An extract from GWEC’s Global Offshore Wind Report 2020
Japan built Asia’s first offshore wind project with two units of V47-660kW turbines in 2003. However, the Asian offshore market was not ready to take off in earnest until 2014, when the Chinese central government released the National Offshore Wind Development Plan (2014-2016). In 2017, China passed the 1 GW annual installation milestone; one year later, it surpassed the UK as the world’s top market in new installations.
GWEC Market Intelligence’s latest market outlook predicts that China will continue to dominate the Asian offshore wind market in the first half of this decade, with more than 70 percent market share. Taiwan is expected to be the largest offshore market in Asia after China in new installations in the same period.
However, the scales will tip from 2025, when more utility-scale offshore wind projects get connected in Japan, South Korea and Vietnam. GWEC Market Intelligence forecasts that China’s market share in this region is likely to drop to 58% in 2025 and will continue to decline when offshore projects expand to new markets with high resource potential, like India and the Philippines, towards the end of the decade.
The average annual growth rate in Asia will stay at the level of 1.7 percent in the first half of this decade, but is likely to increase to 8.4 percent in the second half. The top five markets in this region in new installations in this decade will be China (52 GW), Taiwan (10.5 GW), South Korea (7.9 GW), Japan (7.4 GW) and Vietnam (5.2 GW). Excluding China, the Asian offshore wind market is still at the early stage of development. Each market is facing the challenge of developing a local supply chain and the necessary competencies and capabilities to build an offshore wind industry.
The early experience from Taiwan has proven that collaboration with European partners across markets in this region is essential for success. GWEC Market Intelligence predicts that Europe will remain the largest regional offshore wind market in terms of total installations by 2025 and 2030. Nevertheless, Asia’s share of the global market is expected to grow from 24 percent in 2019 to 42 percent in 2025, where it is likely to remain until the end of the decade.
China was the world’s No. 3 offshore market in total installations as of the end of 2019 (after the UK and Germany). At present, project developers and investors are rushing to commission their projects before the end of the 2021 deadline in order to capitalise on the 0.85RMB/kWh FiT for offshore wind. Considering extraordinary volume of new capacity (4-5 GW/year) will be built in 2020 and 2021, GWEC Market Intelligence expects China will surpass the UK as the world’s largest offshore market in total installations by 2021, if not 2020. However, new installations will decline dramatically from 2022, when the central government will terminate the subsidy for offshore wind. Annual offshore wind growth in China in the future will depend on whether subsidies provided by provincial governments will be available and whether offshore wind industry can reach grid parity before 2025.
With 128 MW offshore wind capacity online at present, Taiwan is positioned to become the second-largest offshore wind market in this region. It will connect 5.5 GW of new offshore wind by 2025 and another 10 GW will be tendered by the government through the Round 3 auctions for commissioning by 2035, providing the long-term visibility needed to generate a local offshore wind industry and supply chain.
Although the “green growth” strategy announced almost a decade ago has failed to boost its offshore wind development, the Democratic Party led by President Moon Jae-in seems intent on reviving the green agenda. To reach the “Renewable Energy 3020” target of 20 percent renewables in the power mix by 2030, South Korea is targeting 12 GW of new offshore wind capacity to be built by the end of this decade.
The development of Japan’s offshore wind sector has been stymied by a lack of ambitious targets and a cumbersome permitting and licensing framework, but there has been a growth in momentum at both the policymaking and industry level since 2017. In July 2020, the government nominated four offshore wind zones and launched the first offshore wind auction for a floating offshore wind farm offshore from Goto City. GWEC Market Intelligence expects he Japanese offshore wind market to take off from the middle of this decade.
More than 500 MW offshore wind projects in the pipeline were expected to come online before the current FiT deadline of November 2021. Taking into account the recent announcement of a FiT extension to the end of 2023 followed by an auction system from 2024, which was officially sanctioned by the Prime Minister in June, GWEC Market Intelligence predicts a total of 5.2 GW offshore wind capacity to be built between 2020 and 2030.
As the world’s largest regional offshore wind market, Europe is expected to maintain steady growth, but new installations outside Europe, predominantly from Asia and North America, are likely to surpass Europe in 2020 for the first time and continue exceeding volume in Europe through 2030. In the near-term (2020-2024), the majority of growth outside of Europe will primarily come from China and Taiwan, with the contribution from the US becoming sizeable from 2024 when the first utility-scale offshore project comes online.
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