Top Trends in Offshore Wind

August 12, 2019

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The U.S. offshore wind market is expected to see massive growth in the next decade. The U.S. Department of Energy’s Offshore Wind Technologies Market Report estimates a potential generating capacity of 25,824 megawatts in the project development pipeline at the end of 2018. Below are the top trends that are leading the offshore wind market into a decade of unprecedented growth.

1. Decreasing Offshore Auction Prices

The figure below shows the declining trend in the price of offshore wind sold in auctions globally. The winning auction prices were adjusted for contract length, grid connection, and revenue mechanism for an “all-in” comparison. The placement of Vineyard Wind (expected to be the first utility-scale commercial project in the United States, built in two phases) within that trend shows early movers in the rising U.S. offshore market may be able to capitalize on cost reductions seen elsewhere in the world. It emphasizes that the United States can remain competitive within the global market and that barriers such as a limited domestic supply chain, which had been a concern, may not hinder the future of the U.S. market.

Adjusted strike prices from U.S. and European Offshore Wind Auctions
Adjusted strike prices in dollars per megawatt-hour of planned electricity sales for projects in European and U.S. offshore wind auctions. | Figure 32 from the 2018 Offshore Wind Technologies Market Report.

2. Increasing Water Depths of Projects

When siting an offshore wind project, the water depth of the site is an important factor as the turbine’s foundation must be specifically engineered for that depth. Projects on the West Coast of the United States will be deployed in deeper water due to the narrow continental shelf and steeply declining continental slope. East Coast projects may also wish to deploy farther offshore in order to reduce competition with other uses of the ocean while also limiting the visibility of the offshore turbines from shore. An increase in global project depth, as shown in the figure below, is a positive indicator for the market. This increase is due to improved engineering of turbines, installation cost reductions, and the development of turbines with floating substructures. This trend suggests that technological advancements can allow for economically competitive installation of offshore wind turbines in deeper waters.

Offshore wind project water depth trend to 2024.
Offshore wind project water depth trend to 2024. | Figure 21 from the 2018 Offshore Wind Technologies Market Report.

3. Increasing Turbine Capacity

The capacity of a wind turbine is often referred to as its rated power, or how much power it can produce when operating at full capability. The blue bars in the figure below show a steady increase in the capacity of offshore wind turbines worldwide. The symbols illustrate the capacities of the largest prototypes, which are expected to become commercially available several years later. The upward trend shows the continued development of larger turbines that require fewer turbines to produce the same amount of power compared to their smaller predecessors. This continued growth in rated power is one of the many factors that has led to lower offshore wind costs.

Average commercial offshore wind turbine rating compared to prototype deployment.
Average commercial offshore wind turbine rating compared to prototype deployment. | Figure 23 from the 2018 Offshore Wind Technologies Market Report.

4. Decreasing Global Levelized Cost of Energy

The levelized cost of energy, or LCOE, is a metric that allows different technologies of unequal lifespans, sizes, and initial capital costs to be compared. The trend line in the below figure highlights a decreasing levelized cost of energy from offshore wind worldwide. The reductions in the levelized cost of offshore wind energy since 2014 have been aided by technology improvements in energy capture, reduced capital expenditures, the advent of larger turbines, competition in international markets, and reduced international lending rates, among many other factors.

Global levelized cost of energy estimates for fixed-bottom offshore wind.
Global levelized cost of energy estimates for fixed-bottom offshore wind. | Figure 33 from the 2018 Offshore Wind Technologies Market Report.

Learn more about the U.S. offshore wind market in the U.S. Department of Energy’s 2018 Offshore Wind Technologies Market Report.