The offshore wind market involves products and infrastructure required for harnessing wind energy through offshore wind turbines. Offshore wind farms consist of wind turbines installed in bodies of water, either permanently or as floating platforms, to harvest wind power. Offshore wind energy provides a cleaner alternative to traditional power sources and can generate more energy due to higher wind speeds away from the land. According to industry estimates, the global offshore wind market is valued at US$50 billion in 2022.
Offshore wind energy has gained prominence in recent years due to the growing need to reduce carbon emissions. Offshore locations experience strong and steady winds that offer greater potential for renewable energy generation compared to onshore sites. Large offshore wind farms can power entire cities and regions. The consistent wind speeds help generate baseload electricity which is a key advantage over other renewable sources like solar. Major economies worldwide are investing heavily in offshore wind capacity to achieve climate targets and transition to a low-carbon future.
The Global offshore wind market is estimated to be valued at US$80 billion in 2024 and is expected to exhibit a CAGR of 15% over the forecast period 2024-2028.
Key Takeaways
Key players operating in the offshore wind market are Siemens Gamesa, General Electric, Vestas, Sinovel Wind Group, and Nordex.
The increasing capacity of offshore wind farms across regions presents lucrative opportunities for investments and project developments. Germany, UK, China, France, Japan and other countries are expanding offshore wind capacities to produce 100 GW or more of renewable energy per year by 2030.
Major developers are spreading their Offshore Wind Market Share footprint globally. European players are exploring opportunities in Asia Pacific and Americas while Chinese firms look to enter the European market. Partnerships between developers, turbine manufacturers and supply chain companies are shaping the competitive landscape. Growing collaborations to boost cost efficiencies will drive global expansion.
Market Drivers
Favorable government policies and incentives: Countries have introduced renewable portfolio standards, feed-in-tariffs, tax credits and other subsidies to encourage offshore wind energy production. This is a major driver for capacity additions.
Improving cost competitiveness: With technological advancements, the levelized cost of energy from offshore wind projects has decreased up to 50% since 2010 making it competitive with conventional sources in many regions. Continued scale up can lower costs further.
Market Restraints
High upfront capital costs: Setting up offshore wind farms requires substantial capital expenditures for development, construction, installation and grid integration. Higher costs challenge projects without strong policy push.
Logistical and technical challenges: Transporting and installing offshore wind turbines in open waters poses difficulties around weather conditions, water depths and distance from shore. Harsh environments can increase maintenance costs as well.
Segment Analysis
The Offshore Wind Energy Market Regional Analysis is dominated by the shallow water segment which holds around three-fourths of the total market share currently. This is because shallow waters which are less than 60 meters deep provide easier setup and connection to land. Majority of existing offshore wind farms are located in shallow waters close to the shore. However, the deep water segment is expected to show high growth in the coming years. With technological advancements, construction of wind farms is now possible even in deep waters over 60 meters. The deep water segment will register a CAGR of around 20% during the forecast period driven by growing investments in projects located far away from coastal areas with high wind potential.
Global Analysis
Europe is currently the leading regional market for offshore wind, holding over three-fourths of global installed capacity. Countries like the UK, Germany, Belgium, Netherlands dominate offshore wind installation in Europe. This is primarily due to strong government support mechanisms and mature offshore wind markets in these countries. However, during the forecast period, the Asia Pacific region is projected to witness the highest growth. With intense focus on developing renewable resources, countries like China, Japan, South Korea, Taiwan, and India are actively investing in large scale offshore wind projects. China especially is emerging as a major market and is expected register a CAGR of over 25% during the forecast period. Initiatives to shift from coal and reduce carbon footprint will further propel market growth in the Asia Pacific region.
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