Despite the sector’s market-making promise, blindly optimistic forecasts by some observers could undercut progress at this crucial stage of its commercialization, warns Scott Urquhart
To judge by the packed conference halls at floating wind industry events this year in Houston, Tokyo, Aberdeen and even Portland, Maine, you’d think the sector was in good health, heading fast toward previously predicted multi-gigawatt forecasts from various parties – with many still suggesting as much as 10-16GW could be built and turning by the end of this decade.
The prospects are in fact now very different, more likely 1-2GW. Despite the sector having expanded from a single turbine off Norway in 2009 to some 250MW now in operation around the world, floating wind’s 350GW project pipeline is still just very much that, a ‘pipeline’, and, from Aegir’s numbers, the sector is unlikely to have a single commercial-scale (that is, 300MW-plus) project in operation by 2030 – except perhaps off China.
Ponderous site permitting processes and a lack of clarity on support mechanisms have a great deal to answer for, of course, in slowing the pace of floating wind’s cost-reduction efforts. The conventional bottom-fixed sector’s story of cost-out in the last decade came from numerous North Sea nations providing substantial subsidy schemes which allowed supply chains to take shape around steady, long-visibility delivery orderbooks. This was a risky bet with offshore wind then sitting above €150/MWh ($158/MWh) but one that paid off with that figure falling 70% over a decade.
'Today it is hard to see any government making the kind of wager on floating wind it did with bottom-fixed to achieve such speed and certainty of cost-out as seen in the past decade.'Scott Urquhart
Today, it is hard to see any government making that kind of wager on floating wind to achieve such speed and certainty of cost-out. That would require gigawatt-scale support, rather than megawatt-scale as is currently the case.
To be sure, the past year has been banner for floating wind. In Europe, Scotland’s 28GW ScotWind awards was 75% in water depths needing floating technology; Norway moved ever-closer to a deepwater auction – while installing the world’s largest floating array, the 95MW Hywind Tampen; Portugal and Spain both pledged floating wind tenders; and France started sailing out flagship pre-commercial projects – led by EDF's PGL (pictured above (FOTO: SBM Offshore) – ahead of a floating-specific auction. Even the UK’s upwardly revised Contract for Difference strike-price pointed to better days ahead for floating wind.
Across in the US Pacific, California handed out leases for some 6GW+ of floating developments, and advanced deepwater auctions off Oregon and in the Gulf of Maine. And in Asia, first commercial projects are pushing ahead with permitting, with some line-of-sight on final investment decisions.
But more tellingly, many Northern European countries, including Denmark, Germany, and the Netherlands, are substantially expanding fixed-bottom lease rounds, which will without question be far cheaper acreage than what can be found in prospective floating wind areas around the North Sea. And in the US, scoping work for upcoming leasing in the Central Atlantic and Gulf of Mexico by federal authorities has quietly been shifted closer to shore, shelving deepwater areas for the time being.
Monopiles' market muddle
Floating wind faces another challenge too: the XX(X)L monopile. Not long ago it was debated whether bottom-fixed projects would be confined to water depths of under 40 meters, with 40-60 meters the preserve of jacket foundations, and anything deeper the domain of floating platforms. But monopiles have continued to grow beyond earlier expectations, and concepts are now being designed to be piled-in in water depths as great as 60 meters, after which jackets could go deeper, cutting into the market for ‘shallow water’ floating.
The fear rarely shared publicly in floating wind circles is that these market crosswinds could lead to small-scale, fragmented deployment of lead-off projects across three continents. This is not a recipe for successful cost-out.
Floating wind, from our view at Aegir, still has a bright commercial future – just not by 2030. But to ensure this reality does eventually materialize, government and industry needs to shake itself out of the delusion – not least at sector conferences – that floating wind is on anything like the trajectory of the once-claimed 10-16GW operational by 2030.
The longer this unrealistic view of floating wind’s near-term future persists, the longer we are ignoring the major interventions needed to get the sector on a commercial track.
• Scott Urquhart is CEO of Aegir Insights
Interested in learning more about the commercialization of floating wind? Aegir Insights has recently published a Market Insights report to our subscribing clients, forecasting the cost of floating wind globally in the next decades and addressing regional site conditions based on data in Aegir’s project list of all announced offshore wind projects worldwide. Reach out to us to learn more about Aegir Insights' intelligence services.
In one of Aegir's latest Wavelength Intelligence Briefings, Head of Data Victoria Toft discussed with Chief Executive Editor Darius Snieckus how the floating wind sector can navigate its way into full-scale international commercialization. Read about their key talking-points here or sign up to get access to the recording.
Every week in Beaufort, Aegir Insights' intelligence newsletter, industry thought leaders write exclusive opinion pieces covering hot-button topics in the offshore energy transition.
Delivered straight to your inbox every Sunday, Beaufort will sharpen your market insight for the week ahead with exclusive commentary, analysis, and in-depth journalism delving into the talking points and technologies shaping offshore wind.