Offshore wind in Europe is now starting to think deeply about the possibilities beyond 2030. Will the industry be able to continue to grow at rapid pace? Will cost reductions continue to drive that growth? Is a new ambition of over 400GW deployed by 2050 realistic?
There are many obstacles in achieving such dramatic growth, but the single most important factor will be the mindset of governments. Of course, technical, social and economic factors will inform government policy and offshore wind growth.
But at best these will be necessary, rather than sufficient, conditions to achieve the policies that will allow offshore wind to maximise its potential place in a sustainable energy mix.
In Europe, offshore wind resource can, in theory, generate more electricity than is ever likely to be needed. The technical potential of offshore wind in European waters is three times the likely electricity demand.
While less than half of this potential will be economically viable, based on expected market prices for electricity, it does highlight that Europe has sufficient resources for offshore wind to become a significant, even major, part of the continent’s energy mix.
The cost reduction trajectory for offshore wind makes it cost competitive with new gas power and may even mean that no net support is required by the middle of the century.
Offshore wind potential is not evenly distributed: the North Sea contains about half of the economically attractive sites and almost all of the sites with the lowest cost.
The key challenge then becomes how to optimise the trade-off between focusing development in the economically most attractive areas versus achieving a wider spatial distribution.
Concentrating on the economically attractive areas requires offshore hubs, grids and interconnectors to play a more significant role, and one that is concentrated in a smaller number of offshore and onshore supply corridors.
The development of the hubs, grids and interconnectors will require governments to work together to design and implement multinational polices to permit and pay for a common infrastructure.
Similarly, the development of effective and efficient storage solutions require grid, permitting and pricing policies.
The challenge is not just for the nations that install the offshore wind; it is also for nations with no coastline that need to access the energy generated many hundreds of kilometres away
The correct policies will also be vital to send the right signals to companies in the supply chain so they can have the confidence to carry out investments to meet growing demand.
The subsequent growth in the supply chain capacity will ensure costs continue to fall and more areas become economically attractive.
These policy signals have to be timely, as well as correct, to give the supply chain enough time to response to expected ramp-ups.
The need for the right policies should not necessarily be interpreted as a plea for more regulation and government subsidies. But some new regulations and support may be required, at least in the short term.
The dependency on policy does not mean that developers, finance providers, suppliers, TSOs, wind farm and grid supply chain companies (and consultants) do not have a significant role to play in the growth.
The role of each stakeholder goes beyond their developing their part of the value chain. Each must also do their part in influencing, implementing and improving the policies from governments relating to offshore wind.
The offshore wind industry is full of some of the most inventive engineers, accountants and commercial people in the world. It has already overcome considerable barriers in grids, finance, regulation and supply chain to become the industry it is today.
A constructive set of policies that provide fertile ground for the talented individuals, companies and enablers to continue transform their ideas into lower costs, higher production and more sustainable energy.
Giles Hundleby is a director of BVG Associates
BVG has been commissioned by WindEurope to investigage pathways to accelerate offshore wind energy deployment in the North Sea. The results will be presented at the WindEurope Offshore 2019 conference at Copenhagen in November