The progress in the development of offshore wind power has been slower compared with the progress in the development of land-based wind power. However, a growing number of maritime and coastal nations in Asia Pacific are now engaging in the large-scale deployment of offshore wind turbines along their coasts. The consultancy firm Wood Mackenzie in its recent report forecasts that the total generation capacity of offshore wind power in Asia Pacific will reach 43GW in 2027, or around 20 times larger in scale compared with the current level. By that time, the cost of offshore wind power is also expected to be competitive with the costs of electricity generation based on traditional power sources (i.e. the burning of fossil fuels).
The Wood Mackenzie report points out that China is going to be the leading growth driver for offshore wind power in the region, with its cumulative installed capacity estimated to increase from 2GW in 2017 to 31GW in 2027. As for Taiwan, its cumulative installed capacity is forecast to reach 8.7GW in 2027 or about 20% of the region’s total capacity at that time. Taiwan is also expected to become the largest offshore wind market in the region in 2020 if China is excluded from the analysis. Wood Mackenzie analyst Robert Liew states in the report that the demand in Taiwan is supported by attractive and consistent regulatory policies. Thus, the market there has enormous potential.
Taiwan’s government aims to phase out nuclear power by 2025 and make renewable energies the primary sources of electricity generation on the island. Regarding the development of offshore wind power, Taiwan’s government wants to increase the cumulative installed capacity to 5.5GW by 2025. Currently, the island’s electricity mix is 84% from the burning of fossil fuels, 9.3% from nuclear power, and 6.3% from renewable energies plus hydro power. The government’s ideal electricity mix for the future is 20% from renewable energies, 30% from gas-fired generation, and 20% from coal-fired generation.
Several countries in Asia Pacific have established bold targets to increase the deployment of offshore wind power. Liew in the report asserts that large-scale and ongoing investments are needed in order to sustain growth in the offshore wind market. Take East Asian countries including South Korea and Japan as an example. They collectively will need at least US$37 billion in investments over the next five years in order to achieve significant growth in offshore wind capacity, according to Liew. With respect to the cost of offshore wind power, the Wood Mackenzie report is optimistic that it will keep falling and become competitive with the costs of generation based on traditional power sources by 2025. The falling cost is also expected to contribute to the increase in the number of project developers in the offshore wind market during the future period.
On the other hand, the report says that governments in Asia Pacific will encounter difficult challenges when carrying out their plans to achieve their respective capacity targets for offshore wind power. While the region has huge market potential, the governments there have to be consistent in developing policies to induce the development of offshore wind farms. At the same time, opportunities have to be provided to allow the formation of a local supply chain for wind turbines. All in all, the synergy of good policies, local suppliers, and a host of other factors is required in order for the countries in the region to meet their offshore wind targets. The Japanese government, for instance, recently plans to remove one of the three floating wind turbines that were built off the coast of Fukushima Prefecture due to the lack of wind in the area and the high maintenance cost.
For countries in Asia Pacific, creating a domestic pipeline for offshore wind projects will involve a long period for technological R&D and the establishment of local suppliers. Furthermore, much of the technological development in offshore wind power has been located in the northern part of Europe, a region that is very different from Asia Pacific in terms of climate and geography. To promote the growth of the offshore wind market in Asia Pacific, governments and project developers need to consider ways to minimize risks such as natural disasters (e.g. typhoons and earthquakes) and to acquire the necessary workforce and technologies related to offshore construction.
The Wood Mackenzie report emphasizes that governments have to be very committed in allocating the time and resources needed to set up the maritime infrastructure and the vessel fleet to install and service the wind turbines. They also have to invest in the upgrading of the power transmission network in order to accommodate the sources of generation that are positioned on the coastlines. Liew says that the European experience in developing offshore wind farms has yielded positive outcomes. Specifically, the competitiveness of the technology has risen with investments and R&D initiatives. Subsequently, turbine installations have grown exponentially as well. In sum, project developers benefit from economies of scale, a well-functioning local supply chain, and the emerging market.
Wood Mackenzie is one of several major research organizations that are bullish on the development of offshore wind power in Asia Pacific. The US-based Institute for Energy Economics and Financial Analysis (IEEFA) even suggests that this renewable energy can substitute fossil fuels for a substantial portion of the region’s overall electricity generation, and thus cutting down energy costs and carbon emissions for the region as well. According IEEFA analyst Kashish Shah, the global market for offshore wind power will grow in scale by around US$2-3 billion annually over the next decade.
(The above article is an English translation of a Chinese article written by Daisy Chuang. The credit of the top image goes to Tee Cee via Flickr and falls under the license of CC BY 2.0.)