2019 is likely to see continued build-out of offshore wind and its adoption by more countries. More than 680 GW of new wind power capacity will come online globally in the next decade, according to research by Wood Mackenzie Power & Renewables, 40% of which will be offshore wind.
With 16 GW of offshore wind power capacity installed in Europe by the end of 2018 and more than 47 GW expected to come online in the region from 2018 to 2027, the European offshore sector continues to be a focal point of growth for the wind power industry. And, as a result of Europe’s successful experience with offshore wind, further commitments from emerging offshore wind power markets can be expected.
Also on the cards in 2019 are the emergence of new routes to market for energy from offshore wind. Of immense long-term potential is using renewable energy from offshore wind to produce green hydrogen, for use in transport, heating and industry.
Another is using offshore wind as way to decarbonise carbon-intensive industries, not least offshore oil and gas. Offshore oil and gas platforms produce huge amounts of CO2, primarily from the gas turbines that provide them with power. A number of initiatives are underway that could see wind power provide them with clean power instead.
Also coming into focus in Europe and in the US is the potential use of renewable energy by island states and territories. Offshore wind has a potential role to play here too.
2019 will see more zero-subsidy tenders for offshore wind, in fact the next one is due to take place early in the year in the Netherlands for Hollandse Kust (Zuid) 3 and 4. Belgium’s state secretary for the North Sea also wants to see zero-subsidy bids and has expanded the area allocated to offshore wind in the country’s new Marine Spatial Plan.
But don’t expect every tender to be zero-subsidy. It all depends on the auction model used and on where the windfarms in questions are, and on site conditions.
There has also been a lot of speculation about how zero-subsidy, merchant risk projects will work.
Of course, governments can help zero-subsidy offshore wind work, one example being a carbon price floor (CPF) of the type that the Dutch Government is considering. A Europe-wide CPF could help reduce CO2 emissions, reduce volatility in power prices and accelerate the expansion of renewable energy by making it easier to finance new projects.
One danger inherent in the growth of the zero-subsidy market is that countries that are new to offshore wind will be lulled into thinking they can strike equally advantageous deals, even where there isn’t an established supply chain. They can’t, of course: it has taken Europe a decade to get to the point where costs have fallen sufficiently for zero-subsidy and low-subsidy bids to materialise. Costs will fall even further in established markets, but new ones need to catch up.
The Japanese offshore wind industry at last seems to be moving now that the government has passed a bill setting a national framework for developing offshore wind. Under the law, the government will set aside offshore areas for wind power projects. Developers will then bid to use the designated areas and successful bidders will be given the right to use the zones for up to 30 years.
This is a crucial step for Japan’s future energy strategy, sending a strong signal that the government is committed to long-term investment in offshore wind, which will not only provide a sustainable energy source, but also increase energy security by reducing the country’s reliance on expensive imported LNG.
The new law will come into effect in early 2019, which means that competition for development rights in areas approved for offshore wind can finally get underway. Not long after the legislation passed, Tokyo Electric Power Company Holdings (TEPCO) confirmed it will start work on the company’s first commercial offshore windfarm on 1 January 2019.
Using renewable energy to electrolyse water to create hydrogen, which can be stored indefinitely or used in a huge number of potential applications from transport to heating to industrial processes and the chemical industry, is a no-brainer.
For countries such as Germany, where connection to the electricity grid is an issue, it provides a way to decouple generation from renewable sources from consumption. It can also help address other issues, such as intermittency and curtailment.
Late in 2018, an all-star trio of companies including Shell, Siemens and transmission system operator TenneT proposed hybrid wind-hydrogen tenders for the German market, but there are several other similar initiatives underway elsewhere.
As the executive director of the International Energy Agency Fatih Birol put it at the Wind Energy Summit in Hamburg in September, wind energy is leading the energy transition and is on course to become Europe’s leading power source by 2030. Wind generation will triple by 2040 but electricity from wind needs to be integrated into Europe’s ageing grid infrastructure, which wasn’t designed to deal with it. As Dr Birol put it, “it’s not a peanuts issue.”
There’s the rub: wind is clean and ever-more cost-effective as a source of power, but without some blue sky thinking, its growth might be constrained, so industry and governments need to think proactively about how grid infrastructure can be improved.
What’s needed is a system-wide approach and potential alternatives to the electricity grid, including the gas grid. According to Dr Birol ongoing cost reduction in wind energy and in particular in offshore wind could “open the door” to new ways to use electricity from wind, including hydrogen. There are a number of other power-to-gas projects getting underway that are also looking at using offshore wind power.
New applications for offshore wind are growing all the time. One is providing power to offshore oil and gas facilities to help them reduce their emissions – which are significant – but one that might well gain some traction in 2019 is the concept of using offshore windfarms to provide power to islands.
On most islands, except those blessed with abundant geothermal power, everything has to be imported, even energy. That makes renewable energy an obvious choice for many of them. Even when it was more expensive than conventional power, renewable energy probably had the edge over other forms of imported energy, but the steep fall in the cost of offshore wind makes it even more competitive.
Late 2019 saw a Bill passed in the US House that could help US territories such as Guam and Puerto Rico build offshore windfarms to provide them with power. The residents of American territories are often forgotten citizens, but the Bill, HR 6665, the Offshore Wind for Territories Act, would enable them to tap offshore resources and strengthen their energy security while providing jobs and economic growth.
But it’s not just in the US that moves are afoot that could enable islands to power themselves using renewable energy and reduce costly imports: there are more than 2,200 inhabited islands in the European Union alone. Most still depend on expensive fossil fuel imports. Recognising this, and as part of the ‘Clean Energy for All Europeans’ package, the EU’s Clean Energy for EU Islands initiative aims to provides a long-term framework to help islands generate their own sustainable, low-cost energy. Offshore wind is one potential solution being explored.
The UK will remain the leading market for offshore wind in 2019 and in subsequent years. Plans for a Round 4 of offshore wind leases are progressing.
By the time you read this, it will, hopefully, have secured a Sector Deal from the government. The offshore wind industry in the UK was hoping that the government would award it a long-awaited sector deal by the end of 2018, but political developments in the UK could have slowed down the process. That a deal is imminent was confirmed by UK Energy and Clean Growth Minister Claire Perry in a 20 November 2018 announcement.
In November The Crown Estate published plans for its next round of offshore windfarms – including proposed locations to be offered for new seabed rights – and said 7 GW, rather than 6 GW could now be developed. In October it confirmed that it had completed an initial assessment of offshore wind extension applications, and that eight proposed projects, representing up to 3.4 GW of potential new capacity, had satisfied the application criteria and could be granted leases in 2019.
The fast pace of growth in the UK is welcome, but will begin posing problems, not least because of the many thousands of people the industry needs to recruit. A newly-published study suggested that by 2032, the UK will need 36,000 people employed in the offshore wind sector, triple the number currently working in it.
Where will they come from? In 2019, the industry needs to start work on a plan to address that issue.
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