Competition in Offshore Wind Industry to Intensify

With an expected compound average growth rate of 28.3% from 2013-2020, the growth for the offshore wind industry remains solid. Short term demand in Europe – the main market region for offshore wind – is set to stabilise pending policy clarification and implementation.

The outlook beyond 2020, however, remains highly dependent on timely clarification of long-term policy commitments to Offshore Wind and on progress in reduction of Levelised-Cost-of-Energy.

Policy changes and grid connection delays in Europe continue to challenge Offshore Wind development in the region, and all eyes are on Germany and UK as targets have been reduced or delayed. Recent developments such as the new FIT-based CfD support scheme in the UK and the extension of the Stauchungsmodell in Germany, however, have allayed fears and renewed investor confidence in the medium-term. As such, MAKE expects a 25GW addition of new capacity through 2013-2020, with a compound annual growth rate of 18% in the period.

While European leaders remain ambivalent about their 2030 targets, China is expected to race ahead and spearhead development towards the end of this decade and beyond. The Chinese National Energy Administration (NEA) has already mapped out a long term plan for Wind Power by 2050 and Offshore Wind is expected to play a prominent role post-2020. Development in the Americas will be limited to a few demonstration projects this decade with significant growth expected only beyond 2020.

Offshore asset ownership will remain dominated by European utilities and developers, with DONG Energy, Vattenfall and E.ON at the forefront. European utilities’ weakened balance sheets will usher in an emergence of new and innovative project financing models over the next few years. As the traditional norms of financing evolve, MAKE expects capital injections from unconventional sources such as banks and pension funds to increase and the trend of utility/IPP co-ownership to intensify.

Globally, a number of next generation 5MW+ turbines were tested in 2013, and MAKE estimates the global average offshore turbine rating to increase from 3.8MW in 2012 to almost double in 2017. Siemens maintained its strong offshore market leadership in 2012, but competition will intensify as other players such as Areva, Alstom or Vestas/MHI JV rush to commercialize their 5MW+ offshore models. Furthermore, relatively flat near-term growth will prompt competition as turbine OEMs race to secure orders.

The trend to larger projects in deeper waters further from shore continues to drive technology changes. MAKE expects jackets to overtake monopiles as the dominant offshore foundation structure from 2016, and HVDC export cable technology to dominate offshore transmission by 2017. Bottlenecks in HVDC technology continue to impede offshore development in Europe as multiple offshore projects with finished installation during 2013 stand idle due to the extensive delays in offshore grid expansion.

Global Offshore Wind Power Market 2013 is a 60-page report that includes analysis of both current and expected market conditions, global and country market forecasts, regulatory frameworks in key markets, asset ownership rankings and offshore supply chain dynamics. It also addresses burning issues such as policy development, supply and demand dynamics across the supply chain, transmission infrastructure, technological challenges and prospects for the offshore O&M industry.

Press release, November 29, 2013; Image: Siemens