Offshore wind readies for take off in Australia and Asia, despite near term problems

The global offshore wind industry connected 8.8GW of new capacity to the global grid in 2022, a sharp fall from the previous year, but expects that a massive 380GW will be built in the next decade, with the Asia Pacific region accounting for half.

The latest Global Offshore Wind Report from the Global Wind Energy Council (GWEC), launched in Melbourne on Monday, says that more than 180GW worth of potential capacity has been identified in the Asia Pacific region outside of China, and Australia alone accounts for a pipeline of more than 50GW.

Australia is one several key “Markets to Watch” highlighted in GWEC’s latest report – which is likely why the country has been chosen as host for the inaugural GWEC Asia Pacific Offshore Wind and Green Hydrogen Summit which opens in Melbourne on Tuesday.

“A key theme of the report is the rapid growth of offshore wind in Asia Pacific, a region that is expected to host almost half of the new offshore capacity out to 2030,” said Ross Rolfe, chairman and CEO of the Australian operations of Iberdrola, which is one of the big global players chasing offshore wind in Australia.

“We believe offshore wind will play a critical role in delivering a reliable and affordable green energy future for Australia, for APAC and for the global economy in general.”

The offshore wind sector has grown rapidly, and as of the end of 2022 there was 64.3GW worth of capacity operating around the globe. Offshore wind is in operation across three continents and 19 countries, and accounts for 7.1% of the global wind power base.

In 2022, however, global installations fell by 58 per cent – mostly as a result of a steep fall in China, the world’s dominant market, after the end of a feed in tariff incentive. In Europe, installations fell to their lowest level since 2016.

Bottlenecks in the supply chain are expected over the next four years, but GWEC expects that by 2032 offshore wind capacity will have grown from around 64MW now to more than 440MW.

This will be spread over 32 markets, with Asia Pacific accounting for nearly half, followed by Europe with 41%, North America with 9%, and LATAM with 1%.

Much of the demand for offshore wind in Australia is being led by the country’s ambitious green hydrogen ambitions, but as a literal continental island, Australia is well suited to become a powerhouse offshore wind generator.

The Victorian state government has set ambitious targets of 2GW of offshore wind generation by 2032, 4GW by 2035, and 9GW by 2040, providing important political clarity and certainty to developers and investors.

New South Wales is still considering introducing state-based targets for its Hunter Valley and Illawarra offshore wind zones.

However, as the report explains, “there are a number of challenges that Australia needs to consider before these projects can be realised.”

“Common offshore wind challenges like grid connection, port infrastructure, access to vessels, workforce development (including skills training) and supply chain capacity are not unique to Australia or other emerging markets,” the report says.

But they will need to be dealt with over the next two years to ensure delivery timeframes can be met.”

GWEC also points out that “Australia’s share of manufacturing and supply chain activity in most renewable energy sectors is low” despite several recent reports documenting valuable opportunities in the market.

As such, Australia will need to invest in infrastructure to strengthen its domestic supply chain if it is to successfully reduce costs for offshore wind while ensuring job creation.

Importantly for Australia, however, the report explains that the country’s federal and state governments are providing a successful example for other emerging markets to follow in terms of its “commitment to iterative learning and constant improvement in processes and regulations around offshore wind”.

Ben Blackwell, CEO of GWEC, highlighted the need for unprecedented collaboration, cooperation, and investment across the globe so as to overcome the hurdles facing the industry.

“Governments and industry will need to face head-on the challenges the sector faces around supply chain, permitting and policy in order to build future-proof markets,” said Blackwell.

“By solving these challenges we can build a strong, resilient global offshore wind industry that can provide a clean and secure foundation for economies around the world, and ensure we meet our climate targets.”