Floating Offshore Wind Power Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

Floating Offshore Wind Power Market - Growth, Trends, COVID-19 Impact, and Forecasts (2022 - 2027)

The floating offshore wind power market is expected to reach 337.92 MW by the end of this year, and it is projected to register a CAGR of over 88.62% during the forecast period.

COVID-19 negatively impacted the market in 2020. Presently the market has now reached pre-pandemic levels.

Key Highlights

• Over the long term, the growing demand for offshore wind power is expected to stimulate the market growth of the global floating offshore wind power market. Furthermore, increasing water depth of offshore wind power projects is considered a game-changing technology to exploit abundant wind potential in deeper waters and is also expected to drive the growth of the market studied.
• On the other hand, increasing adoption of alternate sources of clean power generation, mainly gas and solar power. As power generation from solar and gas resources are cleaner modes of energy production, the growing adoption of the same is expected to hamper the demand for wind power.
• Nevertheless, the growing interest in offshore wind energy from developing and untapped markets is likely to create lucrative growth opportunities for the floating offshore wind power market in the forecast period.
• The European region dominates the market and is also likely to witness the highest CAGR during the forecast period. This growth is attributed to the rapid rise in offshore wind power investments, coupled with supportive government policies in the countries of this region, including Norway, the United Kingdom, and France.

Key Market TrendsDeclining Cost of Wind Energy

• The wind industry has recently developed more reliable and lightweight materials, such as fiberglass composites and other polymers. Besides that, earlier wind industry mainly used steel to build large towers, but now wind towers are made of steel and concrete, allowing manufacturers to build large towers.
• Furthermore, the improvements in the technology, including longer blades, the bearing materials for wind turbine gearbox, and access to better wind resources as wind farms are moving further from shore, are likely to support the growth of the floating offshore wind energy market. The designs and manufacturing processes have significantly improved in the last few years. Due to these developments, manufacturers can build large-sized wind turbines at a relatively lower cost.
• According to the International Renewable Energy Agency (IRENA), the global weighted average Levelized cost of electricity (LCOE) of newly commissioned offshore wind declined by 60% between 2010 and 2021, from USD 0.188/kilowatt hour (kWh) to USD 0.075/kWh. In 2021 alone, there was a 13% reduction, year-on-year.
• Between 2010 and 2021, global average total installed costs decreased by 41%, from USD 4,876/kW) to USD 2,858/kW. At its peak in 2011, the global weighted average installed cost was USD 5,584/kW, which was twice its value in 2021. In Europe, the weighted average LCOE of newly commissioned offshore projects decreased by 29% between 2020 and 2021, from USD 0.092/kWh to USD 0.065/kWh. Driven by project economies of scale, there was a 25% reduction in total installed costs year-on-year and an increase in new projects' weighted average capacity factor from 42% to 48% in 2021.
• The total installed cost and LCOE reductions have been driven by technology improvements and the industry's growing maturity. Additionally, the growing developer experience, greater product standardization, manufacturing industrialization, service hubs, and economies of scale have contributed to cost declines.
• Therefore, the declining cost of wind energy in the offshore industry is expected to drive the adoption of floating offshore wind power technology during the forecast period.

Europe to Dominate the Market Growth

• Europe holds the highest share of offshore wind energy installations globally. According to European Union, Europe represents a quarter of global installations of the total offshore wind market. Europe (primarily North Sea countries) is likely to be at the helm of the offshore wind market.
• Around 85% of the total offshore wind installations are globally in European waters. The governments of the European region, particularly in the North Sea area, have set an ambitious target for installing offshore wind farms in their territorial waters.
• In 2022, Europe is expected to have an installed capacity of 112 MW of floating offshore wind power capacity, with the United Kingdom, France, Norway, Ireland, and Spain being the major markets in the region.
• In August 2022, Cerulean Winds and Ping Petroleum UK signed an agreement on offshore oil and gas facilities powered mainly by offshore wind. Under the agreement, Cerulean Winds, with its consortium of Tier 1 industrial partners, may provide a large floating offshore wind turbine that will be connected via a cable to Ping Petroleum’s Floating Production & Storage vessel. The project is expected to come online in 2025. A grant enabled the project to Cerulean Winds through the Floating Offshore Wind Demonstration Program.
• In February 2022, Norway announced plans for its first auction for offshore wind. The tender, scheduled in the second half of this year, would first look for bids to develop at least 1.5 GW of offshore wind capacity to supply the country, with subsequent tenders designed to provide an economic boost by providing more electricity for export to Europe.
• Furthermore, eight new offshore wind projects reached Final Decision Investment (FID) in 2020, with construction starting in the future. The projects have an investment cost of USD 29.67 billion.
• These recent trends, in turn, are expected to present Europe as an excellent business destination for players involved in the floating offshore wind farm business during the forecast period.

Competitive Landscape

The floating offshore wind power market is moderately fragmented. Some of the major players in the market (in no particular order) include General Electric Company, Doosan Enerbility, Siemens Gamesa Renewable Energy, BW Ideol SA, and Vestas Wind Systems AS, among others.

Additional Benefits:

• The market estimate (ME) sheet in Excel format
• 3 months of analyst support

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