Offshore wind installations surged threefold last year

Offshore wind power is surging around the world as countries adopt ambitious clean energy policies and as wind equipment costs decline. That growth is expected to explode over the next decade, even as the industry faces supply-chain snags and other headwinds.

Those are the main takeaways from two new reports charting the recent progress and future trajectory of global offshore wind development.

In 2021, countries connected 21.1 gigawatts of new offshore wind capacity to the grid, or triple the amount installed in 2020, the Global Wind Energy Council (GWEC) said in a report released on Wednesday. That brings the world’s cumulative capacity of offshore wind power to 56 gigawatts — only about 0.1 percent of which is spinning in American waters.

“It has been an astonishing year for the offshore wind sector,” Ben Backwell, the council’s CEO, said in remarks from the United Nations Ocean Conference in Lisbon, Portugal. ​“Now we need to work rapidly to implement targets and ambitions.”

Offshore wind power is expected to play a key role not only in decarbonizing power grids but also in providing the renewable electricity needed for making ​“green” fuels like hydrogen for cargo shipping, aviation and steelmaking. Putting enough turbines in the water to meet global climate goals will require a ​“gargantuan effort” from policymakers and wind energy companies, the GWEC report concludes.

But a separate analysis by BloombergNEF suggests those ambitions may be within reach. Offshore wind power is on track to hit 504 gigawatts in cumulative installations by 2035, a tenfold increase from last year’s record numbers, the clean energy research firm said in its offshore wind market outlook last week.

The analysts noted that governments are setting higher installation targets in both new and established offshore wind markets. Meanwhile, investor appetite is growing and newer technologies like floating platforms are taking hold, potentially opening up more of the world’s difficult-to-develop coastlines to offshore wind farms.

A longtime laggard, the U.S. is now poised to get in on the action

China alone added 17 gigawatts of offshore wind power last year, or 80 percent of the global total, according to the GWEC report. Wind developers raced to complete new projects to take advantage of China’s feed-in tariff before a January 1 cutoff. From that date forward, newly constructed wind farms will earn less money for every megawatt-hour they supply to the grid and, as a result, the sector’s breakneck pace is expected to ease this year.

The United Kingdom — long the world’s top country for offshore wind capacity — slipped to a distant second place following China’s offshore wind boom. Nonetheless, the U.K. set its own record for annual installations last year, connecting 2.3 gigawatts of new offshore wind capacity to the grid. Vietnam became the third-largest market for new installations in 2021, having installed 0.78 gigawatts of offshore turbines in its intertidal zones.

The United States, by contrast, is only just getting started on offshore wind.

Seven wind turbines twirl off the U.S. East Coast, totaling 42 megawatts (0.042 gigawatts) of capacity. However, 11 states have more than 35 gigawatts of offshore wind projects in their combined pipeline, and two commercial-scale offshore wind farms are now under construction: the South Fork Wind farm near Long Island, New York, and the Vineyard Wind project off the coast of Martha’s Vineyard, Massachusetts.

The federal government has also resumed leasing large swaths of seabed for offshore wind development after a three-year hiatus. Earlier this year, developers bid a record $4.37 billion to lease areas off the coasts of New York and New Jersey and offered around $315 million for leases in the Carolina Long Bay Area near North Carolina and South Carolina.

“This was important because it pressed ​‘play’ where the industry had been paused for so long,” Chelsea Jean-Michel, a wind energy analyst at BloombergNEF, told Canary Media. ​“Securing a seabed lease is the first major step when you want to build an offshore wind farm.”

Yet turning those plans into actual projects requires creating a domestic offshore-wind industry virtually from scratch. States are just now beginning to build factories, expand maritime ports and train workers to put potentially thousands of turbines off U.S. coastlines. At least nine major component facilities are in development to make the foundations, towers, cables and blades used in offshore wind turbines. Virginia-based utility Dominion Energy is building a $500 million vessel at a Texas shipyard specifically to install massive turbines in the water.

Last week, the White House unveiled an initiative with 11 East Coast states intended to smooth permitting processes, build up supply chains and accelerate wind farm construction, though Jean-Michel said the announcement offered few details about how the federal and state governments planned to achieve those objectives.

“I can’t tell you the last time I’ve been this excited about something we’re about to do,” President Joe Biden said in remarks about the partnership. ​“I think we can change — literally begin to change the nature of how we generate [energy].”

The Biden administration aims to install 30 gigawatts of offshore wind capacity nationwide by 2030, an amount it says is enough to power 10 million average U.S. homes for a year. Almost all of the existing project proposals are planned along the East Coast, which has a relatively shallow seabed. However, California is taking steps to open its coastal waters to floating offshore wind platforms, which are connected to the seabed using long mooring cables instead of the typical concrete-and-steel foundations.

In May, the U.S. Department of Interior for the first time proposed leasing swaths of federal waters near Northern and Central California for offshore wind development. The California Energy Commission recently approved a $10.5 million grant to renovate the Port of Humboldt Bay to support offshore wind activities near there.

Worldwide, floating offshore wind projects saw significant growth last year. The U.K. led a handful of countries in adding 57 megawatts (0.057 gigawatts) of floating capacity, bringing the total global capacity to more than 121 megawatts — and marking the technology’s ascent from demonstration stage to ​“precommercial” phase, the Global Wind Energy Council said.

An ​“inflection point” for global offshore wind growth

Despite the recent progress in offshore wind development, the industry is facing some headwinds that threaten to slow the pace of projects.

After years of declining costs, the materials used to make offshore wind turbines are now becoming increasingly expensive due to soaring inflation and supply-chain snags, which in recent months have been exacerbated by Russia’s invasion of Ukraine. Steel, copper and rare earth elements such as neodymium and dysprosium have all seen prices rise, raising turbine costs and further shrinking the margins of offshore wind developers.

At the same time, the growing presence of turbines in coastal waters is leading to ​“rising tension” among wind developers, marine conservationists, commercial fishing operators and other groups that are competing to use — or fighting to preserve — the steadily vanishing amount of available ocean space, according to the GWEC report.

“On one hand, we see political ambitions increase exponentially” to develop offshore wind, Ulrik Stridbæk, vice president and head of regulatory affairs for Danish energy giant Ørsted, said in a statement. ​“But on the other hand, the industry is facing increasing costs and disrupted supply chains, jeopardizing its long-term ability to realize these targets.”

“The global offshore wind industry is at a critical inflection point,” he added.