By Nichola Groom and Nina Chestney
(Reuters) – After a year of canceled projects, broken turbines, and abandoned lease sales, the global offshore wind industry no longer has much chance to hit the lofty targets set by governments in the U.S., Europe and elsewhere, marking a setback for efforts to fight climate change.
The technology forms a big part of government strategies to advance renewable energy and decarbonize the global power industry because it can generate vast amounts of electricity near densely populated coastal regions. Missing targets by a wide margin will leave a gap that could be hard to fill.
Reuters spoke to 12 offshore wind companies, industry researchers, trade associations, and government officials in six countries to come up with a global picture of the state of the industry and its outlook, and found soaring costs, project delays and limited supply chain investment were hobbling installations.
“We’re pretty far away from these targets,” Soren Lassen, head of offshore wind research at energy research firm Wood Mackenzie, said in an interview. He said offshore wind farms now have a global average cost of $230 per megawatt-hour (MWh) – up 30% to 40% in the past two years and more than triple the average of $75/MWh for onshore facilities.
That has companies retreating. BP (NYSE:) last month said it was considering selling a stake in its offshore wind business, and Equinor earlier this year abandoned investments in Vietnam, Spain and Portugal. Meanwhile GE Vernova, one of the industry’s top turbine suppliers, is not taking new orders.
“We do not foresee adding to (our) backlog without substantially different industry economics than what we see in the marketplace today,” GE Vernova CEO Scott Strazik said on a recent investor call.
World governments had set a global target last year of tripling overall renewable energy use by 2030, something the International Renewable Energy Agency (IRENA) said would require offshore wind capacity to surge to 494 GW by the end of this decade, from 73 GW currently.
IRENA Director-General Francesco La Camera told Reuters offshore wind is now projected to fall short of its target by a third. Estimates by three other prominent research firms project that the world will not reach 500 GW of offshore wind installations until after 2035.
TRUMP EFFECT
Governments in Europe, the Americas and Asia have sought to prop up the sector with national targets aimed at attracting deep-pocketed developers including…
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