The Offshore Wind Industry needs more than just Political Commitment to Grow Dramatically
ACORE Comments on the ISSB’s Exposure Draft on Climate-Related Disclosures
July 29, 2022
ACORE Comments on Department of Commerce Proposed Rule on Duty-Free Importation of Solar Cells and Modules from Southeast Asia
August 1, 2022
The latest report published by the Global Wind Energy Council (GWEC) shows 2021 as the best-ever year for the offshore wind industry. This was the year when 21.1 GW of new capacity was connected to the grid around the world. China led offshore wind for the fourth year in a row, bringing its cumulative offshore wind installations to 27.7 GW. By the end of 2022, Asia will be the largest offshore market in the world. It could take Europe until 2031 to regain its position.
Due to the recent success in offshore wind and the increased ambition of governments around the world to improve energy security, net-zero and affordability, GWEC has raised its outlook for 2030 by 16.7%, which equates to another 45 GW of capacity, however, there are some serious challenges that will need to be tackled.
Current challenges
According to the report, there has been an increase in offshore wind targets due to the global energy crisis and the Russian invasion of Ukraine. Not only does the industry need to invest and maintain growth in Europe and China, it must keep up with the rapid scale-up in the US and the rest of Southeast Asia, and deal with the emerging demand in South America and the Pacific. The globalization of the offshore wind industry will strain the logistics and supply chains that are already under pressure.
The world needs to work swiftly to achieve the new targets, while establishing an efficient global supply chain. It is a great concern for the industry that inflation, commodity and logistics costs will undermine its efforts to accelerate offshore wind delivery. There is a lot of pressure on the current supply chain, which is making it difficult for the offshore wind industry to grow rapidly and address the challenge of decarbonization.
Additionally, a growing demand across the economy, for materials like copper, steel and rare earth elements (REEs), as well as supply chain bottlenecks is leading to a long-term sustained price increase because demand is surpassing supply.
What can be done to ensure rapid growth in the offshore industry?
While it helps tremendously to have political commitment, an enormous amount of effort and timely action is required in order to achieve the set targets. Global governments must urgently put in place their policy and regulatory frameworks to make sure they are able to fulfil their promises.
The industry, governments around the world, and all other stakeholders must collaborate with each other to take some necessary actions, including:
- Ensure that seabed concessions are being licensed at the right pace,
- Make sure that planning processes are simplified and are more efficient, and
- Ensure that procurement schemes such as auctions recognize the system and social value of offshore wind energy and can deliver sustainable prices.
For more information, download the GWEC Global Offshore Wind Report 2022 here.
