The IEA estimates the global technical potential is around 36,000TWh per year in waters less than 60 metres deep and within 60km from shore. (Global electricity demand is currently around 23,000TWh per year).
Moving further from shore, into deeper waters, or both, the IEA reckons that offshore wind could provide around 11 times the expected electricity demand in 2040.
Due to the high capacity factors that are achieved, the IEA coins a new description for the technology: "variable base load".
The report notes that offshore wind produces more energy during the winter months in Europe, the US and China, which means that its system value is generally higher than that of onshore wind and solar PV.
The IEA expects offshore wind to be competitive with fossil fuels within the next decade, as well as with other renewables including solar PV, with the levelised cost falling by nearly 60% by 2040.
The decrease in offshore-wind generation costs has been rapid during the past few years and this trend — based on prices bid in recent tenders in the UK, Germany, the Netherlands and elsewhere — is expected to continue.
The current price of offshore wind is around $150/MWh, so a 60% reduction — to $60/MWh — would bring it within the range of current wholesale electricity prices.
Data from the European Commission shows that levels in the second quarter of 2019 were within the $36-60/MWh range, with a pan-European average of around $47/MWh.
However, some developers have already submitted zero-subsidy bids in Europe, which suggests that convergence will occur within the next few years.
Electricity prices in Australia are expected to fluctuate, but are forecast to be within a similar range within the next few years.
In the US, prices are about 20% lower, while they are about 50% higher in Japan, making the Asian country an attractive market for offshore wind.
By 2030, the rate of construction of offshore wind is expected to be around 20GW per year, and the IEA expects offshore wind will increase at least 15-fold by 2040, which would take its capacity to around 375GW.
There are a number of caveats, however, and the report emphasises the need for clear policies from governments, who are encouraged to "facilitate investments of this kind by establishing a long-term vision for offshore wind."
This will also facilitate the establishment of appropriate supply chains. Electricity regulators are also encouraged to support the construction of appropriate grid infrastructure, both onshore and offshore.
One of the factors that has helped the reduction in levelised costs of offshore wind has been increased investor confidence which, in turn, has led to lower costs for loans and for equity contributions.
The IEA illustrates this effect by showing that a reduction in the weighted average cost of capital from 8% to 4% leads to a reduction in the current levelised cost from $140/MWh to around $100/MWh.
Global wind speeds continue to increase
In the October issue, we reported on the uncertainty surrounding the influence of global warming on wind speeds.
A recent report from a team of around a dozen institutions, led by Princeton University in the US and including data from 1,400 weather stations around the globe dispels this uncertainty and unequivocally states that wind speeds have increased over the past decade.
While there had been some evidence of a decrease in the later years of the last century, that reversed from around 2010.
So a typical wind turbine would have produced about 17% more energy in 2017 than in 2010, and the authors predict that the trend of increasing wind speed will continue for at least another ten years.
At a glance — This month’s report conclusions
Offshore Wind Outlook 2019, International Energy Agency, October 2019 Detailed assessment of global offshore wind energy resource and of costs expects costs to fall by 60% to 2040 and total capacity to grow at least 15-fold in that period.