More than 20 years after the world's first commercial offshore wind farm opened in 1991 in the Baltic Sea off the coast of Vindeby, Denmark, the industry continues to be dominated by Europe.

But one of the reasons for the slow take-off of offshore wind in China is the lack of a technical supply chain anywhere near competing with that in Europe. Goldwind, China’s second biggest turbine manufacturer, plans to source 50% of its components from abroad as a result. As most Chinese original equipment manufacturers (OEMs) are outsourcing manufacturing and design processes, China’s offshore industry currently offers Europe more of a business opportunity than a threat.

In Japan the post-Fukushima scramble to ramp up renewables has mainly benefited solar so far. But the idea of pursuing offshore wind in an island nation surrounded by deep waters and often hit by typhoons is no longer readily dismissed. According to the Japanese Wind Power Association, potential floating offshore wind capacity in the country is a massive 519 GW. The nation’s current nuclear capacity stands at 46.15 GW.

Japan’s government wants to phase out nuclear energy over three decades and wants renewable energy to meet around 40% of demand by the early 2030s, up from 8% at present. Feed-in tariffs (FiTs) introduced on July 1, 2012 require utilities to buy power from renewables providers at premium prices set for up to 20 years, and investment in clean energy is expected to double to more than $17 billion in 2012.

Japan’s first floating wind farm off the coast of the western prefecture of Nagasaki is expected to be fitted with a 2 MW turbine and grid connected next summer. Meanwhile, Hitachi Zosen is leading a consortium planning to build 7.5 MW of pilot offshore wind plants in Japan by 2016 to be followed by 300 MW over 10 years at an estimated cost of $1.5 billion.

The increasing scale and ambition of global offshore wind
projects is clear in the UK’s London Array, set to total 1 GW on
completion (London Array Ltd)

In South Korea the benefits of tapping into the country’s considerable offshore wind potential could not be more obvious. The country imports 97% of its energy needs in the shape of oil, coal and liquefied natural gas. But in November 2011 the country’s government announced it will invest $9 billion in constructing a 2.5 GW offshore wind farm, which would be the world’s largest, in three phases by 2019. Collaboration with the UK is expected to assist the project’s progress, and Sawyer expects South Korea will emerge as a third serious player in the region. ‘For the first time the industrial sector in Japan is looking at offshore wind as something other than just a small niche market,’ he said. ‘In Korea you have some of the largest and best capitalised high-tech companies in the world. Governments and big companies [in Asia] have thrown their weight behind offshore and if it works they will continue to move in that direction.’

North America Takes Its First Steps

North America, and particularly the eastern seaboard of the US, is another region with vast untapped offshore potential. Onshore wind has boomed in recent years, aided by a 2009 economic stimulus package which meant developers could opt for either a 30% tax credit for investments in energy projects or a $2.1 cent/kWh production tax credit for electricity from renewables. The levelised cost of electricity (LCOE) for many Midwest onshore projects now comes in at $50/MWh or less while the offshore industry focuses on cutting costs to $160/MWh.

The first proposed offshore farm in US waters, the 420 MW Cape Wind in Nantucket Sound off the coast of Cape Cod, to be built by developers Energy Management Inc, generated a decade-long political and legal controversy amid opposition on environmental and aesthetic grounds. The Department of the Interior hopes to overcome some of the issues that have prevented a single US offshore plant being constructed so far by auctioning 2434 square miles (9700 Ha) of the Atlantic continental shelf, allowing wind farms to be built off six states running from Massachusetts to Virginia. It follows the ‘Smart from the Start’ scheme, which aims to speed up siting, leasing and construction of Atlantic wind projects. But, according to Sawyer, it is the federal system itself which largely explains the lack of offshore development.

‘The cheapest and easiest way to get 20%-25% of US electricity from wind power is onshore in the Midwest with new transmission lines, but that’s difficult due to NIMBYism and competing jurisdictions,’ he said. ‘The other way would be to put a lot of offshore wind on the east coast at water depths under 50 metres and relatively short distances to transmission lines. But that would require planning on a scale the US is not used to doing, as it’s all done state by state and mostly by the private sector.’ Potential clashes with fishing grounds and vulnerability to hurricanes are further factors on the east coast.

In Canada, deep waters and severe weather on the east coast and huge onshore potential close to the west coast may hold back significant development. But a few projects are moving ahead in the Great Lakes, such as the 420 MW Trillium Power Wind 1, off northeastern Lake Ontario. Windstream Energy holds the only offshore wind power feed-in-tariff contract in Ontario for the 300 MW Wolfe Island Shoals. ‘Economically I think it can work in the Great Lakes,’ said Sawyer of Canada’s offshore prospects. ‘Maybe in southern British Columbia there may be places where it also makes sense.’

In Australia Enhar, a Melbourne-based renewable energy consultancy, has estimated that offshore wind power costs in the few areas with shallow waters could be competitive with solar and geothermal, but there is nothing to suggest the industry will take off in the short term.

UK, Germany and China Set To Dominate

According to Douglas-Westwood, 15 GW of new offshore wind capacity will be added from 2012 to 2016 with the UK, Germany and China accounting for 83%. The average 3 GW to be added per year is five times the annual level seen from 2007 to 2011, with China set to become the biggest market early in the next decade.

BNEF agrees that three countries are set to dominate. ‘We forecast the UK, Germany and China will account for 76% of offshore wind in 2020, with a scattering in other European countries, North America and other parts of Asia,’ said Johnston.

If floating concepts take off then Japan could quickly scale up, and the Atlantic and Mediterranean could also be fruitfully exploited. Sawyer believes Germany is a ‘wild card that could go either way’ as sustained investment in renewables threatens to hit consumer prices hard, prompting renewed debate on policy.

Geography, greenhouse gas emissions, job creation and politics will all remain influential in shaping the offshore wind sector. If the industry is to expand rapidly in new areas much will also depend upon hard economics. According to IRENA’s wind cost analysis, the LCOE for offshore wind ranges from 26%-75% more expensive than onshore, assuming a 15% higher capacity factor. But the document also states that offshore wind should benefit from increasing difficulties in gaining approval for onshore farms close to demand – meaning ‘its longer-term prospects are good’.

Add to this a growing urgency to tackle climate change, constant technological improvements and volatile oil prices and it becomes easy to imagine a world in which offshore wind turbines are widespread rather than clustered in the North Sea.