Offshore wind projects are seen as a key to decarbonising the power sector. However, some offshore wind projects around the world, especially in Europe and the United States, have been blocked by high costs and reduced investment, Reuters reported Tuesday, the likelihood of meeting the 2030 targets is diminishing. Several industry insiders told the global times that European and US countries tend to have ambitious plans for the offshore wind industry, but their ability to implement them is vulnerable to various adverse factors. It is worth noting that China has maintained strong momentum in the development of offshore wind power because of its industrial chain and project landing strength. And the advantage of industrial chain may become an opportunity for Chinese enterprises to participate in global projects.
Projects have been withdrawn or delayed
With the global offshore wind industry hobbled by a year of project cancellations, wind turbine damage and lease deals abandoned, the chances of countries such as Europe and the US meeting their planning targets are becoming increasingly slim, Reuters reported, global efforts to tackle climate change hit a wall.
According to the Nihon Keizai Shimbun newspaper, its statistics on offshore wind projects worldwide that have been announced to be withdrawn or postponed show that in the 2023 year since October, the withdrawal or postponement of projects with a combined installed capacity of at least 6 gigawatts, or more than half of the estimated 11 gigawatts of new offshore wind capacity added in 2023.
A Reuters survey found that soaring costs, delays and under-investment in supply chains have prompted companies in Europe and the US to pull out of offshore wind projects. Norway’s Statoil, Denmark’s Woche energy and BP are all pulling out or considering cutting offshore wind operations, Reuters and the Nikkei business daily reported. GE Vernova, one of the industry’s top wind turbine suppliers, is not taking new orders.
According to the National Renewable Energy Laboratory, the US set a target of 30 watt (GW) offshore wind power by 2030 in 2021, but by May this year, it operates less than 200 megawatts of offshore wind capacity. Europe is also suffering. Offshore wind analysts at RZ expect the UK, Germany and the Netherlands, the world’s largest offshore wind power producers, to meet only 60-70 per cent of their targets by 2030. Belgium, Denmark and Ireland have relatively conservative industrial plans but are not expected to achieve their goals.
According to Reuters, the International Renewable Energy Agency (IEA-RRB- now expects offshore wind power to be a third below its target, after governments pledged to triple total renewable energy use by 2030.
Many factors have brought offshore wind power in Europe and the US to a standstill
Lin Boqiang, Xiamen University of the China Energy Policy Research Institute, told the Global Times that most developed countries in Europe and the US are rich in offshore wind resources. The demand for electricity in these countries is strong, especially in Europe after the Russian-ukrainian conflict energy crisis, the search for energy independence to make it more attention to the development of offshore wind power.
But offshore wind power is now slowing in Europe and the US. “Japan Economic News” said that the rising costs of offshore wind power development is the main dilemma. The combination of high inflation, high interest rates and rising labour costs in Europe and the US has led to higher-than-expected development costs. In addition, Covid-19 and the conflict between Russia and Ukraine caused by supply chain disruption has also adversely affected.
The global average cost of offshore wind Søren Larsen is currently $230 per megawatt hour, up 30% to 40% in the past two years, according to Wood Mackenzie, head of offshore wind research, that’s more than three times the average cost of an onshore wind farm of $75 per megawatt-hour. The cost of offshore wind power in the US is expected to be $0.125 per kilowatt-hour, up about 45 per cent year-on-year, according to calculations published in August by the National Renewable Energy Laboratory.
An unnamed industry source told the global times that high inflation in Europe and the US has driven up the overall price of the offshore wind industry chain, with the combined development costs being about two to three times that of Chinese companies. The industry believes that the European and American countries in the offshore wind industry planning goals tend to be more ambitious, but encounter a variety of adverse factors will be greatly reduced its implementation capacity.
In the United States, politics is also holding back offshore wind power. The Japanese economic news reported that under Donald Trump, the US government may reduce its support for offshore wind power. Reuters also expressed concern that Donald Trump could derail the development of renewable energy.
China’s development is stable, or it can help global industry
While offshore wind power has stalled in Europe, the US and elsewhere, China’s industry has remained stable. China 2023 more than half of the world’s offshore wind capacity at 6.3 GW, Reuters reported. The Global Wind Council estimates that China will install 11 to 16 gigawatts of offshore wind power annually over the next two to three years.
On November 16, China’s offshore wind power industry was ranked first in the world for three consecutive years as of the third quarter of this 2024, according to information released by the Joint Action Conference on the modern offshore wind power industry chain. The information also shows that China has built the most complete offshore wind power industry chain in the world. Currently, China accounts for 60% of the global wind turbine capacity, 64% of the blade capacity and 80% of the gearbox capacity, generators account for 73% of capacity.
Yang Rongcheng, an analyst at China Merchants Securities, said in a recent research report that in order to deal with global climate change, developed countries such as Europe and the United States put forward the concept of green development earlier, it has also set a series of measures to achieve a“Net zero” target, and China has proposed a“Double carbon” target in 2020. He believes the global offshore wind industry started in Europe and grew stronger than China.
The industry source told the global times that the gap between China’s offshore wind power and that of Europe is narrowing and that China has become an important driver of new offshore wind power installations around the world.
The Nikkei said buying equipment from China would help lower costs for developers in Europe, Japan and the United States, but that governments in those countries are trying to encourage local production, to reduce reliance on Chinese technology. China’s overall strength, which makes offshore wind cheaper to develop, provides a significant opportunity for China to participate in the global market in the future, these people said.