We haven’t reached our capacity for offshore wind power. Not even close.
Offshore wind, used effectively, could offer the holy trinity for renewable energy sources: reliability, affordability, and most of all, the kind of scale capable of meeting the energy needs of the U.S., Europe and Japan, several times over.
That’s the conclusion of the International Energy Agency’s annual offshore wind report, which concluded on Friday that offshore wind—currently representing just a fraction of total electricity production—is a vastly underused source of energy, and sitting on the cusp of incredible growth.
“Offshore wind currently provides just 0.3% of global power generation, but its potential is vast,” Fatih Birol, the director of the Paris-based agency, said in the announcement.
Even if the world’s coastlines continue to be under-utilized, projections by the agency have offshore wind growing fast. By 2040, the IEA predicts offshore wind capacity will increase fifteen times over, becoming a $1 trillion industry. Like the growth in solar power—which, earlier this week, the IEA predicted would be the greatest source of growth in renewable energy over the next five years—the pace of that forecast growth is largely due to sinking costs and adoption in China, though it is dependent on support from government policy.
Within about 20 years, the cost of electricity produced by offshore wind is forecast to drop by 60%, the IEA said—in practice, that means that by 2030, offshore wind should be among the cheapest sources of energy: competitive with natural gas in Europe, and competitive with coal in China. In the U.S., particularly on the east cost, offshore wind is now on the cusp of being affordable relative to other energy sources, the IEA says.
Capital costs are also expected to fall rapidly. In 2018, the cost to construct an offshore 1 GW wind farm was on average more than $4 billion in upfront costs—or about $3,300 per kilowatt hour, already more competitive upfront than gas or coal-fired plants, but less competitive than onshore wind or solar, according to the IEA. By 2030, those capital costs are expected to fall more than 40%.
While offshore wind is already common in northwest Europe—a famous sight is the turbines dotting the strait between Copenhagen and Malmö, Sweden, where offshore wind is a mainstream energy source—those forecasts of dropping costs reflect an extensive pipeline of projects beyond the traditional markets in the North Sea: 150 new offshore projects, across 19 countries, with 100 projects scheduled to be complete by 2021. In the U.S. alone, currently scheduled projects amount to 25 Gigawatts of capacity. One gigawatt is equal to 412 utility-scale wind turbines, and is enough to power 110 million LED lights, according to the U.S. Department of Energy.
That’s expected to mark offshore wind’s growth in the U.S. after “more than a decade of false starts,” the agency said.
The agency also noted that it has an advantage: major energy companies who already drill offshore already have much of the expertise and technology to expand wind, providing an opportunity to use the expertise of the conventional oil and gas industry for low-carbon means.
But offshore wind also shares the technical challenges of many other forms of renewable energy, while also being more expensive to install compared to, say, solar panels on commercial buildings and homes. In particular, the longstanding constraints to the onshore grid capacity required to distribute wind power to consumer markets, including how to manage congestion when production is at its peak—i.e., when it’s particularly windy.
Even with projections of rapid growth, however, offshore wind will only remain a small part of the total energy mix: in the U.S., for example, an 80% growth in offshore wind capacity by 2040 would mean it would still provide only a maximum of 5% of the total power generation—far short of the world’s potential.
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