Offshore wind energy refers to wind farms that are constructed offshore, generally in coastal waters. Offshore wind farms can generate large amounts of renewable energy at a lower cost than many other renewable technologies. Major advantages of offshore wind farms include stronger and more consistent winds and the ability to install larger turbines. Offshore wind energy is emerging as an important source of renewable power around the world. Some key uses of offshore wind include generating electricity that can be fed into the local or national grid through underground cables. Countries across Europe and Asia have been at the forefront of developing offshore wind power projects due to their coastal geography.
The Global Offshore Wind Market Size is estimated to be valued at US$ 40 Billion in 2023 and is expected to exhibit a CAGR of 5.0% over the forecast period 2023-2028, as highlighted in a new report published by Coherent Market Insights.
Market Dynamics:
One of the major drivers for the growth of the offshore wind market is the lower levelized cost of energy (LCOE) generation from offshore wind farms. Increased turbine sizes and improved technologies have significantly reduced costs, making offshore wind competitive against other sources of energy such as coal or natural gas. For instance, the LCOE from offshore wind projects is expected to drop below $50 per MWh by 2030 as per estimates from the International Renewable Energy Agency (IRENA). Additionally, growing preference for renewable sources of energy due to environmental concerns is also expected to boost the adoption of offshore wind power generation globally over the coming years.
Segment Analysis
The offshore wind market is dominated by the shallow water sub-segment which accounts for more than 70% of the market share. This is because shallow waters upto 30 meters in depth are more viable for installing wind turbines and also have lower installation and maintenance costs compared to deep waters. The shallow water areas have favorable wind conditions and are located close to shore, making transportation and grid connectivity easier.
PEST Analysis
Political: Renewable energy targets set by governments across Europe and Asia to reduce carbon emissions are driving growth in the offshore wind sector. Favorable policies around tax incentives and subsidies for offshore wind projects are encouraging investments.
Economic: Offshore wind offers a stable source of energy without fuel costs and helps lower dependence on energy imports. The falling costs of offshore wind generation makes it more competitive compared to other sources.
Social: Offshore wind is receiving more acceptance among local communities as a clean source of energy compatible with sustainable development goals. However, concerns around impacts on marine life and ocean use need to be adequately addressed.
Technological: Innovation in bigger turbine sizes, floating foundations and digitalization are helping optimize energy outputs and reduce costs of electricity. Advanced monitoring systems enable remote operations and maintenance of offshore assets.
Key Takeaways
The global offshore wind market is expected to witness high growth over the forecast period.
Regional analysis: Europe accounts for over three-fourth of the cumulative offshore wind installations globally led by the UK, Germany, Belgium and the Netherlands. China has ambitious plans to significantly scale up offshore wind capacity and overtook the UK as the largest offshore wind market in 2020. Renewable portfolio standards in Northeast states are driving interest in the US offshore wind sector.
Key players operating in the offshore wind market are Siemens Gamesa, MHI Vestas, GE Renewable Energy, Adwen, Orsted, SSE Renewables, RWE, Equinor, and EDP Renewables. Majority of these players offer solutions across the project lifecycle from development, construction to operations and maintenance services.
*Note:
1.Source: Coherent Market Insights, Public sources, Desk research
2.We have leveraged AI tools to mine information and compile it
