Offshore wind industry sees huge opportunity in new markets

Developers and sector analysts believe industry must put forward the business case for offshore wind in emerging markets

Emerging offshore wind markets like Taiwan offer huge potential for developers (pic credit: Swancor)

The offshore wind sector is eyeing huge opportunities to develop offshore capacity in emerging markets despite major challenges, according to developers and industry analysts.

Although the potential is massive, new markets may lack the political backing, regulatory framework and physical infrastructure required for offshore wind that development companies are used to in more established markets.

“As developers entering a market early, we need to be prepared to do that groundwork, to work with governments and put forward the business case,” said Una Brosnan, manager of new offshore markets at Mainstream Renewable Power at RenewableUK’s Global Offshore Wind event in London.

It can be tricky for developers and suppliers as governments finetune regulations – such as Taiwan’s decision to slash subsidies for offshore wind. But more work means more business.

“Where there’s no grid connection, port infrastructure, or fabrication facilities, that’s an opportunity for companies like ours to build that capacity,” said David Robertson, head of renewables at engineering firm ODE.

Companies may have to share knowledge and provide training to local partners with less experience of offshore wind, but the relationship can be complementary.

“They help us enter the market and we help to get them up the learning curve,” explained Robertson.

Of course, the state of play between different markets varies considerably.

Taiwan already has plans to install 13GW by 2030 while significant investment is unlikely to take off in Japan and Poland until the second half of the decade, said Oliver Metcalfe, a senior associate at Bloomberg New Energy Finance.

American dream

Offshore wind is advancing slower than expected in the US but installed capacity could reach 50GW by 2035.

“The pace of the scale-up there offers huge opportunities,” the consultant noted.

The UK government is looking to support the country’s offshore industry to seek business in these new frontiers, identifying opportunities and providing financing.

“We are talking to governments about their plans for offshore wind and frankly we are looking to position the UK supply chains very, very early,” said Richard Simon-Lewis, head of business development at UK Export Finance.

According to one study, UK companies could provide up to 40% of the content for foreign offshore wind farm projects, but much of it comes from smaller businesses which lack the balance sheet to shoulder investments worth billions of dollars.

But government credit agency UK Export Finance aims to use long-term credit backed by the UK government as leverage to insert UK technology into the projects, Simon-Lewis explained.

Technology offers another way in, said James Battensby, head of research business development at UK’s Offshore Renewable Energy Catapult.

The UK research centre is currently working with the US National Renewable Energy Laboratory on novel sensors at the Block Island wind farm off Rhode Island.

“Getting into that first offshore demonstrator with some UK technology and enabling confidence is clearly going to accelerate and drive that growth,” he explained.

Role for governments

Meanwhile, multilateral lender the World Bank has urged governments in emerging markets to play a key role in developing their countries’ potential for offshore wind generation in a new report.

It found that emerging markets have the technical potential (meaning all suitable sites are used for offshore wind development) to host 16,000GW of offshore wind capacity – eight times the capacity it believes is needed to help play its part in reaching net-zero global emissions by 2050.

“It sounds like an insurmountable target but if we want to avoid the worst impacts of climate change this is what needs to be done,” said Demetrios Papathanasiou, Global Director of the World Bank’s Energy and Extractives Global Practice, at a launch ceremony at the Global Offshore Wind 2021 event in London.

Developing offshore wind will require proactive government action to clearly communicate the role of the technology as part of a long-term energy strategy with policy commitments to target volumes and dates.

Governments should also coordinate different arms of governments to create legal and regulatory frameworks in line with industry practice that create investment opportunities, according to the report

Gustavo Ponte, deputy head of power generation at the country’s Energy Planning office EPE praised the report’s recommendations but highlighted that the recipe for each country would be different.

“Policymaking is not a simple cut-and-paste exercise. Effective policies must consider the unique characteristics and needs of each country,” he said.