Blowing In The Wind: The Coming Explosion in Offshore Wind Power
“The answer, my friend, is blowin’ in the wind,
The answer is blowin’ in the wind.”
Blowin’ In The Wind
Music and Lyrics by Bob Dylan, 1963
For those in favor of Green Energy, Wind Power always possessed a long attraction as did Solar Power. Both generate power by harnessing a free resource, the wind or the sun. And they turn those into energy that can be utilized in a myriad of ways. Of the two, Wind Power stands as one of the oldest forms of energy production. It dates back to the 3rd Century when the Byzantine Empire used it for grist milling. But it did not really see a major expansion into the standard, when running water was not available, until the 10th Century. It’s role as an alternative to water power is most well known for the famous windmills in The Netherlands in Europe, where there still exist Windmills from the 1400’s. Nevertheless, with the advent of the steam engine in the 1800s, the economics of the windmill faded until the last 30 years.
Since the 1990s, new developments in technology enabled Windmills, with tax credits, to become competitive with standard forms of power. Thus, the initial Wind Farms came into existence, demonstrating how a Green Alternative could compete with traditional power produced via coal or natural gas. With continuous development of the technology, Windmills saw increasing use across the world, as an individual Windmill which could only produce 2 MW of power in 2001 can produce 9.5 MW today. This production will continue to grow such that an individual Windmill will produce almost 14 MW by 2025. However, especially in places such as Europe and the US, opposition arose as they scarred the landscape, killed birds, and lowered property values. As a result, approvals became more difficult, took longer, and cost more money. Based on recent data from Wood Mackenzie, the global energy consulting firm, installations of Onshore Wind Capacity, outside of China, will peak in 2021, then enter decline, falling 19% in 2022 and an additional 10% in 2023. (Please see the following link for the report: https://www.woodmac.com/press-releases/over-$16-billion-of-wind-turbine-capacity-ordered-in-q2-2020/ .)
Offshore Windmills appear poised to fill the void and enable overall Wind Power to continue its growth. When positioned offshore, these Windmills avoid many of the NIMBY issues that face onshore installations. And, with standard undersea power cables, these installations can easily hook up to the local grid. As a result, Offshore Wind Power installations will rise from 6.8 GW in 2020 to a projected 9.8 GW next year, growing almost 45%. They will then gather steam, rising to 11.5 GW in 2023 before leaping to 19.2 GW in 2025. All in all, Offshore Wind Power installations will grow over 180% from 2020 to 2025 or at a 23% Compound Annual Growth Rate. This will make Offshore Wind Power one of the fastest growing major industries in the world.
While finding new Windmills on land may become a rarer and rarer sight and older Wind Farms may get decommissioned, the economics of the technology, coupled with the policy goal to reduce carbon emissions, will continue to underpin their use. As a result, annual installations offshore will continue to accelerate throughout the 2020s, reaching 25 – 30 GW per year by 2030, potentially 4x their level in 2020. With Wind Power continuing to assert its role in the energy grid of the future, The Answer, My Friend, Is Blowin’ In The Wind, The Answer Is Blowin’ In The Wind. (Data from Wood Mackenzie, JP Morgan, and Jefferies LLC coupled with Green Drake Advisors analysis.)
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