine manufacturing facilities, and has already delivered 7.5 GW Finally in June 2020, the Federal foundation systems and shipyards for of capacity. The sector employs Ministry of Economy and Energy offshore wind services. Jobs have also around 27,000 people, fosters EUR drafted a bill outlining a target of been created across the value chain 9 billion in annual turnover and has 20 GW by 2030, which would then in inland cities, for the manufacturing [12] attracted a cumulative EUR 25 billion double to 40 GW by 2040. The of bearings, gearboxes, generators in investment over the last 20 years.[10] bill followed agreements by federal and other components. To deliver It is also a pillar of the country’s and state authorities, as well as the industrial development potential energy transition and plan to create a Transmission System Operators ahead, the government must remain hydrogen economy. (TSOs) to better capitalise on steadfast in its new offshore wind Germany’s offshore wind resource commitments, and implement a Key to signalling strong public potential and address related grid sensible procurement scheme that commitment to growing the offshore needs. But it also introduced a two- can sustain investments in the local sector is policy stability. The German round tendering process designed supply chain. government has amended its sector to drive bid prices down, which development goals twice in the past: could exert additional pressure on It initially outlined 10 GW by 2020 an already strained domestic supply and 25 GW by 2030 in its Renewable chain. Energy Sources Act (EEG), but reduced these targets to 6.5 GW Growth of Germany’s offshore wind and 15 GW, respectively, in 2014, sector at the scale of 40 GW by due to the high prices of the early 2040 could potentially address the offshore wind sector. As offshore capital and labour displacement costs declined dramatically, pressure experienced in its struggling onshore increased on the government to wind sector. Offshore wind has raise its targets; while public sector already brought large benefits to representatives indicated this would coastal regions in Germany, with

[10] https://www.wind-energie.de/themen/anlagentechnik/offshore/; https://windeurope.org/newsroom/press-releases/german-offshore-wind-can-deliver-more-legal- framework-for-at-least-20-gw-by-2030-required/ [11] https://www.focus.de/regional/schleswig-holstein/energie-offshore-offensive-fuer-mehr-windraeder-auf-nord-und-ostsee_id_11216814.html [12] https://www.offshorewind.biz/2020/06/01/germany-drafts-offshore-wind-bill-with-40-gw-by-2040-goal-dynamic-tendering-process/

GWEC.NET 41 c. Grid Connection

The expansion of the global of the additional capacity required, Equinor’s floating Hywind Tampen offshore wind market presents a WindEurope estimates that 380 GW project, for instance, will be located formidable challenge to electricity of offshore wind could be developed 140 kilometres off the Norwegian grids, requiring forward-planning in the North Sea region alone, coast – major investments, planning for transmission infrastructure and and would need to be integrated capacity and expertise are needed to interconnections, grid-fault and into mainland grids, in order to ensure reliable and expeditious grid stability analysis, priority dispatch achieve climate neutrality targets connections. for renewables and a flexible set by the European Commission.[13] system to integrate large volumes of With more and larger wind farms Offshore wind grid connection renewable energy. As an indication expanding farther into the sea – normally consists of two parts: 1.) offshore wind turbines are connected via 33 or 66 kV inter-array cables Grid connection responsiblity in different offshore wind markets to an offshore AC substation, and 2.) then the AC offshore substation 33 or 66 kV inter-array cables is connected via a 132-220 kV 220 kV HVAC cables HVAC export cable with an onshore Existing onshore grid substation, from where electricity Offshore High voltage grid to be connected to the mainland substation AC [14] Substation grid . The scope of responsibility for these connections, and up to Dunes Extension what point, varies between markets and falls either to the transmission Land cable High voltage grid system operator (TSO) or the project Inter-array cables Sea cable developer.

[13] https://windeurope.org/about-wind/reports/our- energy-our-future/ Denmark [14] The transmission system has two types: AC and Germany DC. HVAC is generally employed for shorter Netherlands Denmark (from 2018) distances, while HVDC connections are generally Belgium (From 2018) The UK employed for longer distances to the main grid. In France (Round-3, 2019) Belgium (2011, 2013) the German North Sea, for example, many offshore US wind farms are first connected with an offshore AC substation and then the offshore AC substation France (Round-1, 2) can be connected to grid at shore through HVDC Taiwan converter station and HVDC cables. Mainland China Source: GWEC Market Intelligence, TenneT

42 GWEC I Global Offshore Wind Report 2020 In leading European offshore wind TSOs to take the responsibility for agreement with government.[17] The markets like Germany, Denmark the connection between offshore AC CfD scheme incorporates negotiation (up until 2018), the Netherlands, substation and the mainland grid. and prequalification to ensure project Belgium (from 2018), and France feasibility, while allowing for market (from Round-3, 2019), the connection In 2018, Denmark decided to shift competition and balance of price from the offshore AC substation responsibility for grid connection risk between the developer and the to the mainland grid has been for three offshore wind farms off-taker (see page 30). The resulting the responsibility of the TSO, commissioned up to 2030 from the revenue stability has been shown [15] mandated by national government TSO to the project developer. to support the investment case for (see Figure 2).This has generally While construction and operation of projects where developers must been a successful model which the offshore substation and export finance and develop substation and ensures a coordinated approach cables was previously managed cable assets. to building offshore assets and by the Danish TSO Energinet, this onshore reinforcements, while TSOs activity will be included within the can access financing costs which scope of tenders for three North Sea tend to be more favourable. In the projects, including the 800 MW - 1 UK, US, Denmark (from 2019), and GW Thor wind farm scheduled to be [16] Taiwan, project developers pay for awarded in 2021. The developer the connection from the wind farm will be responsible for financing the to the onshore substation, while transmission assets, which would be in Mainland China developers are calculated within its bid for a two- still responsible for financing and way Contract for Difference (CfD) constructing transmission facilities agreement. for connecting the offshore project to This model is similar to the UK, the grid, although local government where responsibility and cost in Yangjiang, Guangdong province is for grid connection are included considering to separating connection within tenders for a long-term CfD into two parts and requiring the

[15] https://ens.dk/sites/ens.dk/files/Vindenergi/brief_tender_for_thor_offshore_wind_farm_30march2019.pdf [16] Energinet will remain responsible for the financing and construction of the onshore substation to the transmission grid. [17] Developers can either take responsibility for construction of the offshore transmission assets before transferring them to a third-party operator, or commission a third-party operator to construct the assets. To date, the de facto model has been for project developers to be responsible for financing, development and construction of the transmission assets. The developer’s CAPEX costs for transmission assets would be recovered through payments from the operator of the assets after completion; the operator in turn receives revenue from the grid authority for operation, maintenance and decommissioning of these assets.

GWEC.NET 43 A 2019 study by DIW Econ, guidance that a model should commissioned by Ørsted, found prioritise time and cost-efficiency that the UK market design, where without burdening the economics of development of grid connection the tendering process for offshore is included within a competitive wind – particularly as cost reduction tender, reduces overall costs of the potential for grid connections is transmission assets.[18] A model lower than that for offshore wind integrating grid connection into technology.[20] the overall project tender also incentivises cost reduction and Transmission is a vital part of the allows for synergies in planning and sector’s development, ensuring that construction between the offshore communities benefit from a secure wind farm and transmission system. and reliable supply of power from offshore wind. Given its centrality These findings can be considered to the growth of offshore wind, alongside another study by Navigant grid connection must be carefully in 2019, wherein analysis of data considered by policymakers in the from the UK, Denmark, France and context of local market design and the Netherlands found that making cost/investment dynamics. Whether the TSO responsible resulted in integrated into a capacity tender or lower CAPEX/MW of installed grid shouldered by the TSO, the risks and connections, as well as lower costs costs for grid buildout should be for cables and onshore substations adequately organised in a way that (although costs for offshore platforms will not dampen the investment case are generally comparable).[19] for offshore wind or slow down its deployment. Each market has its own distinct policy, consenting and fiscal characteristics. There is no universal model for grid connection responsibility, but rather general

[18] Construction and then operation of the offshore transmission assets are competitively tendered in the UK. [19] https://guidehouse.com/-/media/www/site/downloads/energy/2019/2019-navigant-comparison-offshore- grid-development.pdf [20] https://guidehouse.com/-/media/www/site/downloads/energy/2019/2019-navigant-comparison-offshore- grid-development.pdf

44 GWEC I Global Offshore Wind Report 2020 d. Cost reduction and energy source and is expected to supply chain play a crucial role to support the global energy transition. Although Offshore wind power is a unique great progress has been made in opportunity that promises carbon- cost reduction, especially in the free, utility-scale power generation past decade, political pressure and contributes enormously to the now requires the sector to become security of electricity supply. Policy subsidy-free and to compete head-to- support such as feed-in tariffs (FiT) head with fossil fuel-based energy on and renewable obligation certificates economic terms. (ROCs) have kickstarted the offshore wind industry in many countries from According to BNEF, the global the beginning. After three decades offshore wind average LCOE has of development, offshore wind has dropped 67.5% to US$84/MWh since grown from a niche to a reliable 2012. Cost reduction of offshore wind

Levelised cost of electricity offshore wind USD/MWh 0 0 0 00 0 5 0 0 0

00 0 0 0 0 0 009 00 0 0 0 0 0 0 0 0 09 00 0e 0e 0e 0e 0e

Methodology: BNEF LCOE scope for offshore wind farms includes all transmission costs up to the project’s onshore substation, which is also included. The outlook from 2020-2025 is a fitted curve best reflecting future levelized auctions bids (it mixes auctions including and excluding the cost of transmission to shore). Source: BNEF LCOE Database Jan 2020, GWEC Market Intelligence

GWEC.NET 45 is set to continue and expected to hit content requirements (LCRs) – growing industry. The offshore wind US$58/MWh by 2025 thanks to the regulatory provisions on how much of industry in France is an example of scale provided by GW-level projects, a wind project must be manufactured this. the newly introduced supersized locally. offshore wind turbines and the Overall, to drive cost reduction with reduction in the cost of capital. While on the one hand, an inward- a strong supply chain demands high looking perspective sees LCR as a commitment from governments and Recent auction results show that means to maximise local job creation the industry. The UK offshore wind offshore wind has become already and economic prosperity, on the industry is a success story of global competitive in some mature European other hand, an outward-looking reach which has created jobs and markets (for example, zero-subsidy view, sees LCR as an instrument economic growth, as well as billions auctions completed in Germany and to drive down costs and facilitate in export value. the Netherlands) and is on the cusp domestic companies’ integration into of competitiveness even in some less international supply chains. mature markets (notably France). Experience in Europe has proven From an industry life-cycle that strict local content requirements perspective, the current stage of frustrate economic hopes of wind offshore wind can be classified as the industry players by raising the cost growth phase, to accelerate further of electricity and creates inefficiency cost reduction and eventually become by enforcing local suppliers to play a completely subsidy free, a strong much bigger role during the take-off project pipeline, long-term visibility, of the offshore deployment in many and a well-managed global supply new and emerging markets. chain that increases competition and capacity will all be paramount to the For an industry such as offshore wind growth of the wind industry as well as that naturally offers a high degree technology-based innovation. of localisation due to the large size of components, such as blades and Conflicting paradigms of development towers, and complicated and costly logistics, overly restrictive local Concurrent to driving down LCoE, content requirements are not justified. driven by political motivations to Overly restrictive requirements can justify financial support, the wind be counter-productive to the original industry is challenged by local intention and ultimately, slow down a

46 GWEC I Global Offshore Wind Report 2020 Case Study: UK - Volume drives down costs, and localisation follows

The UK is now an offshore wind leader and export hub. From its first 4 MW New installed offshore capacity versus offshore LCOE* pilot project in Blyth in 2000, to 9.7 MW and USD/MWh GW of installed capacity today, the 143 1764 progress of the UK’s offshore wind 140 1715 is phenomenal. The UK Offshore 132 125 Average LCOE Wind Sector Deal has done well for reduction per year: -12% encouraging investment and attracting Average LCOE 111 1312 commitments from turbine and reduction per year: - 4% component manufacturers to build 87 capacity with its market certainty 854 78 813 72 by providing the right market and 752 733 66 regulatory frameworks that instilled 572 confidence for action to mitigate 50 458 potential supply chain bottleneck impacts. 56 The UK has exemplified that with 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 an increased market certainty and volume visibility, scale is one of the Aggregated UK content in 4 4 keys that support competition and TOTEX of wind projects innovation in the supply chain to drive LCOE refers to projects signed during the given year, but not the LCOE of the installed volume: time lag between project signature competitiveness and reduce costs. and installation is 4-5 years Source: GWEC, BNEF H2 2018 Wind LCOE Update, BVG Associates, Renewable UK, Press, UK Office for National Statistics. In retrospect, the cost of the latest (third) CfD round in late 2019, fell by – cheaper than new gas and nuclear market share. With that, the increasing around 30% compared to the second power. competition in the UK offshore market round in 2017, and has fallen as much is expected to continue to drive cost as 66% compared to the first round With current ambitions of 40 GW reduction through downward pressure held in 2015. Projects are now being by 2030 and meeting the net-zero on pricing and via the benefits of scale, delivered for as low as US$50/MWh carbon emissions target by 2050, the learning and innovation combined with making offshore wind one of the lowest UK provides a large enough market socio-economic benefits such as local cost options for new power in the UK to attract turbine manufacturers each job creation. with a prediction of a reasonable

GWEC.NET 47 Achievements

For the period 2016 and 2021 investment in offshore wind in MHI Vestas expands its UK exports of offshore the UK will total nearly GBP wind blade factory at Isle wind energy products and 19bn. This investment supports of Wight, set to deliver services expected to thousands of jobs across the UK around 1,100 new jobs increase fivefold to GBP in manufacturing, project and GBP 42 million in 2.6 billion. development, construction and local economic benefits. operations.

2016-21 2016 2018 2019 2030 Clearly, with the right interventions and strategic direction, the supply chain can play its part in reducing UK exports of offshore Siemens opens a GBP costs, while at the same time wind energy products and 310 million wind turbine creating many thousands of services worth GBP 475 blade factory that created jobs in the UK. 1,000 jobs in Hull. million.

48 GWEC I Global Offshore Wind Report 2020 Case Study: France - Top-down localisation slows down market with 2nd highest offshore wind potential in the EU

In many respects, France is an ideal country for wind energy with 11 France levilised offshore wind auction bid prices million square kilometres of marine 2018 $/MWh Tender I territories on the English Channel, 300 Tender II Atlantic Ocean and the Mediterranean Tender III Sea. As an indication of this potential, initial tariffs, expected COD France’s long-term offshore wind 200 potential is estimated to be 90 TWh tariff cuts, project delays per annum. A total of six offshore wind projects with a combined capacity 100 no local content, no of 3 GW were selected in the Round transmission cost 1 tender in 2012 and the Round 2 tender in 2014 that has never taken 0 2015 2017 2019 2021 2023 2025 2027 2029 off. Commercial Operation Date

A fundamental issue that hampered Source: BloombergNEF. Note: Levelized price, takes into account tariff price and length, inflation, a merchant progress was the need for tail assumption and a 25-year project lifetime. White dots represent other European markets. renegotiation of earlier contracts which priced at around EUR200/MWh, Despite France’s huge potential and from SMEs in the region – the winning a tariff that is over-priced for the ambitious targets of 6 GW by 2020 price of EUR44/MWh came as an French government in these days of and to generate 15,000 direct and excellent news for the offshore wind zero bidding. At the time the projects indirect jobs, none of these outcomes outlook in France. were awarded, such prices were were accomplished mainly due to the the norm as they needed to cover implementation of strict LCRs before This case study exemplifies that the cost of fulfilling the top-down a local supply chain emerged. without strict need for local content, localisation content requirements offshore wind projects can deliver at (LCRs) that includes grid connections Nonetheless, in the latest Dunkirk competitive pricing and the industry and an industrial component, offshore tender (June 2019), with the can be rebooted given the right whereby the manufacturers linked to localisation rules drastically relaxed policy direction and frameworks in the winning bids, Alstom (now part of – WTG are no longer requested to place. GE), and Areva (now Adwen under procure locally, instead emphasize on Siemens Gamesa), committed to certain share of investment to source building local factories.

GWEC.NET 49 Case Study: China – Early termination of central government support forces the local industry to reach parity

China commissioned its first As of the end of 2019, China has On 23 January 2020, the Chinese commercial offshore project, Donghai nearly 7 GW offshore wind in total central government announced Bridge Wind Farm, in 2010. The installations, making it the third- it would cease subsidies for market, however, was not ready to largest offshore wind market after the offshore wind from 2022 onward, take off until the first offshore FiT UK and Germany. Thanks to a robust albeit subsidies from provincial scheme and the National Offshore onshore wind supply chain and rapid governments are encouraged to Wind Development Plan (2014-2016) growth in annual installations over the provide continuity for the sector. were released by NEA (National past three years, the offshore wind Energy Administration) in 2014. This supply chain in China has developed Although offshore wind CAPEX has was followed in 2016 with joint release very quickly. To date, eight Chinese been reduced by 40-50% in China of The Management Measures for turbine OEMs have released offshore over the past decade, the current Offshore Wind Power Development turbines greater than 5 MW, of which LCOE for the Chinese offshore and Construction by NEA and SOA six are listed among the world’s top market is still at the level of CNY 0.64/ (State Oceanic Administration), ten offshore wind turbine suppliers in kWh (EUR 0.08/kWh), according to aligning guidelines between various 2019. State Grid Energy Research Institute government bodies and stakeholders.

Within less than a decade of Donghai Evolution of Chinese offshore wind support schemes Bridge, China passed the 1 GW 0.978 (Tariff for Donghai Bridge Project) milestone for new offshore wind 1.0 installations in 2017, surpassing the 0.80 UK as the world’s leading offshore (FiT cap for projects approved in 2019) market in new installations one year 0.8 0.85 (fixed FiT set in 2014) later. Following a new policy released 0.75 by the Chinese National Development (FiT cap for projects approved in 2020) and Reform Commission (NDRC) in 0.6 May 2019, project developers and

investors are rushing to commission 0.4 their projects before the end of 2021 0.39-0.45 (parity, without in order to capitalise on the current subsidy) CNY 0.85/kWh FiT. 0.2 2010 2014 2016 2018 2019 2020 2022

Source: GWEC Market Intelligence, June 2020

50 GWEC I Global Offshore Wind Report 2020 Chinese offshore wind provinces and emerging offshore wind clusters

Liaoning

Yantai (port in Penglai) Shandong Yancheng (port in Dafeng) Jiangsu Naantong (port in Rudong) Zhejiang

Fujian Fuzhou

Jieyang & Shantou (port in Jieyang) Guangdong Yangjiang (port in Yangjiang)

Source: GWEC Market Intelligence, June 2020

GWEC.NET 51 (SGERI). In China, the parity tariff for renewables is regulated to be set at the same level as coal-fired power generation, which varies by province. At present, the tariff for electricity generated by coal-fired power plants in China’s coastal provinces is in the range of CNY 0.39-0.45/kWh – at least 30% lower than the current offshore wind LCOE.

Since no provincial government has so far committed to post-2021 support scheme for offshore wind, the local Chinese offshore wind industry states that the early termination of the central government FiT brings great uncertainty for the sector in the medium term.

GWEC Market Intelligence believes that the termination of support by central government is likely to force the Chinese offshore wind industry to reach grid parity earlier than expected. The following factors may mitigate the financial uncertainty of subsidy-free procurement, and further drive down LCOE:

Ambitious targets set by the coastal provinces

Guangdong plans to build 30 GW offshore wind by 2030, followed by

52 GWEC I Global Offshore Wind Report 2020 Jiangsu (15 GW), Zhejiang (6.5 GW), 12MW offshore turbines from H2 will this cooperation help address Fujian (5 GW) and Shandong (3 GW). 2021. current bottlenecks throughout Other coastal provinces, namely the supply chain, it will also import Liaoning, Hebei, Guangxi, Hainan and Industrialisation experience in project execution Shanghai, also have their own offshore The local offshore wind industry will and operation from Europe through wind development plans, although benefit from the current investments foreign-local partnerships (for their targets are much lower than made by leading turbine OEMs and example, the joint venture between the five leading provinces. Offshore key component suppliers along the EDF Renewables and China Energy wind targets close to 60 GW by 2030 coastal cities, as well as plans from for two offshore wind projects located provides long-term visibility and the local port cities such as Yangjiang in Jiangsu province). scale for local industry. and Nantong to make themselves Conclusion Technology innovation offshore wind manufacturing bases. The Chinese offshore wind cluster China has already demonstrated The average annual offshore wind is expected to be built along the rapid reduction in LCOE for onshore turbine size in China in 2019 was coastline. wind via large magnitudes of volume 4.2 MW – 3 MW lower than Europe. and investment, a maturing supply However, this is expected to change, Lessons learned from onshore wind chain and technological innovation. as six Chinese turbine manufacturers China is the world’s largest Although the central government have introduced larger offshore is eager for local offshore wind manufacturing base for onshore models of greater than8MW in the wind, with a mature local supply to become subsidy-free – and past 18 months. After a 10 MW PMG chain already in place. The Chinese several factors are in place for turbine prototype was rolled off the onshore wind industry has committed further cost reduction – GWEC production line at Dongfang Electric to reaching grid parity by the end Market Intelligence believes that and a 10 MW model released by of 2020 – earlier than any other post-2021 financial support by CSIC Haizhuang in 2019, Mingyang established onshore wind market. The provincial governments should be unveiled its MySE 11 MW-202 offshore sector can greatly benefit considered to support the transition. medium speed turbine in June 2020, from the onshore experience in this A support scheme will be crucial to making it the largest hybrid-drive transition. ensuring that the Chinese offshore turbine in the world. In addition, wind sector can remain on a steady international player GE Renewable International cooperation path to achieve grid parity around Energy is building a factory in 2025, and will bear insights for Jieyang, Guangdong province, with The offshore wind installation rush other offshore markets on how to the aim of producing its Haliade-X has already helped to accelerate balance government support with the international cooperation. Not only maturation of local industry.

GWEC.NET 53 e. Health and safety Forecast installations (in MW) for key markets to 2024 and associated workforce as a key to scaling requirements global offshore wind Market Forecast installations (MW) Calculated workforce requirement North America 5,720 14,300 Workforce safety is paramount China (mainland) 19,000 47,500 to the success and sustainability Taiwan 3,579 8,948 of offshore wind. As the industry Japan 860 2,150 expands its footprint in established Vietnam 1,100 2,750 and emerging offshore markets, South Korea 560 1,400 the sector’s focus is to strive for an injury-free working environment. Total 30,819 77,048 Source: GWEC Market Intelligence, GWO and RCG Globally recognised regimes of safety and technical training standards have been developed to wind in China, Japan, Vietnam, South sustainably, making offshore wind a the extent that the industry today Korea, Taiwan and the United States sector of choice. can call upon almost 100,000 people presents a huge opportunity for the Successes have been possible trained to GWO standards in 40+ industry to collaborate with owners through a commitment to countries, around a third of whom and primary contractors, policy collaboration and transparency. are trained to work safely in offshore makers and wind energy associations GWO standards have achieved wind. to deploy established regimes that already work well in existing markets. almost universal acceptance in In the recent report co-authored many established offshore wind by Global Wind Organisation The goal is to support the safety markets, and as it grows into new and the Global Wind Energy profile and working cultures in these markets, the industry is mindful of Council Powering the Future – countries to help scale the industry existing systems of health and safety, Global Offshore Wind Workforce Outlook, six emerging markets are forecasting over 31GW of new The industry today can call upon almost installations between 2020-2024, with an associated need for over 100,000 people trained to GWO standards in 77,000 trained workers (see table). 40+ countries This imminent expansion of offshore

54 GWEC I Global Offshore Wind Report 2020 workforce regulations and legislation methodologies has been called for at around the world. An open platform the very highest levels of the industry for collaboration that acknowledges and early stage developments are in these variables, can avoid any notion progress. Sometimes known in the that perceived best practices are industry as ‘lagging indicators’, this being imposed onto markets where data can help identify causal links local experience about how to keep between work activities and injuries people safe will often represent the or fatalities in the wind industry, best-informed opinion. after the fact. They already exist to a considerable degree of sophistication Early signs of success include the on a company by company basis so fast work by GWO’s China and the next step will be standardisation, North American Committees. Large most likely led by organisations with manufacturers and owner operators experience such as G+ Offshore in these two markets use the tools Wind and Safety On, based in the and methodologies GWO members UK, and the American and Canadian designed to create training standards Wind Energy Associations. Steps to and make them work better at formalise reporting between these a regional level. Global training organisations and their members standards like GWO contain learning will be challenging but fruitful in objectives for skills and knowledge understanding and improving the which generally apply everywhere, safety performance of the offshore and the collaborative process to wind industry as it grows. agree their deployment locally, is helping them grow in scale as a Paul Robbins – Global Subject Matter sustainable element of the supply Expert, HSE, Vestas. Chairman of chain. Global Wind Organisation (GWO)

Of course, training is only a part of the safety matrix in offshore wind. Another urgent priority is to ensure hazards are correctly identified, risk assessed and mitigated. A system of collecting incident data on a global basis using standardised

GWEC.NET 55 Part 2. Emerging markets

Taiwan Taiwan is heating up as the second- GW tranche was procured across a much volume will be allocated and to submarine cables to shipbuilding. largest offshore wind market in the selection round and auction, the next when, is due to be published by end The industry must balance growth Asia-Pacific region, after Mainland 10 GW (termed Round 3) will likely of this year, with the first phase of with local content requirements that China. Ambitious capacity targets be conducted across two phases; the allocation conducted from Q2 2021 to are expected to be higher in Round set by the DPP government have first phase (2026-2030) will prioritise Q2 2023. 3. In 2020, positive signs have already attracted eager interest from leading projects at water depth of less than 50 been marked by announcements offshore wind developers and metres. Critical to the steady progression of for an MHI Vestas-Tien Li blade technology providers. Already, 128 the market will be the government’s manufacturing facility in Taichung, MW of offshore capacity has been Following government delays due localisation strategy, which aims to an SGRE nacelle production facility installed at Formosa 1, Taiwan’s first to COVID-19, a draft version of the consolidate the entire supply chain in Taichung and CDWE’s work on commercial-scale offshore wind farm Round 3 framework, including how in Taiwan, from turbine components in Miaoli County, and a further 109 MW is due to come online from the Progression of Taiwan’s wind procurement mechanisms Changhua County project by the end of 2020. Auction for Offshore wind is a key component year CD of Taiwan’s green economy vision, 00 which charts a nuclear-free pathway ree annual auctions to generate 20% of electricity through for total renewable energy by 2025. The Auction process Priority to proects wit government is aiming to install 5.7 allocate A an at 0m water GW of offshore wind by 2025, and CD 000 ept election process year CD in late 2019 announced that it would allocate 000 double its ambitions to 10 GW over CD 000 the 2026-2035 period. While the 5.7

56 GWEC I Global Offshore Wind Report 2020 Market outlook for cumulative installed offshore wind capacity in Taiwan (MW)

10667 9667 8667 7667 6667 5667

3707 3357 2607 1707

128 237

2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030

Source: GWEC Market Intelligence, June 2020 the first Taiwan-built offshore wind promotion plan and a relatively open installation vessel. But how flexible investment environment. Limited land the localisation requirements are in space and high energy insecurity the forthcoming Round 3 framework further compels Taiwan to look to will be key to determining whether coastal zones for power production. the nascent offshore wind industry can develop into a sustainable and Power sector reform is also on the competitive market. horizon, with amendments in 2017 to the Electricity Business Act which Within the next decade, Taiwan will mandated the unbundling of utility achieve more than 10 GW of installed Taipower’s generation, transmission offshore wind capacity, becoming and distribution business, and the an experienced market with an liberalisation of the electricity market established domestic supply chain. to enable multiple business models The sector is supported by a Feed- for direct procurement of renewable in-Tariff, a four-year wind power energy.

Courtesy of Formosa 1 & Ørsted Group GWEC.NET 57 Japan

Asia’s first offshore wind market at leading global players have now available until March 2014, when crossroads formed joint ventures with local the Ministry of Economy, Trade and Japanese companies and/or set up Industry (METI) approved the ¥36/ Japan’s offshore wind market has local operations. The coming period kWh (€0.28/kWh) FiT for offshore taken time to develop, with the first will be crucial, as the wind industry wind. Despite the rate being the pilot projects going into the water seeks to work with government to highest available anywhere for back in 2003. In the years following create a strong sector based on large offshore wind, Japan only had 66 the Fukushima nuclear accident in volumes and competitive prices, MW of offshore wind installed by 2011, there was renewed commitment rather than a small sector which could the end of 2019, including five and activity, with both fixed and remain an expensive niche within floating turbines (totaling 19 MW) floating foundations being deployed. Japan’s wider energy picture. and 23 near-shore wind turbines. To date, no commercial-scale offshore The slow uptake is attributed to projects greater than 20 MW have In March 2020, GWEC and the Japan Japan’s overly complex Environment been installed and the development Wind Power Association (JWPA) Impact Assessment (EIA) system and of a viable market structure is set up a new Japan Offshore Wind market uncertainty. It can take four emerging at a slow pace. Taskforce (JOWTF), which will to five years to pass through Japan’s play a key role in working with the strict environmental assessment But 2020 marks an inflection point government to develop a sustainable process, and the lack of clarity and for Japan’s offshore wind sector. wind industry, as well as produce coordination between different The government launched the first a detailed Cost Reduction Study government bodies has prompted offshore wind auction in the general to identify different price/volume industry to call for a “one-stop shop” common sea in June 2020 and the scenarios and investment and approach. As of January 2020, 14.8 other four promising sea areas industrialisation opportunities. GW of offshore wind projects are in nominated in July 2019 are ready the EIA pipeline. for auction after the approval on 21 A regulatory drag on Japan’s offshore July 2020, four more sea areas were development until now Positive steps to accelerate offshore nominated as promising area in the The feed-in tariff (FiT) for wind power wind development same month. In addition, there is a was approved in Japan in 2012, but strong sense of growing momentum To address these challenges, the the tailor-made offshore FiT was not in both policy and industry, as many government has been streamlining

58 GWEC I Global Offshore Wind Report 2020 regulation since 2017, when the Ministry of land, Infrastructure, Round 1 & 1.5 Candidate offshore wind promotion areas in Japan Transport and Tourism (MLIT) amended its Port and Harbor Law to promote offshore wind power Aomori Pref. development in Port-associated Sea (Japan Sea South) Aomori Pref. Areas. In March 2018, the Japanese Hiyama, Hokkaido Pref. (Japan Sea South) Cabinet decided on a bill to establish basic rules for development of Happou-cho/ offshore wind power in the General Noshiro-city, Akita Pref. Gann-u and Minami- Common Sea Area. Further progress Shiribeshi, Hokkaido Pref. was made in 2019 with METI and Noshiro-city/Mitane-cho/ MLIT announcing the first nomination oga-city, Akita Pref. of 11 offshore wind promotion zones Mutsu bay, in July for fiscal year (FY) 2019. Four Katagami-city, Aomori Pref. Akita Pref. of these zones (Goto in Nagasaki, Choshi in Chiba, Yurihonjo in Yurihonjo - city, Akita Pref. Akita, Noshiro in Akita) have been (North/ South) nominated as promising areas where Yusa, Yamagata Pref. Murakami/ Tainai-city, local authorities and residents have Niigata Pref. agreed to cooperate to develop offshore wind projects. Goto in Nagasaki Prefecture was nominated Choshi, Chiba Pref. as the first zone for promotion of offshore wind in December 2019.

Although COVID-19 prolonged Enoshima Saikai-city, public consultations, METI and MLIT Nagasaki Pref. launched Japan’s first auction in July Goto, Nagasaki Pref. Round 1 (4 promising areas), announced in July 2019 for FY2019 2020 for a floating offshore wind farm Round 2 (4 promising areas), announced in July 2020 for FY 2020 (8 turbine, not less than 16.8 MW) Candidate offshore wind promising areas off Goto City in Nagasaki Prefecture, to run until December 2020. According to METI, the operator will be selected in June 2021. The other Source: METI, MLIT, JWPA, July 2019

GWEC.NET 59 three promising areas nominated for FY2019, were nominated as the Japanese offshore auction progress list zones for promotion of offshore Stage of progess Round1 (FY2019) Round2 (FY2020) wind on 21 July 2020. Of these areas, Yurihonjo area in Akita has been Initial (July 2019) Progress (July 2020) Initial (July 2020) divided into two areas, Yurihonjo Promotion Japan Sea side North, Aomori Gann-u and Minami- Shiribeshi, Hokkaido North and Yurihonjo South, to promote zones Japan Sea side South, Aomori Hiyama, Hokkaido Mutsu bay, Aomori Happou-cho Mutsu bay, Aomori competition. & Noshiro, Akita Kisakata, Akita Kisakata, Akita-city, Akita Murakami & Tainai, Niigata Yusa, Yamagata Furthermore, METI & MLIT Enoshima Saikai-city, Nagasaki Murakami & Tainai, Niigata announced the second nomination Promising Noshiro, Akita Japan Sea side North, Aomori of 10 offshore wind promotion zones areas Yurihonjo, Akita Japan Sea side South, Aomori in July 2020 for FY2020. Four of Choshi, Chiba Happou-cho & Noshiro, Akita these zones (Aomori Japan Seaside Enoshima Saikai-city, Nagasaki North, Aomori Japan Seaside North Official Goto, Nagasaki Noshiro, Akita South, Happou and Noshiro in Akita, promotion Yurihonjo North, Akita Saikai in Nagasaki) have been newly areas Yurihonjo South, Akita nominated as promising areas. Choshi, Chiba Areas with auction Goto, Nagasaki The progress that Japanese offshore already launched wind development has made in the Source: JWPA, July 2020 past 12 months is summarised in the table below. of the country’s annual electricity the country’s energy strategy would Offshore wind in Japan’s long-term production. This situation, however, prioritise decarbonisation over the energy strategy is expected to change gradually. The current “energy mix” plan (fossil, trends of global energy transition nuclear and renewables). This change Japan has hesitated to announce and decarbonisation have made will be reflected at the next “Japanese a long-term offshore wind target the Japanese government change long-term energy vision” revised in because the METI still maintains its their future energy plan. METI’s 2021 (it is revised every three years). commitments with the nuclear and minister Hiroshi Kajiyama recently As coal-fired generation supplies coal industries. The official wind declared the closure of 100 old & low about one-third of Japan’s electricity, power target in Japan is only 10 GW performance coal-fired power plants renewable energy and particularly by 2030, including both onshore by 2030 (out of 140 existing coal-fired offshore wind is expected to play a and offshore, representing 1.7% power plants) and announced that big role to fill the gap.

60 GWEC I Global Offshore Wind Report 2020 Japanese offshore wind “sector deal”

On 17 July 2020, METI & MLIT held the first government-industry dialogue in Tokyo to promote offshore wind power development in Japan. This dialogue works as a system that can increase the voice of the industrial world from various power sources and is a concept similar to the Sector Deal in UK. During the first government-industry dialogue, JWPA proposed the 10 GW by 2030 and 30- 45 GW by 2040 offshore wind targets. The government suggested the intention to nominate 3 or 4 candidate sea areas (each area has 300-350 MW in capacity) ache year (about 30 projects in total). If this plan can be executed, it would bring Japan’s total offshore wind capacity to about 10 GW by 2030.

Building the local offshore wind supply chain A more streamlined regulatory environment has drawn the attention of large local utilities including TEPCO, which signed an MOU with leading offshore wind developer Ørsted to work jointly on offshore wind projects in Japan and abroad. In addition, Kyuden Mirai, a subsidiary of

GWEC.NET 61 Kyushu Co, J Power GE Renewable Energy and others to Conclusion and Tokyo Gas Co. also signed move in. the partnership with RWE, Engie 2020 is expected to be an important and Principle Power respectively In March 2020, MHI Vestas gained year for Japan’s offshore wind sector, with the focus on the offshore its first firm order in Japan, to with the launch of the first wave development. supply turbines to the 139 MW of commercial projects and the Akita Noshiro offshore wind announcement of the framework for Local and international suppliers are project owned by a Marubeni- further tenders. also entering the offshore wind value controlled subsidiary, while in chain. For example, Tokyo-based November 2019, it signed a Penta Ocean took delivery of Japan’s preferred supplier agreement to first jack-up offshore wind turbine supply its V174-9.5 MW turbines installation vessel (OWTIV) in 2019, to the 220 MW Hibikinada offshore while another three OWTIVs are wind farm. In April 2020, MHI expected to be delivered in 2022 by Vestas was selected to supply local companies including Shimizu, turbines for the 700 MW Akita Kajimay, Yorigami, Obayashi and Yurihonjo project, one of the Toa. International-local partnerships, largest offshore wind farms such as Van Oord/NYK and Northern planned in Japan. Offshore Group/NYK, have been established to capitalize on the emerging opportunities in foundation and turbine installation and wind farm operation. However, the government MHI Vestas gained its first firm order in Japan, may need to find a new strategy to revive its local offshore turbine to supply turbines to the 139 MW Akita Noshiro manufacturing industry as two local offshore wind project owned by a Marubeni- turbine OEMs, Japan Steel Works (JSW) and Hitachi, have discontinued controlled subsidiary, while in November 2019, turbine production in recent years; it signed a preferred supplier agreement to this could leave room for MHI Vestas (a joint venture between Mitsubishi supply its V174-9.5 MW turbines to the 220 Heavy Industries and Vestas), SGRE, MW Hibikinada offshore wind farm.

62 GWEC I Global Offshore Wind Report 2020 South Korea

Offshore wind is a golden opportunity a low initial feed-in tariff (prior to for South Korea, offering the chance the introduction of the Renewable to accelerate its phaseout of fossil Portfolio Standard scheme) also fuels and nuclear generation dampened growth.

Nearly a decade ago, South Korea As a result, South Korea’s initial foray adopted an ambitious Green into “green growth” and a clean Growth Strategy that aimed to energy transition saw little translation reduce greenhouse gas emissions into action for the better part of the by 30% by 2020. This strategy last decade. marked the beginning of “green South Korea prepares to push the growth” as the direction of travel reset button on offshore wind for South Korea’s economic growth, sparking the interest of domestic Nonetheless, at the start of a new industrial conglomerates (such as decade, the momentum for offshore Samsung, Hyundai, Doosan and wind in South Korea is picking up STX) in renewable energy project with the passage of President Moon development and equipment supply. Jae-in’s Green New Deal and a groundswell of interest from ambitious Following a 2.0 MW STX direct consortia of local and international drive offshore turbine and a 3.0 MW wind energy developers. Doosan geared drive turbine installed in early 2010s’ for testing purpose, 1. Policy support the 30 MW Tamra offshore wind farm came online off Geumdeung-ri Growth in modern South Korea is in Jeju Island in 2016. However, the built upon energy-intensive industries sector has been generally slow to such as electronics, automotive and take off, due to public opposition on shipbuilding, many of which are environmental and livelihood (fishing) difficult to decarbonise. As such, the issues. Long permitting periods and nation is still embroiled in public

GWEC.NET 63 by 2030 (currently around 6%) and South Korea also has its own wind Over 12 GW of new offshore wind capacity to increase that share to 30-35% turbine manufacturers. Of these, by 2040. Given insufficient land Doosan has the longest track record needs to be installed to reach the country’s 2030 available for onshore wind and low in offshore wind with 96 MW installed, solar radiation, attention has moved and is expanding its products line-up renewable energy target. offshore. Over 12 GW of new offshore to 8 MW platform from the current 3 wind capacity needs to be installed to MW and 5 MW models. In addition, reach the country’s goals. local turbine suppliers Unison and debates over its commitment to coal, Hyosung are seeking opportunities in gas and nuclear power, imposing 2. Strong local industrial base offshore developments. a drag on the transition to cleaner South Korea’s industrial experience in and more secure renewable energy A strong locally supply chain steel, shipbuilding and logistics could sources. also exists for forging, with local translate to competencies in offshore companies Hyundai Forging, Hyunjin Now, with President Moon in office engineering and supply chain Materials, Kofco and Taewoong, and the re-election of the Democratic efficiencies, smoothing the pathway to as well as slewing bearings Party in 2020, South Korea can press developing a localised offshore wind manufacturers Shilla and CS Bearing, ahead with its newly adopted Green industry. already exporting products to New Deal. To boost the green sector, For instance, its marine and offshore overseas offshore markets. South Korea plans to invest a total of industry will play a critical role 12.9 trillion won (US$10.8 billion) in 3. International partnerships fabricating offshore wind jacket green buildings, urban forests and foundations, with local shipyard Leading international offshore players low-carbon energy production by company Samkang already delivering have recognised the potential for 2022 and create 133,000 jobs in the jacket foundations to the Changhua offshore wind (particularly floating process. Under this plan, South Korea Demonstration project in Taiwan. offshore) in South Korea and are has become the first country in East South Korea also has the advantage piling into the market. Asia to pledge to reach net-zero of high R&D intensity in shipbuilding emissions by 2050. and cabling, allowing Samsung Early last year, the port city of Ulsan signed an MOU with four domestic Through its Third Energy Plan, and Hyundai to build offshore wind and foreign partners and investors released in June 2019, South Korea’s installation vessels and local company (including Royal Dutch Shell and “Renewable Energy 3020” target for LS Cable & System to manufacture CoensHexicon, South Korea’s energy 20% of total electricity consumption offshore cables for markets in Europe company SK E&S and Denmark’s to come from renewable energy and the US. Copenhagen Infrastructure Partners,

64 GWEC I Global Offshore Wind Report 2020 Status of Offshore Wind Farms in Korea

Authorization for power generation business (`20.07)

Scheduled (Total 3.7GW) In operation (Total 132.5MW) Poongdo Offshore Wind Power (200) IWEST / Uram jonghap geonseol Farmname(Capacity MW/installation number) Owner

Gunsan offshore wind power demonstration (3/1) Korea Electric Power Research Institute Saemangeum offshore wind power (98.8) Saemangeum Offshore Wind Power

Southwest Offshore Wind Power (demonstration complex 60/20) KOWP

Nakwol offshore wind power (354.48) Myeongwoon Saneopgaebal Anma offshore wind power (218.4) Anma offshore wind power Dongnamhaean Offshore Wind Power (136/17) SK E&C YeomSan wind power (38.4) Daemyeong Energy Wind System Evaluation Center (12.3) JNTP Yeonggwang Doouri Wind Power (99.1) Jaewon Energy Yeonggwang (79.6 (Offshore 34.5) /35) Daehan Green Energy / EWP Changwoo offshore wind power (151.2/36) CW&RE Yeonggwang Yawol 2 offshore wind power (10.0) Yawol 2 offshore wind power Yeonggwang Yaksu Offshore Wind Power (4.3) JNDC Yeonggwang Yawol offshore wind power (49.8/20) Daehan Green Energy Haegi Offshore Wind Power (40) G Wind Sky Eoui Offshore Wind Power (16) Sinan Eoui Offshore Wind Power

Apae Wind power1,2 (60) Apaepungnyeokbaljeon Tongyeong Socho Wind Power (9.9) Yeongdongbaljeon Maewol offshore wind power (96) Maewol offshore wind power Yokji Offshore Wind Power (352/64) Hanguk Baljeon Gaebal Sinan Jeungdo Wind Power (33.0) Win Wind Power

Shinan Wuyi Offshore Wind Power (396.8) Hanwha E&C/ KOENERGY /SK D&D Wando Offshore Wind Power (148.5/27) IWEST

Shinan Offshore Wind Power (300/47)POSCO Energy/ KOENERGY Geumil offshore wind power (200/25) KOENERGY / Cheonghae Remikon

Jeonnam offshore wind power(96/24)SK E&S Korea Institute of Energy Research’s offshore wind power demonstration (2/1) Chunsaeoeui Offshore Wind Power (16.0) Cheonsaeouipungnyeokbaljeon Doosan Heavy Industries & Construction's offshore wind power demonstration (3/1)

Hallim Offshore Wind Power (100) KEPCO/KEPCO E&C/KOMIPO/Daelim Industry/Baram Woljeong/Hangwon Offshore Wind Power (125) investment planned Handong·Pyeongdae Offshore Wind Power (105) investment planned Tamla Offshore Wind Power (30/10) KOENERGY

Daejeong Offshore Wind Power (100) KOSPO/Doosan Heavy Industries & Construction Pyoseon Offshore Wind Power (135) / investment planned

Source: Korea Wind Energy Industry Association GWEC.NET 65 Macquarie’s Green Investment Group Fulfilling the promise of South Korea does not always match action, the (GIG) and Korea Floating Wind offshore wind market will need steadfast public (KFWind)) to explore large-scale steering and ambitious long-term floating offshore wind development. As of June 2020, there are currently targets to drive decarbonisation and In February 2020, Canadian power 5 operational offshore wind projects diversify the power mix. Still, with producer Northland Power acquired totalling 132.5 MW, including the latest sufficient government commitment local wind developer Dado Ocean, and largest 60 MW demonstration and industry experience from which owns a portfolio of early-stage Southwest Offshore Wind Project neighbouring countries to smooth offshore wind projects in South Korea. completed in January – the first the learning curve, the future of South phase of a massive 2.5 GW project. Korea’s offshore wind sector looks In addition to partnerships and Over 23 offshore wind projects are in bright indeed. acquisitions, large-scale floating preliminary development (totalling projects are being developed 7.3 GW), as shown in the project map by international-local consortia. on page 56. The 200 MW Donghae 1 floating offshore wind farm, nearly 60 Despite its slow start, South Korea’s kilometres offshore from Ulsan, is offshore wind sector is now benefiting being developed by Equinor, the from the financial clout coming Korea National Oil Corporation from both state-owned and foreign (KNOC) and Korea East-West Power investors, and buoyed by its existing Corporation, for commissioning in industrial infrastructure. GWEC 2024. In proximity to this project, Market Intelligence forecasts that a Equinor recently commenced LiDAR total of 7.8 GW of offshore wind is installations to conduct metocean data likely to be built in South Korea by measurements for a potential 800 MW 2030, of which 1.2 GW is expected to floating offshore wind project. be floating wind.

By 2030, South Korea is expected to However, South Korea remains a emerge as East Asia’s hottest floating challenging market with respect to offshore wind market, housing some terrain complexity, turbulent wind of the world’s biggest floating offshore conditions and strong incumbent wind farms, boosted by significant energy and marine actors, developer and investor appetite. particularly among the coal and fishing industries. Coupled with criticism that government rhetoric

66 GWEC I Global Offshore Wind Report 2020 GLOBAL WIND ATLAS MEAN WIND SPEED MAP VIETNAM

Vietnam Onshore and offshore wind speed in Vietnam

Since commissioning its first 16MW Steady strengthening of Vietnam’s intertidal wind farm in Bac Lieu in wind project pipeline 2013, Vietnam has emerged as the offshore wind market to watch in PDP 7 aims for 800MW of onshore South East Asia. Now with 99MW of and offshore wind energy GLOBALby 2020 WIND ATLAS offshore wind installed capacity, and and 6GW by 2030 – whichMEAN pales WIND SPEED MAP VIETNAM 200MW due to come online in 2020, in comparison with the country’s Vietnam has drawn significant interest technical potential. With a coastline amongst international developers, of more than 3,300 kilometres and investors, and financiers as a fast- average wind speeds of 8-9m/s in growing market. the south, up to 475 GW of fixed and floating offshore wind resource Vietnam’s market growth is potential has been identified by the supported by strong fundamentals World Bank Group.[1] Due to growing including a steep rise in energy industry appetite to develop offshore demand, rapid industrialisation and a wind power in Vietnam, the market is growing population. While currently expected to reach around 2.0 GW of dependent on fossil fuel generation, offshore wind capacity by 2025 and the Vietnamese government has 5.2 GW by 2030. sought to accelerate the production of electricity from renewable sources, Offshore wind is prioritised in the targeting 10% renewables in its 2030 government’s plan to build a “blue power mix in PDP 7, the country’s economy” – developing marine- master energy plan. But for a market based renewables to meet energy known for its technical and legal needs – and achieve energy security. complexity, clarity on regulation, grid Since revising PDP 7 in 2016, the access and bankability of projects Vietnam government has been remain critical challenges. reorienting its reliance on coal to

[1] http://documents.worldbank.org/curated/ This mapMap is printed obtained using thefrom Global the WindGlobal Atlas Wind online Atlas application 3.0, websitea free, (v.3.0) web-based owned by application the Technical developed, University of Denmark.owned and For moreoperated information by the and Technical terms of use, University please visit https://globalwindatlas.info en/716891572457609829/pdf/Going-Global- of Denmark (DTU). The Global Wind Atlas 3.0 is released in partnership with the World Bank Group, utilizing data provided by Vortex, using Expanding-Offshore-Wind-To-Emerging-Markets.pdf funding provided by the Energy Sector Management Assistance Program (ESMAP). For additional information: : https://globalwindatlas.info

GWEC.NET 67

This map is printed using the Global Wind Atlas online application website (v.3.0) owned by the Technical University of Denmark. For more information and terms of use, please visit https://globalwindatlas.info prioritise clean energy sources. Despite the ambition for Promising developments for PDP 8 Resolution No. 55-NQ/TW, published decarbonisation and attractive in February 2020, outlines measures resource potential, pursuing a least- PDP 8, expected by the end of 2020, to liberalise the energy sector cost transformation of the energy will outline a two-year extension to and reduce the share of coal-fired system will require transparent the current FiT framework for offshore generation in the power mix. policy, streamlined administration wind, as well as higher capacity and a flexible grid. The lack of policy targets out to 2030. In April 2020, Just last month, the government differentiation between onshore, the Ministry of Industry and Trade of formally approved a list of 91 nearshore and large-scale offshore Vietnam (MOIT) officially proposed additional wind projects totalling 7 wind projects of Vietnam is holding an extension of the FiT mechanism for [2] G W, on top of the 4.8 GW of planned the sector back. PDP 8 is expected wind projects from 1 November 2021 wind capacity (78 projects) already to deliver more concrete policy to 31 December 2023. By 2024, the approved under the current master frameworks for large-scale offshore government is planning to transition plan. Projects in operation (377 MW) wind developments, including zoning, wind procurement to an auction and those with power purchase marine spatial planning, and ports system. contracts with EVN (1,662 MW) are infrastructures plans and permitting This development followed policy excluded from the figures above. All processes. A key issue will be the engagement with GWEC Asia, of these puts Vietnam on track for a design challenges for grid upgrades, which highlighted the supply chain total wind power generation capacity and whether public or private bodies disruptions, labour shortages and of nearly 14 GW latest by 2030. will be responsible for investments construction delays brought by the in grid connections and transmission The added wind capacity is viewed Covid-19 outbreak, as well as the infrastructure. as necessary to plug the power permitting delays to several wind shortage left by delayed coal plants, projects which made it unfeasible which may not come online until 2023. While Vietnam remains a net coal importer for now, the declining economics of new coal generation vis-à-vis wind and The government formally approved a list of 91 are driving the shift to utility-scale additional wind projects totalling 7 GW, on top of renewable generation. the 4.8 GW of planned wind capacity (78 projects) already approved under the current master plan. [2] https://tinnhanhchungkhoan.vn/dau-tu/danh- tinh-91-du-an-dien-gio-vua-duoc-bo-sung-quy-hoach- dien-333024.html

68 GWEC I Global Offshore Wind Report 2020 to meet the 2021 commissioning A bankable PPA is a building block of Vietnam. The country has a solid Offshore wind is set to play a critical deadline under the original FiT successful offshore wind markets that pipeline for offshore wind, most role in Vietnam’s clean energy framework. require huge volumes of capital, and of which are nearshore, with three transformation, bringing in local and is widely perceived as a constraint on projects in the build phase (142MW foreign investment, creating local A direct power purchase agreement Vietnam’s wind sector development Bac Lieu Phase 3, 40MW Khai Long and sustainable jobs, delivering (DPPA) pilot programme could also and financing. Bankability of the DPPA I and 48MW V1-1 - Truong Long carbon reduction and positioning the generate new revenue opportunities and verification of renewable energy Hoa project) and 10 in the pre- country as an energy leader in South and demand for renewable energy attributes according to international construction phase, as of June 2020. East Asia. To deliver this potential, from industrial consumers. Currently, standards will both be required for the government must expedite national utility Vietnam Electricity the secondary market to take off. Worth highlighting is the mammoth its improvements to the current (EVN) and its subsidiaries act as Thang Long project at 3.4GW – regulatory framework, streamlining the sole offtaker of electricity from Offshore wind project outlook making it one of the world’s biggest permitting processes and reducing generators. However, the government offshore wind farms once completed the legal and technical complexities has announced its vision for a Further regulatory clarity, especially – which has already obtained in the process of obtaining seabed of offshore developments. It must also competitive power market, with this approvals from the government. The focus on risk mitigation mechanisms DPPA pilot scheme operating from leases and approvals for offshore project is still in the early stage and its wind projects, will be critical to and reforms to the standard PPA, 2021 to 2023, paving the way for a first 600MW phase is planned to be which can increase investor and off retail electricity market. attracting the international capital completed by 2022. and interest that can sustain a boom taker certainty and reduce the cost of in offshore wind development in capital for wind projects.

GWEC.NET 69 US East Coast offshore wind project and lease areas The US offshore wind market has and natural gas. Since the regulations picked up strong momentum since were enacted, BOEM has issued 16 the 30 MW Block Island Wind Project commercial offshore wind energy came online in Rhode Island in leases, including three commercial NY December 2016. Despite a complex leases in 2019. In total the 16 offshore MA regulatory scene with differing rules wind leases could support more RI CT across the offshore states, large-scale than 21 GW of generating capacity. Bay State Wind projects are advancing and developer BOEM is now in the planning stages Revolution Wind (704MW) Vineyard Wind (800MW) appetite has been at fever pitch. And for leasing areas off the coast of New PA South Fork Wind Farm with technical resource potential for York, South Carolina, California and (130MW) Sunrise Wind (880MW) Park CIty (804MW) US offshore wind exceeding 2,000 Hawaii and expects to hold two lease Equinor GW, there is vast room to grow. sales in 2020, one in the Atlantic in the Mayflower Wind (804MW) New York Bight and one in the Pacific NJ Empire Wind (816MW) Regulatory progress at both federal off California. and state levels The issuance of leases and Atlantic Shores Offshore Wind On the federal level, the Bureau subsequent review of energy Ocean Wind (1,100 MW) DE of Ocean Energy Management development activities on the Ørsted, PSEG (BOEM) is responsible for managing Skipjack Wind Farm (120MW) OCS is a staged decision-making MD MarWin (269MW) development of offshore resources process. BOEM’s renewable energy in federal waters. In 2009, the authorization process is comprised Department of the Interior (DOI) of four distinct phases (Figure 2). The announced final regulations for lease does not provide the lessee the Unnamed Dominion Energy Project (2,640MW) the Outer Continental Shelf (OCS) right to construct particular facilities; Renewable Energy Program, which VA rather, the lease provides the right Coastal Virginia Offshore Wind (12MW) provides a framework for issuing to use the leased area to develop leases, easements, and rights-of- Avangrid Renewables its site assessment and construction NC way for OCS activities that support and operations plans, which must be production and transmission of approved by BOEM before the lessee energy from sources other than oil can move on to the next stage of the Source: BOEM, AWEA, January 2020

70 GWEC I Global Offshore Wind Report 2020 Phases of BOEM’s Offshore Wind Energy Authorization Process

ears 1 ears ears ears

Intergovernmental Task Construction and Publish Leasing Notices Site Characterization Force Operation Plan Conduct Auctior or Site Assessment Plan Request for Information Facility Design Report or Call for Information Negotiate Lease Terms and Fabrication and and Nominations Installation Report Issue Lease(s) Area Identification Decommissioning Environmental Reviews Environmental and Technical Reviews

Source: BOEM, AWEA, January 2020 process. On the last phase, BOEM Connecticut, Massachusetts, New and Virginia together with the 2030 through state-issued solicitations, conducts environmental and technical York, New Jersey, Delaware, Maryland, offshore wind targets released in which are the calls for proposals from reviews of the plan submitted by Virginia and North Carolina is Connecticut and Maryland have offshore wind developers to deliver project developers and decides driving strong demand for offshore brought the country’s total offshore offshore wind energy to an state. whether to approve, approve with wind energy. To date, more than wind procurement targets from 9.1 The top four states by total volume modification or disapprove. At the 10 states have offshore projects in GW in 2018 to 28.1 GW in 2020 (see of solicitations are: New York (1,696 end of lease, project developers must development, of which six states have figure on page 17 on Global Market MW), Massachusetts (1,604 MW), decommission facilities in compliance offshore wind procurement targets Outlook section). Connecticut (1,108 MW) and New with BOEM regulations. through either legislation, conditional Jersey (1,100 MW). The state-level targets or executive orders. The According to AWEA, as of June solicitations are expected to continue On the state level, the East recently increased offshore wind 2020, six states had selected nearly in 2020. Coast cluster consisting of Maine, targets in New York, New Jersey 6,300 MW of offshore wind projects

GWEC.NET 71 Developers expect 15 offshore wind projects, totalling 10,603 MW, to be commissioned by 2026.

In January 2020, New York State ownership, more than 70% of the Energy Research and Development capacity to be delivered by 2026 is Authority (NYSERDA) filed a petition controlled by European developers, with state regulators to initiate a of which Ørsted is taking the lead regulatory proceeding for the (2.5 GW). The Danish utility is closely authorization of a second large- followed by Avangrid Renewables, a scale solicitation for at least 1 GW subsidiary of Spain’s Iberdrola (2.3 of offshore wind. Developers expect GW), Equinor (816 MW), CIP (804 15 offshore wind projects, totalling MW), EDPR (402 MW) and Shell (402 10,603 MW, to be commissioned by MW). 2026. Market ready to take off from 2024 According to AWEA, as of April 2020 with European suppliers dominated the US offshore wind pipeline totalled the current pipeline more than 26 GW in federal lease areas issued to date. According to Although the 12 MW Dominion GWEC Market Intelligence, out of Virginia demo project was this pipeline, developers expect successfully installed in June 15 offshore wind projects, totalling 2020, compared to GWEC Market 10,603 MW, to be commissioned Intelligence’s pre-COVID outlook, by 2026. Out of the 10,603 MW of the combination of prolonged lead offshore wind capacity, 25% is likely time to secure federal permits and to be built in Virginia, followed by the effects of the COVID-19 health New York (17.2%), Massachusetts crisis has caused delays for projects (15.2%), North Carolina (14.0%), previously scheduled for commission Connecticut (10.5%) and New Jersey in 2022 and 2023. Thus, we have (10.4%). With regards to the project

Copyright:72 Dominion Energy GWEC I Global Offshore Wind Report 2020 pushed back the commission year factors to fulfil timelines and meet Expected annual offshore wind installation by state, 2020-2026 for those projects by one year. ambitious targets. Individual states have defined programs, As of the end 2019, offshore Maine Ohio Delaware Maryland 4184 including tax incentives and developers have selected or Rhode Island New Jersey Connecticut research grants, to attract private announced preferred turbine North Carolina Massachusetts New York 880 investment. The challenge here 3246 suppliers for nine offshore projects. Virginia 2878 will be defining a collaborative Thanks to Dominion Energy’s approach and planning strategy 804 1696 2,640 MW project off the coast of 1760 in order to set up an efficient Virginia, Siemens Gamesa is so far 304 130 supply chain across individual the largest winner with a 4,366 MW 120 1100 804 states. order backlog in the US, followed 20.7 12 283 1486 by GE Renewable Energy (1,220 12 400 270 804 MW) and MHI Vestas (804 MW). SGRE’s SG14-222 DD (the world’s 2020e 2021e 2022e 2023e 2024e 2025e 2026e largest offshore model released in Source: GWEC Market Intelligence, June 2020 May 2020), GE’s Haliade X- 12MW DD and MHI Vestas’ V164-9.5 MW turbines are the most popular ramp-up of an industry with huge and the public – throughout the models selected for those projects. growth potential and strategic development and construction process is essential. Challenges need to be addressed alignment with economic to achieve growth recovery objectives. The final • Establishing a local supply approval from BOEM for the chain and investing in grid and With activity level accelerating Construction and Operations port infrastructure through a along the East Coast, GWEC Plan (COP) has been particularly collaborative approach will be Market Intelligence predicts a total prolonged for developers, and essential to the sector’s success of 22.6 GW of offshore wind could has already impacted projects in the US. Commitments and be built in the US by the end of this scheduled to be online in 2022- investments in the supply chain, decade. To realize such potential, 2024. In addition, for future including Jones Act-compliant however, the following key commercial lease sales, engaging offshore wind installation vessels, challenges must be addressed: stakeholders – including federal, adequate grid buildout and port • Slow project permitting state and local agencies, fishing infrastructure, as well as a trained processes can delay the and marine use communities and skilled workforce, are critical

GWEC.NET 73 France

With a total 16.6GW of installed 496MW Saint-Brieuc project in 2023. target of 5.2-6.2GW installed offshore onshore wind capacity, and a solitary Projects from Tender II are still waiting wind capacity by 2028. Taking it one 2MW pilot floating turbine spinning, to be cleared and expected to be step further, the revised Multiannual France is undoubtedly late to the commissioned in 2023/2024. Energy Programme (Programmation offshore wind boom when compared pluriannuelle de l’énergie, or PPE) to its European neighbours. The In France’s third offshore wind auction raised its target to put up to 8.75 first wave of French offshore wind in 2019, an EDF-Innogy-Enbridge GW of offshore wind capacity out to projects was auctioned in 2012 consortium won the right to develop a 600MW offshore project off Dunkirk (1.9GW allocated) and 2014 (1 GW French offshore wind projects allocated), but public opposition with a winning bid of EUR44/MWh. and project delays linked to fishing This particular tender featured a Dunkirk industry, aviation and national security number of regulatory changes that Le concerns stalled progress for years. facilitated competitive bidding, Tr éport This was followed by retroactive tariffs faster project developments and low Fécamp Courseulles -sur -Mer cuts in line with the rapid decline bid prices. Dropping local content in offshore wind prices since the requirements, shifting transmission Saint-Brieuc auctions. cost to the Transmission System Operator (TSO) and pre-tender public participation all contributed to The reboot of the French offshore Groix producing a successful procurement wind industry Floatgen Tender I round, securing prices 69% cheaper Saint-Nazaire Tender II Nonetheless, at the start of this new than previous French tenders. decade, France’s offshore wind sector Yeu-Noirmoutier Tender III is finally advancing. Backlogged Following the third tender, the French Floating tender I projects from Tender 1 have resolved government is committing strongly Floating tender II their permitting disputes, clearing to both onshore and offshore wind. In Faraman the path to financial closure. These April 2020, France’s 10-year National Demonstration are expected to come online by Energy and Climate Plan (NECP) Leucate 2022, starting with the 480MW Saint- was submitted to the European Gruissan Nazaire project, followed by the Commission, setting an impressive

74 GWEC I Global Offshore Wind Report 2020 tender from 2020 to 2028. If this target According to government plans, the Other positive developments from located between the islands is realised, GWEC expects France next tender will take place in H2 industry in 2020 include: of Yeu and Noirmoutier to the would become the eight-largest 2020 for a 1GW offshore project in • European Investment Bank French national grid. offshore market globally by that time. the Manche Est-mer du Nord region, (EIB) has granted a €450 million Conclusion followed by further 1 GW tenders (US$507m) credit line to co- Promising offshore wind outlook in 2021, 2022 and 2023. Separately, finance the construction of the ahead Although the French market had a a total of 750MW floating offshore 497MW Fécamp offshore wind slow start, the government’s recent By 2030, GWEC Market Intelligence capacity will be allocated through project expecting to come online PPE commitment and 2028 target expects 8.5 GW of offshore wind three projects in Brittany, Occitanie in 2022; have put offshore wind back in the and Provence-Côte d’Azur, expected capacity to be installed in France. Spanish energy company spotlight. If it can realise its capacity to be awarded in 2021 and 2022. • This includes the 3.5 GW of approved Iberdrola announced an targets and maintain a streamlined The Environment Minister recently projects from Tenders I, II and III, as investment of EUR 3-4 billion permitting and consenting process, announced that from 2024 onward, well as four demonstration floating in renewable energy projects the country is expected to be among France will tender 1 GW per year of wind projects and volume outlined in in France, and plans to start Europe’s top five offshore wind either fixed-bottom or floating wind future tenders. construction on the EUR 2.5 markets by 2030, as well as one of the capacity, largely depending on the billion Saint-Brieuc project in world’s leading markets in floating cost. 2021; wind. • Siemens Gamesa Renewable France offshore outlook, 2020-2030e Energy (SGRE) is expected to 1968 start construction of its blade New Cumulative manufacturing facility in Le Havre, creating around 750 direct and indirect jobs, scheduled for completion in 2023; 1000 • LM Wind Power announced plans 1000 1000 1000 1000 948 to recruit 250 employees at its blade manufacturing facility in Cherbourg in 2021; 500 • Prysmian secures over €150 Million (US$169m) from RTE to

25 25 59 develop two submarine and land export power cable systems 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 to connect offshore wind farms Source: GWEC Market Intelligence, June 2020

GWEC.NET 75 Part 3. Exploring new markets World Bank Group – Offshore Wind Development Program

energy sector policies and strategies Background of WBG client countries and support The World Bank Group (WBG) the work needed to build a pipeline launched a new global initiative of bankable projects. Key activities on offshore wind in March 2019. include conferences and study The Offshore Wind Development tours, knowledge creation, capacity Program is being funded and led building, strategic country roadmap by the Energy Sector Management studies and technical assistance. Assistance Program (ESMAP) in close partnership with the International Conference and Study Tours Finance Corporation (IFC, the UK Study Tour, June 2019 private sector arm of WBG). GWEC collaborates with WBG on execution • GWEC organised a week-long of key elements of this initiative. study tour to the UK, attracting delegates from 12 WBG client Core funding was received from countries. The week started with the UK Department for Business, a private conference at BEIS, Virtual Study Tour, September 2020 Energy and Industrial Strategy (BEIS). followed by a day at the Global Additional funding has been sourced Offshore Wind conference. The • For 2020 WBG has chosen and further funds are expected across delegation was then taken up to move to a virtual event the 5 year duration of the program. to NE England to see various and, again, GWEC is leading offshore wind activities including the organisation. The virtual The objective is to support the research, manufacturing, ports approach gives certain inclusion of offshore wind into the and a training facility. advantages; more delegates

76 GWEC I Global Offshore Wind Report 2020 can attend, more locations can technical resource potential estimated be “visited” across multiple across these 48 markets is 15.6 TW. geographies and all with a dramatic reduction in carbon Countries Engaged footprint. • Following the UK Study Tour a number of countries have asked Knowledge Creation for technical assistance on offshore wind, including: The first report from the program was released in Oct 2019, entitled “Going • Vietnam, where a roadmap Global: Expanding Offshore Wind study is nearing completion To Emerging Markets”. The report and a draft report is with the gives a general background on the Ministry of Industry and Trade for offshore wind market, the dramatic consultation across government. fall in prices and lessons learned. It • Turkey and Sri Lanka, where provides an estimate of the offshore roadmap studies are being wind technical resource potential in commissioned in Summer 2020 8 developing countries, including • Brazil, where a virtual event with India, Vietnam, South Africa, Brazil stakeholders and government is and Turkey. The report concludes that planned for July 2020. the resource is massive and emerging Ongoing engagements with markets are well placed to benefit • governments in India, South from growth of the offshore wind Africa, Colombia, Azerbaijan, sector. Philippines, Nicaragua and others. The second knowledge output has been the preparation of 48 maps of WBG client countries and regions For further information see (see example above) which have https://esmap.org/offshore-wind an offshore wind resource. The total

GWEC.NET 77 Exploring New Markets

From the perspective of GWEC Market Intelligence, it is important to highlight the potential development for offshore wind in newer markets. Even if actual installations will not happen immediately. The five selected markets, Ireland, Poland, Estonia, India, Australia, are representative of markets with high offshore wind potential but varying political support and targets to date. Still, in all five markets there is an increasing awareness that offshore wind can provide an at scale, cost- competitive and efficient solution for these countries.

GWEC Market Intelligence is monitoring activities in 46 markets on a regular basis to document the opportunities and progress of taking offshore wind global.

78 GWEC I Global Offshore Wind Report 2020 Country Development stage Political support Challenge Next milestone Ireland Pre-approval of 7 offshore wind projects Strong and clear support for offshore Strategic investment to build an indigenous Steps need to be taken to grow the local by government, totalling 3.5 GW, awaits wind on the Programme for Government and economically sustainable local supply chain, currently, no port in Ireland auction in 2021. (“PfG”), published in mid of June by supply chain including improving port meets all the requirements for offshore Ireland’s prospective new government, infrastructure. wind projects. with policy targets to include 5 GW of offshore wind off the Eastern and Southern coasts by 2030 and an assessment of the potential for 30 GW of floating Atlantic offshore wind, coupled with commitments to hold the first offshore wind auction in 2021, developed an Options Paper on offshore grid models and the enactment of the Marine Planning and Development Bill within 9 months (presumably from Government formation). Poland Up to 5.9 GW (instead of 4.6 GW 10 GW of offshore wind envisaged to be Depends on strengthening and Await the regulatory frameworks for announced in Jan 2020) in projects would built by 2040 that could generate 25% modernising Poland’s transmission permitting, tendering and development to be granted a fixed CfD support by end of Poland’s energy according to Energy network, especially in the north. be finalised so as to kickstart the industry of 2021 and another 2.5 GW each in Policy of Poland until 2040 (EPP 2040). with international financing entering. 2025 and 2027 to be tendered off in competitive CfD auctions. Estonia Initiated the construction permit approval Renewable energy to account for 50% Strengthen Estonian-Latvian cooperation Estonia and Latvia work to develop process for Eesti Energia’s 1 GW offshore (currently, at 30%) of final consumption of in marine spatial planning of joint wind guidelines for a collaborative project and wind project in the Gulf of Riga, together domestic electricity by 2030 as announced farms, in attempt to avoid past halted have companies’ part of the discussion to with Latvia. in Estonian Energy Development Plan offshore projects due to national security intensify the cooperation for projects to (ENMAK 2030). concerns. come online. India Nearly 70 GW potential area has been India had announced a national target to Offshore wind in India is expected Proper plans for the tender of the first earmarked for offshore wind development, have 5 GW installed capacity by 2022 to compete with cheaper land-based projects, possibly beginning with a however the tender for the first 1 GW and 30 GW by 2030, the first target is renewables and it has stalled the market. demonstration scale project. offshore wind project in the Gulf of now not feasible and the second would Khambhat (Gujarat) has been delayed, require a rapid deployment. attention has now turned to the stronger wind resource area off Tamil Nadu. Australia Progress continues on Australia’s ground- At the start of the year, a plan for an Patchy track record on general support Policy formation. breaking 2.2 GW Star of the South offshore clean energy bill was issued by and policy measures to back renewable offshore wind energy farm, with contracts the Department of the Environment and energy generation, especially with respect signed for the design of the project’s Energy. Once implemented, the framework to long-term certainty for measures such as onshore transmission network and grid will fill an existing regulatory and its Feed-in-Tariff scheme. connection. legislative gap that can kick-start a viable offshore clean energy industry in Australia.

GWEC.NET 79 OFFSHORE WIND TECHNOLOGIES

Courtesy of Principle Power. Artist name: Dock90

80 GWEC I Global Offshore Wind Report 2020 Next Generation of Offshore Wind Turbine Technology

When the world’s first offshore turbine which can reach 15 MW with wind farm, Vindeby, was installed in Power Boost will be commercially Evolution of Offshore wind turbine and project size Denmark in 1991, the turbine size available from 2024. 00 was only 450kW (Bonus B35). Since then, the offshore wind turbine size The increase of offshore wind turbine 90 size has been driven primarily by 0 has grown significantly with the global 0 the goal of reducing the levelized cost average offshore wind turbine size 0 reaching 1.5 MW in 2000 and 6.5 of wind energy (LCOE). When the bigger offshore turbine is released 0 MW in 2018. In Europe, the average . 0 turbine size for new installations in with a higer , rotor diameter and tower height, the 0 . 2019 is even higher, 7.2 MW. . technical capacity factors are higher, 0

GE Renewable Energy launched its which in turn increases the annual nits per Proect Aerae 0 . Haliade X 12 MW DD turbine in 2018 energy production (AEP). 0 . with the first prototype installed in Rotterdam for onshore testing from Although larger turbines per unit are 0 November 2019. When the Haliade X, more costly than smaller ones, it saves 000 00 00 0 00 0 which was the world’s largest offshore the CAPEX for foundations, cables and installation as well as the OPEX * Expected average turbine size in markets outside China where average size is likely to be 7-8 MW wind turbine model at the time, was Source: GWEC Market Intelligence, June 2020 released, the company stated that12 due to lower turbine units. MW was not the end, it was the With offshore wind power developed climate change targets. However, beginning and will get bigger. This from a costly alternative to a with wind power penetrations was proven true when its competitor, competitive source of energy, it is increased, challenges are imposed the world’s largest offshore wind expected to play a big role in the on the electricity grid due to the turbine supplier in total installations, global energy transition, helping characteristics of wind. A new study Siemens Gamesa, released its SG14- countries to reach their committed by Berkeley Lab, however, shows 222 DD model in May 2020. This new that in addition to the reduction in

GWEC.NET 81 levelized costs, significant increases long-term wind output uncertainty). and China (see figures on page 81- However, at what point the future in wind turbine size can, in fact, Considering the system benefit 82) also illustrate such trends. offshore turbine size will plateau enhance the value of wind energy to provided by supersized offshore will be determined by factors such the electricity system and provide turbines as well as the increasing Our offshore wind ambassador and as continued turbine technology other ‘hidden’ benefits including pressure for offshore wind to the offshore wind pioneer Henrik innovations, drive-train optimization, reduced transmission expenditure reach grid parity, GWEC Market Stiesdal predicted in GWEC’s recent alternative materials, regulatory (due to greater transmission Intelligence believes that the offshore Global Offshore Wind Technology barriers, and logistical constraints for utilization), lower balancing costs for wind turbine size will continue to webinar that the next generation of both transportation and installation. the electricity system (due to lower grow if wind energy is to reach its offshore turbine technology could aggregate wind output variability), full potential. The offshore wind probably be around 20 MW with and lower financing costs (due to less technology road maps in both Europe a 275m rotor diameter by 2030.

82 GWEC I Global Offshore Wind Report 2020 Offshore Wind Turbine Capacity Growth Pathway (excluded China)

0

9

W M

0 99 99 99 99 99 99 99 99 999 000 00 00 00 00 00 00 00 00 009 00 0 0 0 0 0 0 0 0 09 00 0

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te installation as een complete new prouct was release ut te protype is not installe yet.

Source: GWEC Market Intelligence, June 2020

GWEC.NET 83 China is playing catch-up in Offshore Wind Turbine Technology

0

9

0 0e 00 00 009 00 0 0 0 0 0 0 0 0 09 00 0e

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te installation as een complete new prouct was release ut te protype is not installe yet.

Source: GWEC Market Intelligence, June 2020

84 GWEC I Global Offshore Wind Report 2020 Floating Offshore Wind Technologies

Offshore wind has enormous potential Northern Europe, the US and the and is expected to play a big role in east coast of China have maximum Floating offshore wind platform types future energy mix. However, 80% of nearshore water depths of 30-50m the world’s offshore wind resource favourable for bottom-fixed offshore potential lies in waters deeper than wind. The best resources for floating 60m[1]. To fully harvest the global wind are located in Europe, Japan, offshore wind potential and expedite South Korea, Taiwan, off the west coast the energy transition and maintain of the US and off the south coast of a 1.5°C pathway in line with IPCC China (see map on page 10). recommendation, it has become imperative for the wind industry Floating wind technologies to quickly commercialise floating Beginning with the early floating offshore wind technology (FOWT). offshore wind turbine concept in As well as providing even better the 1970’s, the first small scale tests wind resources and larger technical in the 1990’s and the first MW-scale potential than bottom-fixed offshore installation in the 2000s, the offshore wind, floating wind could help create industry connected the world’s first socio-economic benefits such as commercial floating offshore wind jobs and facilitate a smooth energy Semisubmersible project, the Hywind Scotland (with transition by bringing expertise from TLP Spar (>50m water a single floating cylindrical spar (>50m water depth) (>120m water depth) depth) the Oil and Gas (O&G) industry Mooring line stabilized Ballast stabilized Distributed structure), in the UK in 2017 and buoyancy stabilized into offshore wind while re-skilling commissioned the world largest workers who may be dislocated from offshore wind turbine, MHI Vestas the fossil fuel sectors V164-8.4MW model, in Portugal in 2019.

[1] NREL, EIC Global Offshore Wind Report 2019: Norwep, Equinor, internal analysis Source: Aqua-RET

GWEC.NET 85 The benefits and challenges associated with three basic floater concepts

Spar Semisubmersible TLP Overview: Overview: Overview: • Simplest concept and attractive dynamics • Most popular concept and less attractive dynamics • Attractive dynamics but not widely deployed • Minimum depth 80m during whole installation process • Typically requires moveable water ballast to limit tilt • Achieves static stability through mooring line tension with a • Achieves stability through ballast installed below its main • Requires dry dock for fabrication submerged buoyancy tank buoyancy tank • Achieves static stability by distributing buoyancy widely at the • Typically requires purpose-built installation vessel • Complex manufacturing and Weight for 6 MW: ~3.500 t water plane • Weight for 6 MW: ~2.000 t • Weight for 6 MW: ~3.000 t

Benefits: Benefits: Benefits: • Inherent stability • Heave plates for reducing heave response • High stability, low motions • Suitable for even higher sea states • Broad weather window for installation • Having a good water-depth flexibility • Soil condition insensitivity • Depth independence • Small seabed footprint and Short mooring lines • Cheap & simple mooring & anchoring system • Soil condition insensitivity • Simple & light structure, easy for O&M • Simple fabrication process • Cheap & simple mooring & anchoring • Lower material costs due to structural weight of the • Low operational risk system; Overall lower risk substructure • Little susceptible to corrosion • Simple installation & decommissioning as specialized vessel • Onshore or dry dock assembly possible required

Challenges: Challenges: Challenges: • High cost, 5-8 mEUR/MW (based on the 30 MW demo); • Non-industrialized fabrication • Unstable during assembly, requiring the use of special • Heavy weight, with long mooring lines and long & heavy • Higher exposure to waves leads to lower stability and impacts vessel structure on turbine • High vertical load moorings • Deep drafts limit port access and Large seabed footprint • Labour intensive and long lead time • Complex & costly mooring & anchoring system making it • Relatively large motions • Large and complex structure, so complicated in fabrication the most expensive floater design type • Assembly in sheltered deep water challenging and time- • Foundation always built in one piece, requiring dry dock or • Mooring tendons presenting higher operational risk in case consuming special fabrication yard with skid facilities of mooring failure and add requirements on site seabed • High fatigue loads in tower base • Lateral movement presents potential problems for the export conditions • Specialised installation vessels needed cable

Source: Stiesdal A/S, NREL, DNV.GL, Carbon Trust, IRENA

86 GWEC I Global Offshore Wind Report 2020 There are three basic floating base experts expect that the direction types[2] which are mainly derived from of floating base development will oil and gas experience namely, Deep- be to design a common floating water floating Spar, Semisubmersible platform that can host several and Tension-leg platform (TLP). types of a turbines, combined with Associated benefits and challenges hybrid renewable energy sources of the basic floaters are presented in such as wave, solar and Power to X table below. generation.

In the past, the deep-water floating Current status of commercialization spar was most used in floating pedestals, but the development of Although different floating the semi-submersible floating base technologies have been tested has gained popularity. According to through demonstration and pilot GWEC Market Intelligence’s global projects in the past decades, floating offshore wind database, current floater production is not cumulatively 15 floating projects will industrialised yet and has just come into operation by the end of entered the pre-commercial phase. 2020, of which ten (67%) use the However, according to GWEC Market semi-submersible floater, and five Intelligence’s global offshore floating use Spar (33%). The study completed wind project database (see table 2), by University of Strathclyde Glasgow, floating wind installations are likely DNV.GL and other two organizations to take off from 2025 (when four in 2019 also predicts the semi- 150-200 MW floating projects will be submersible floater to be the market online) and full commercialisation leader with a share of about 62% is expected to be achieved by the by 2022. Although TLP has better end of this decade (when GW-level flexibility in shallower and deeper large scale floating projects could be waters; its current market share is connected in both Europe and East relatively lower due to complex Asia). installation and needs a cost reduction Our projection for the strategy for mooring installation. commercialisation of floating wind Moving forward, offshore wind

[2] Barge is also mentioned as a floating type in other studies, but not widely deployed so far due to heavy structure (concrete) and weight.

GWEC.NET 87 could also be justified by recent Global Floating Offshore Wind Project Pipeline commitments and partnerships made primarily by oil majors, large Operational Projects Projects under Construction or plan to be Projects announced in developing European utilities and technology ( Demonstration and trial phase) built by 2025 partnerships or auctions and to be providers in the past 18 months. (Pre-commercial phase) operational by 2030 (Commercial phase) Selected activities in this business Hywind Demo, Norway (2.3 MW)- 2009 EolMed project, France (24.8 MW)- 2021 JERA, ademe and Ideol project (2000 segment by three groups are MW)- Japan summarised below: WindFloat 1 Prototype, Portugal (2 MW)- Provence Grand Large floating, France Equinor & KNOC floating projects 2011 (25.2 MW)- 2021 (800MW)-South Korea Oil majors Kabashima Floating, Japan (2 MW)- 2013 DemoSATH, Spain (2 MW)- 2021 Ulsan 1GW floating (1000 MW)- South Korea Equinor, a pioneer in floating Fukushima FORWARD, Japan (2 MW)- 2013 Hywind Tampen, Norway (88 MW)- 2022 Equinor floating project (300 MW)- Greece wind, was recently joined by other Fukushima FORWARD, Japan (7 MW)- 2016 Atlantic Test Site, Ireland FLAGSHIP Iberdrola (10 MW)- Norway oil majors, such as Shell and Total, (30MW)- 2022 to start working in partnership Hywind Scotland, UK (30 MW)- 2017 Les Éoliennes Flottantes du Golfe du Lion, Erebus demonstration (TOTAL) project (96 with the utilities/developer in the France (30 MW)- 2023 MW)- UK floating offshore wind business Floatgen, France (2 MW)- 2017 Groix Belle Ile wind farm, France (28.5 Parque Eólico Gofio (50 MW)- Spain segment. Aside from the Hywind MW)- 2023 Tampen project in North Sea to Fukushima FORWARD, Japan (5 MW)- 2017 CTG first floating tender, China (10 MW)- Industry proposed floating projects (1000 be built by 2022, Equinor plans to 2022 MW)- Norway develop floating wind projects in Kincardine, UK (2 MW testing)- 2018 Aqua Ventus, USA (12 MW)- 2023 Celtic Sea Floating (1000 MW)- The UK Spain, Greece and South Korea. Hibikinada KitaKyushu Demo, Japan (3 Goto (GCS) Floating, Japan (21MW)- French floating auctions (750MW)- France Through the partnership with Korea MW)- 2019 2023 National Oil Corporation (KNOC), PLOCAN’s Test Site, Spain (0.2 MW)- 2019 Celtic Sea Folating, UK (32MW)- 2024 Equinor recently commenced LiDAR WindFloat Atlantic, Portugal (25.2 MW)- Equinor floating Canary Islands, Spain installations to conduct metocean data 2020 (200 MW)- 2025 measurements for a potential 800 MW Nezzy2 Floating, Germany (testing-1.5 Donghae 1, South Korea (200 MW)- floating offshore wind project in South MW)- 2020 2024 Korea. In early 2019, Shell joined Kincardine, UK (48MW)- 2020 Redwood Coast offshore wind project, seven other partners and signed USA (150 MW) a Memorandum of Understanding TetraSpar Demo, Norway (3.6 MW)- 2020e Sicilian Channel TetraSpar floating project, Italy (250MW)- 2025 (MOU) with the City of Ulsan in South Source: GWEC Market Intelligence, June 2020 Korea to explore large-scale floating offshore wind development. Shell

88 GWEC I Global Offshore Wind Report 2020 also took over EOLFI, a pure-play been supporting the development of Europe. Aside from exploring French floating wind developer, to of floating technology and will soon opportunities in Europe, the France- enhance its existing expertise in the install the 25 MW Provence Grand based pure floating foundations floating wind section at the end of floating project in the Mediterranean. player Ideol signed a MOU with that year. Following a partnership In Germany, utilities EnBW joined Kerogen Capital in May 2020 to established with Simply Blue Energy forces with Aerodyn to accelerate assess the benefits of using offshore in March 2020 to develop a 96 the commercial development of the wind to power oil & gas platforms MW floating project in the Celtic radical 15MW Nezzy2 twin-rotor in South Korea. Additionally, Naval Sea, UK, the French oil major Total offshore floater. In Spain, through the Energies, a sub-system engineering joined Offshore Renewable Energy offshore wind joint-venture created firm with floating project already (ORE) Catapult’s national Floating in 2019, European utilities EDP and locked in France, signed a MOU Offshore Wind Centre of Excellence Engie are also interested in floating with Japanese partner Hitachi (FOWCoE) together with Shell, wind. In China, CTG announced Zosen to extend their collaboration Equinor and other seven offshore the plan to launch its first floating after completing a floating wind wind developers in summer 2020. offshore tender for a pilot project off technology feasibility study in Japan Guangdong province in 2021 and in June 2020. In the same month, the Utilities and large developers CGN also invested in Eolfi’s 24 MW company also joined the Offshore Following a commitment made in floating project in France. Wind California coalition, which gathers offshore wind developers and 2018 through Innogy to build the Technology providers TetraSpar demonstration project with technology companies supporting Shell in Norway, RWE Renewables There is a long list of technology a goal of 10 GW of installed offshore has recently set up a joint pilot providers who are active in the wind capacity in California by 2040. project DemoSATH with Spanish floating wind sector, some of whom Challenges for floating offshore wind Saitec Offshore Technologies to start focus purely on floating design. Those development testing it offshore the Basque Coast in who have already installed floating Spain where the Spanish Iberdrola turbines include Principle Power and As presented in Market Outlook decided to step into the floating wind IDEOL and those who are installing or section, GWEC Market Intelligence business sector as well. The utility are ready to install a floating turbine predicts a total of 6.5 GW floating is now leading a consortium aiming project include Stiesdal OT, Saitec, offshore wind projects to be built to test a 10+ MW floating turbine at Naval Energies, Olav Olsen, Saipem by 2030. To reach this level of the FLAGSHIP project in Norway and and SBM Offshore. In 2020, two installations, however, the following also plans to deploy another floating French floater designers expanded challenges and barriers need to be wind power prototype in Spain. their business development out addressed through a cross-industry In France, French utility EDF has approach and collabation.

GWEC.NET 89 • Floating wind energy cost is high, solution, rather than a sub- investment from private and almost double the cost of fixed sector of offshore wind. This institutional investors. bottom offshore wind energy. can be done through adaptation • Cross industry collaboration, • According to Carbon Trust, there of an optimised engineering especially O&G and Power-to-X, are around 40 different floating approach together with market needs to be addressed and wind concepts at various stages consolidation in floater design. developed for commercialisation of development, this prevents • Achieving cost reduction through of the FOW sector and to achieve the floating offshore wind from standardisation, modularisation, cost reduction. reaching the standardisation and increase of technology readiness industrialisation. level, lowering cost of project • The right policy frameworks finance and economy of scale. tailor-made to support floating • Coordination amongst the leading are in general missing in most market players via strategic markets, which is a barrier partnerships and sharing for getting the private sector experiences from pioneer engaged and also increases markets such as Norway, UK, financial cost compared with Portugal, France and Japan with bottom-fixed solution due to emerging floating markets such a lower level of technology as South Korea, Spain, Greece, readiness. Ireland, Italy and the US. Strong policy obligations with In order to address these barriers • long term visibility, such as 2030, and provide best practices to this fast- 2040 and even 2050 floating wind moving offshore wind sector, GWEC targets. launched a Floating Offshore Wind Task Force with key global industry • Making floating wind a part of players on 7 July 2020. GWEC global green recovery strategy Market Intelligence believes that with dedicated funding for floating offshore wind is at a critical both floating projects and turning point and it will succeed if infrastructure. prioritisation can be made in the • Favourable regulatory following areas: frameworks and support schemes • Making floaters commercially tailor-made for floating wind to viable as standardised foundation reduce investment risk and attract

90 GWEC I Global Offshore Wind Report 2020 Power-to-X

Power-to-X - the missing puzzle piece Offering further market growth of the global energy transition opportunity for offshore wind Power-to-X : Integration of renewable energy into end-uses

As the world races against time Power-to-X is one of the most to fight climate change, there is promising storage options for offshore a growing consensus that Power- wind that minimises waste and to-X (PtX) could be the solution to maximises efficiency by deploying help decarbonise some of the most stored power for a myriad of uses. fossil fuel dependent sectors such Stored electricity can be electrolysed as heating, transport and industrial into hydrogen to be used as feedstock processes such as steel and iron to produce bulk chemicals like making. Power-to-X refers to the methanol or ammonia for industrial conversion of surplus renewable processes (a concept known as energy into liquid or gaseous power-to-gas or power-to-chemicals) chemical energy sources through or combined with captured CO2 to electrolysis and further synthesis make carbon-neutral liquid fuels such processes. Continued advancements as crude, gasoline, diesel and aviation in Power-to-X technology and falling fuels (power-to-liquid fuels).It can also offshore wind costs, along with generate heat through heat pumps anticipated changes in policy, suggest or electric boilers for houses and Source: IRENA, 2018d. that this combination could constitute factories (power-to-heat). Or it can be an emerging economically viable stored in underground formations like business model. salt domes and fed back to the grid when needed.

GWEC.NET 91 Power-to-X is one of the critical process to US$0.8 to $1.6/kg in most components to reach power systems parts of the world before 2050[2], based on 100% renewable energy making it price-competitive with its sources for its ability to increase fossil fuel substitutes. reliability and quality of demand- side power management, energy Nonetheless, this technology is now independence, and climate change limited by the scale of projects, targets. In addition, PtX internalises making it too expensive to be widely the cost of the positive externalities deployed at this stage. But the with the potential for offsetting industry is primed to take the next investments elsewhere such as in step, so it’s just a matter of “when”. transmission networks or energy The most economically competitive storage. As system balancing costs option: offshore wind-to-hydrogen and risk to the electricity suppliers would be reduced, this provides a With electrolysers just in their infancy route to affordable hydrogen that is and still expensive, the potential for also a desirable investment. cost reductions is enormous. Of all the renewable electricity options, wind Capital cost is high but expected to has the highest potential to produce fall when scale is achieved coupled sustainable hydrogen because of with government incentivisation its economic competitiveness - the The technology itself has already price of wind turbines fell by 67.5% [3] proven to be technically feasible, between 2012 and 2020 . however, success now lies on the As the best wind resources are out economic performance and hence at sea or in rural areas, Power-to-X the willingness to invest in Power- complements offshore wind perfectly. to-X technologies. Prices are set to It aids the integration of more fall just as with offshore wind power, offshore wind by avoiding curtailment from the current US$2.50 to US$6.8 or constraint due to the lack of [1] per kilogram for the high-cost transmission capacity and decouples renewables powered electrolysis renewables power generation

[1] https://www.bloomberg.com/professional/blog/how-green-hydrogen-could-make-green-steel-real/ [2] https://about.bnef.com/blog/hydrogen-economy-offers-promising-path-to-decarbonization/ [3] BNEF LCOE Database Jan 2020

92 GWEC I Global Offshore Wind Report 2020 from demand. The hybrid solution Another innovative offshore wind- Offshore wind to hydrogen solution 1(a) brings about increasing flexibility to-hydrogen solution aims at using of the power grid, greater energy excess offshore wind energy to security and lower price volatility. At power electrolysers located on oil present, there are two types of widely and gas platforms to produce green 1. Water Purification 2. Electrolyses 3. Compression 4. Storage explored offshore wind-to-hydrogen hydrogen from seawater. The green O H solutions. hydrogen is blended into the gas H export line and transported to land Green Hydrogen Facility In the first offshore wind-to-hydrogen via existing gas infrastructure. This Offshore wind farm solution, surplus offshore wind energy solution is already widely used by that would otherwise be curtailed - or industrial gas producers to supply H 0 purpose-built offshore wind capacity chemical and refining industries. It is for hydrogen generation - will expected that up to 20% of hydrogen Offshore wind to hydrogen solution 1(b) power electrolysers that split water by volume can be mixed into existing molecules into hydrogen and oxygen. gas pipeline flows. While blending Green hydrogen is then compressed green hydrogen into existing natural and stored in a tank system, waiting to gas pipelines cannot achieve 100% 1. Electrolytes2. Compression3. Storage be offloaded when energy is needed. decarbonisation, it can still be a O H H With an offshore hydrogenation contributing solution in the short term Green Hydrogen Facility platform available, liquid hydrogen as the existing natural gas supply will Offshore wind farm Onshore (LH2) can be converted to synthetic continue to be used to balance power natural gas (SNG), better known as systems in the immediate future and Hydrogen pipeline methane, before being shipped to blending green hydrogen helps to partially decarbonise this flow. end-users for multiple purposes. As Offshore wind to hydrogen solution 2 shipping is a relatively expensive form of transportation, electrolysers can also be deployed in coastal areas connected by HV subsea cables to 1. Water Purification2. Electrolyses substations to transport the green O H H hydrogen directly with on-land Oil & Gas Platform hydrogen pipelines or by truck after compression. Offshore wind farm

H 0 Natural gas pipeline

GWEC.NET 93 Future of offshore wind to power-to-X economy

The unprecedented momentum around the world, coupled with Power-to-X, could finally accelerate global decarbonisation efforts towards 100% renewable energy as well as other benefits such as greater energy security, socioeconomic benefits and boosted economic activity. Offshore wind to Power-to-X could be a game-changer within this decade considering the falling hydrogen cost and pilot projects coming online. The two energy islands in the North and Baltic Seas (5 GW combined capacity), recently approved by the Danish government along with another 1 GW offshore wind farm are examples of how government can use offshore wind and Power-to-X as solutions to reach a net-zero commitment by 2050 and be a global leader by utilising cutting edge technologies while creating more green jobs. However, unlocking the benefits of a Power-to-X economy will require policy coordination across government, the right policy frameworks for private investment and subsidies over the next few decades, just as was done with renewables back in the early 2000s.

94 GWEC I Global Offshore Wind Report 2020 CONCLUSION

GWEC.NET 95 Offshore Wind: A Decade of and zero-carbon energy. While the Steep Growth Ahead COVID-19 pandemic has impacted Key takeaways energy consumption and supply At the beginning of this new decade, chains around the world, the offshore • 2019 was a year of record growth, with 6.1 GW of capacity added and offshore wind is in a dramatically wind sector is expected to be largely cumulative global installations of 29.1 GW. different position compared to 10 shielded in the long term, due to • Europe is the largest region for installations, but the market is primed to take years ago. Having multiplied from longer project development timelines off in the Asia-Pacific region, where Mainland China is the global leader in 1 GW of installations primarily in and increasing cost-competitiveness. new capacity and markets like Taiwan, Vietnam, Japan and South Korea set Europe in 2010, the offshore wind Employment in offshore wind’s to accelerate to 2030. market is now primed to accelerate in diverse and highly skilled value • More than 205 GW of new offshore wind capacity is forecast through 2030 markets around the world. Mainland chain offers a huge opportunity for – a 15 GW increase from last year’s business-as-usual outlook. China is set to lead in new capacity, governments to invest in the sector while emerging markets in the Asia- for green recovery. • COVID-19 will not significantly impact the global outlook, due to longer Pacific region and North America are project timelines and concentration of installations in the latter half of the seeing increased momentum, with As the offshore wind market matures, decade. Europe expected to maintain steady new areas of innovation will boost • Floating offshore wind is an area of opportunity, set to reach growth. Through 2030, GWEC Market growth. Floating offshore wind shows commercialisation by 2030 with more than 6 GW installed globally. Intelligence forecasts more than 205 enormous promise, with 66 MW • Turbine technology is also set to improve in both efficiency and resilience, GW of new offshore wind capacity to already installed and significant resulting in LCOE reductions and increased adoption. be added globally. investment from oil majors and leading wind developers. Floating • Offshore wind can be a core pillar of the global energy transition, supported This is a 15 GW upgrade from the technology will sail through the by Power-to-X solutions, public commitment to decarbonisation and previous business-as-usual outlook demonstration stage in the first widescale electrification. in the Global Offshore Wind half of the decade to achieve • Industry must continue horizon-scanning for new areas of innovation, Report 2019 – buoyed by policy commercialisation by 2030, when learning and improvement to accelerate offshore wind deployment. ambition, declining technology costs GWEC Market Intelligence forecasts and international commitments to more than 6 GW installed in markets decarbonisation, offshore wind is like South Korea, Japan, France, increasingly viewed as a critical Norway and the UK. provider of large-scale, affordable

96 GWEC I Global Offshore Wind Report 2020 Turbine technology is another industry can build on these to deliver area to watch, with European and offshore wind’s potential as a core Chinese OEMs improving capacity pillar of the global energy transition. and resilience to achieve LCOE reductions and application in a wider range of marine environments. The average size of installed turbines is on track to be 10-12 MW by 2025 – nearly double the size today. As hydrogen costs fall and cross-industry collaboration takes place, Power-to-X offers a potential solution to allow offshore wind to scale exponentially and support the decarbonisation of fossil fuel-dependent sectors.

These innovations, however, require adequate policy coordination and supportive frameworks, a formula which allowed renewables to take off over the last decade. As summarised in this report, there are already plenty of lessons to be gleaned from early offshore wind markets regarding support schemes, grid integration, cost reduction and industrial development. There are still further areas for R&D and investment, with GWEC and industry players continuing to scan the horizon for opportunities to innovate, learn and improve offshore wind in order to accelerate its deployment. Combined with steadfast commitment and collaboration with government, the

GWEC.NET 97 APPENDIX

98 GWEC I Global Offshore Wind Report 2020 Abbreviation

BEIS Business, Energy and Industrial Strategy MoU Memorandum of Understanding BOEM Bureau of Ocean Energy Management MT Metric Tons CAPEX Capital Expenditures MW Megawatt CfD Contract for Difference NDRC National Development and Reform Commission COP Construction and Operations Plan NEA National Energy Administration DPP Democratic Progressive Party NREL National Renewable Energy Laboratory ESMAP Energy Sector Management Assistance Program O&M Operation and Maintenance FID Final Investment Decision OEMs Original Equipment Manufacturers FiT Feed-in-Tariff OFTO Offshore Transmission Owners FOW Floating Offshore Wind OPEX Operating Expenses FOWT Floating Offshore Wind Technology OREAC Ocean Renewable Energy Action Coalition GDP Gross Domestic Product PDP Vietnam Power Development Plan GW Gigawatt PPA Power Purchase Agreement GWO Global Wind Organization R&D Research and Development HVAC High Voltage Alternate Current RD&D Research, Development and Demonstration HVDC High Voltage Direct Current ROC Renewables Obligation Certificate IRENA The International Renewable Energy Agency SGRE Siemens Gamesa Renewable Energy JWPA Japan Wind Power Association SMEs Small Medium Enterprises LCOE Levelized Cost of Energy TSO Transmission System Operators LCRs Local Content Requirements TW Terawatt METI Ministry of Economy Trade and Industry MLIT Ministry of Land, Infrastructure, Transport and Tourism MOEA Ministry of Economic Affairs MOIT Ministry of Industry and Trade

GWEC.NET 99 About GWEC GWEC Market Intelligence Areas Market Intelligence GWEC Market Intelligence provides a Market statistics, series of insights and data-based analysis Country profiles, policy Database of asset owners on the development of the wind industry. market outlook, updates, offshore updates in key markets This includes a market outlook, country auction/tender updates

theoffshore market among other insights.

GWEC Market Intelligence derivesit insights from its own comprehensive databases, local knowledge and leading industryexperts. Wind turbine data, technology Shift to value-focused, new ISP - OEM - Self Perform trends, component assessment wind-based solutions database for key markets The intelligence team in GWEC consists of severalstrong experts with long-standing industryexperience.

GWEC Market Intelligence collaborates with its regional and country member wind association as well as with its corporate members. GWEC Market Intelligence created How to access GWEC a Member only area to provide more Market Intelligence in-depth market intelligence to • CorporateGWEC-Members • Wind energy associations GWEC’s members and their • Non-GWEC Members employees.

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100 GWEC I Global Offshore Wind Report 2020 Reports Frequency

1. Wind Energy Stats/Market Data Wind stats 2019 (and historic) Annual Global Wind Report Annual Wind Energy Statistics (wind energy penetration rate, jobs) Annual

2. Country Profiles/Policy Updates Country Profiles Onshore/Country Profiles Offshore Quarterly/Ad-hoc Ad-hoc policy updates Ad-hoc

3. Market Outlook Global Wind Market Outlook for next five years (Q1 and Q3) Semi-Annual

4. Supply Side Data Global Wind Turbine Supply Side Data Report (by market, by technology, by turbine size and numbers) Annual

5. Auction/ Tenders Auction Trends and Learnings Annual/Quarterly Global Auction Results (database) Annual/Quarterly

6. Offshore Wind Market Global Offshore Wind Report Annual/Quarterly Market Entry Opportunity (database) Annual/Quarterly Global Offshore Project Pipeline (database, in-operation and under-construction) Annual/Quarterly Global Offshore Turbine Installation Vessel Database Annual/Quarterly

7. Components Assessment Gearbox (Q4 2019), Blade (2020), followed by other components Special report

8. Wind Asset Owners/ Operators Ranking of Wind Asset Owners and Operators Globally (Onshore & Offshore) Annual

9. O&M O&M service provider database (ISP - OEM - Self-perfrom) Annual

10. Energy transition, Digitialzation, Hybrids Position papers/ studies - Value shift, Corporate PPAs Special report Government support to wind and other (“true cost of coal”) Special report New Solutions, GWEC policy recommendations Special report

GWEC.NET 101 Global Wind Energy Council

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