Offshore wind power could become $1 trillion industry, says IEA

Offshore wind could become a cornerstone of the world’s power supply as steep cost reductions and improved technology unleash the potential of the green energy source, said the International Energy Agency (IEA) on Friday.

Replacing fossil fuels with renewable energy sources is crucial to meet a globally-agreed-upon goal of limiting temperature rise to below two degrees Celsius this century, and the expansion of offshore wind could avoid the generation of five to seven billion tonnes of CO2 emissions from the power sector globally, said the IEA.

Power generated from wind turbines at sea only accounts for 0.3 percent of global electricity generation today, said the IEA in what it called “the most comprehensive” study of offshore wind to date.

“[But] the potential is huge,” IEA executive director Fatih Birol told Reuters news agency in Denmark – the country where the first offshore wind turbines were installed in 1991 and where 15 percent of electricity last year was produced from offshore wind.

Based on current and proposed policies, capacity is set to increase 15-fold over the next two decades, turning wind power into a $1 trillion business, according to the IEA.

Birol likened offshore wind to two other game-changers in the energy system: the shale revolution and the rise of solar photovoltaics (solar PV). He said that offshore wind had the potential to deliver similar steep cost reductions.

Birol said he expected the average generation cost for global offshore wind to halve to $60 per megawatt hour within five years – a reduction driven by lower financing costs and bigger turbines, some measuring almost as high as the Eiffel Tower.

In Europe, offshore wind will soon beat new natural gas-fired capacity on cost and be on a par with solar PV and onshore wind. In China, it is set to become competitive with new coal-fired capacity around 2030, according to the IEA.

But Birol cautioned that real political action – and large investments in onshore grid infrastructure – were needed to unlock offshore wind’s full potential.

“If the governments are serious about their climate policies and climate neutrality, they have to have dedicated policies in order to foster green technologies like offshore wind,” he said.

While the green transition is increasingly taking over the global political agenda, there is a growing disconnect between climate ambitions and real-life emissions trends. Energy-related greenhouse gas emissions reached a historic high last year.

The United Kingdom today has the biggest capacity for wind power, but China is likely to have the largest offshore wind fleet by 2025. The industry is also growing in markets such as the United States, Taiwan and Japan.

Denmark’s Orsted is the world’s biggest developer of offshore wind, while Siemens Gamesa and MHI Vestas Offshore Wind, a joint venture between Vestas and Mitsubishi Heavy Industries, are the largest makers of wind turbines employed at sea.