Europe has lost its position as the world’s largest offshore wind market to the Asia-Pacific region led by China, as a result of rising costs and supply chain disruptions, the global industry group has found.
Europe accounted for about 47 per cent of the 64.3GW of total global offshore wind capacity in 2022, while the Asia-Pacific region surpassed it with almost 53 per cent, according to data from the Global Wind Energy Council.
China alone made up almost 49 per cent of the global total. The shift in dominance comes since 2021, when Europe accounted for 50 per cent of the total 55.9GW of cumulative installations, GWEC said in its latest report on the state of the global offshore wind market.
“Offshore wind additions in the near term are expected to be relatively slow . . . due to lower activity levels in established North Sea markets . . . as well as the impact of current challenging market conditions,” the report said.
GWEC added that Europe was unlikely to recapture its position as the largest offshore wind market in the next 10 years, albeit that annual installations in the region “are expected to surpass Apac’s from 2030”.
Europe’s offshore wind industry has struggled as supply chain problems and high interest rates following the pandemic and Russia’s invasion of Ukraine have increased the costs of everything from turbines, labour and financing. That has led to losses at turbine manufacturers and project cancellations where the economics no longer made sense.
Last month, Swedish developer Vattenfall halted plans for a new offshore wind farm off England’s east coast, one of the country’s largest, saying rising costs meant it was no longer viable. Siemens Energy earlier this month said it expected to rack up a €4.5bn loss this year as it struggles to fix its ailing wind turbine business Siemens Gamesa.
The challenges mean that Europe is expected to see lower offshore wind installations in the next five years than previously forecast. The GWEC said it expected Europe to add a total of 34.9GW in offshore wind capacity from 2023 to 2027, down from the 40.8GW it had projected in last year’s report.
The Apac region is expected to add 76.1GW in the same period, driven by China, which will account for 84 per cent of the increase.
In Europe and in the US, offshore wind projects have been delayed or stalled “by inadequate and inefficient permitting and licensing rules”, Rebecca Williams, head of offshore wind at GWEC said.
“Such ineffective policies centred on a downward price competition and, where coupled with impractical and unattainable local content stipulations, will add to project costs and slow the pace of offshore wind deployment,” she added.
The council also warned that China’s control of 70 per cent of the market for some key components for offshore wind projects meant that “restrictive trade policies such as those proposed by the EU and the US look certain to create bottlenecks”.
Globally, 380GW of new offshore wind capacity is expected to be added in the next decade, the council said, bringing the total installed capacity to 446GW in 2032.
Two-thirds of the capacity will be added in the second half of the decade, in part due to projects being pushed back in Europe and the US amid the challenging market conditions.
In order to hit net zero emissions goals and limit global warming, both the International Energy Agency and the International Renewable Energy Agency estimate that offshore wind capacity will need to exceed 2,000GW by 2050.
Some 8.8GW of new offshore wind capacity was added around the world in 2022, after a record 21.1GW addition in 2021, the council said.