Record H1 investments in offshore despite pandemic

Investments in new offshore wind capacity reached $35 billion in the first half of 2020, defying the Covid-19 recession, new analysis suggests.

Larger projects with bigger turbines have brought down the levelised cost of offshore wind (pic: ScottishPower Renewables)
Larger projects with bigger turbines have brought down the levelised cost of offshore wind (pic: ScottishPower Renewables)

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Number crunching by research company BloombergNEF (BNEF) reveals offshore wind investment in the first half of 2020 was up 319% year-on-year, and even beat the full-year record of $31.9 billion set in 2019. 

In January to June 2020, finance decisions on 28 offshore wind farms were signed off, including the largest offshore project to reach a financial investment decision so far – Vattenfall’s $3.9 billion 1500MW Hollandse Kust Zuid 1-4 Hollandse Kust Zuid 1-4 (1500MW) OffshoreNetherlands, Europe Click to see full details array off the Netherlands’ coast.

Other major offshore deals this year included SSE’s 1075MW Seagreen 1 Seagreen 1 (1075MW) OffshoreFirth of Forth, UK, Europe Click to see full details project in the UK at an estimated $3.8 billion; Copenhagen Infrastructure Partners' 600MW Changfang and Xidao cluster off Taiwan estimated to cost $3.6 billion; and the 497MW Fécamp Fécamp (497MW) Offshoreoff Fécamp, Normandy, France, Europe Click to see full details and 496MW Saint Brieuc Saint Brieuc (496MW) Offshoreoff Saint-Brieuc, Brittany, France, Europe Click to see full details projects in French waters, together amounting to 993MW and $5.4 billion. 

Offshore wind has benefitted from a 67% reduction in levelised costs since 2012 and the latest giant turbines, said Tom Harries, head of wind analysis at BNEF. 

“But the first half of this year also owed a lot to a rush in China to finance and build, in order to take advantage of a feed-in tariff before it expires at the end of 2021. 

“I expect a slowdown in offshore wind investment globally in the second half, with potentially a new spike early next year,” he added.

At least 17 Chinese installations have been financed in the first six months of 2020, led by Guangdong Yudean’s $1.8 billion investment in the first 600MW of its 2GW Yangjiang Yangxi Shapaat offshore hub.

Less money for onshore and solar

But not all renewables have seen the same investment. Onshore wind investment has slipped 21% to $37.5 billion over the same timeframe, while solar fell 12% to $54.7 billion. This means overall investment in wind power is slightly down year on year, despite the record offshore figure (see chart).

Looking at the figures by location, China was the largest market investing $41.6 billion in the first half of 2020 across all renewables, up 42% compared to the same period in 2019. 

Overall investment in new renewable energy capacity – excluding large hydro-electric dams of more than 50MW – stood at $132.4 billion in the first half of 2020, up 5% from a revised $125.8 billion in the same period 2019. Overall clean energy investment, including renewables capacity financing and corporate-level equity deals, came to $137 billion, up 4% on the first six months of 2019 ($131.9 billion).

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