Bernstein looks at nascent offshore wind industry

Bernstein Research says offshore wind power has already shown considerable promise in the United Kingdom and international markets, but is still the “latest kid on the renewables block” in regard to commercial development.

Bernstein recently published for clients an overview titled “Offshore wind: Always the technology of Tomorrow?” The piece was authored by a group of Bernstein officials, led by Senior Analyst Deepa Venkateswaran.

Offshore wind is currently dwarfed by the more established technologies like onshore wind and solar. “As of end 2014, the global installed capacity of offshore wind was about 8.8 GW (of which 8 GW was in Europe) vs. onshore wind of 361GW and solar of 180 GW,” Bernstein noted.

Having said that, offshore wind has grown strongly over the last five years, Bernstein said. That’s due in part to subsidy support offered in the United Kingdom and Europe.

In the United States, the Interior Department has been selling offshore wind development rights in hopes of starting a domestic industry.

“We expect UK to grow its offshore wind capacity (currently 5.1 GW) to 10 GW by 2020, Germany (currently 3.3 GW) to 6.5 GW, France to 3 GW and Denmark to 1.5 GW by 2020,” Bernstein Research said.

Outside of Europe, China is the only major country looking to offshore wind in a serious way, although its success so far has been patchy. With just an installed base of 658 MW by 2014 and 800 MW in construction, China has a long way to go before it asserts and influence on offshore wind, Bernstein said.

“The current target of the Chinese Government is to install 10 GW by 2020 and 30 GW by 2030l,” Bernstein said.

Offshore wind resource is generally greater than onshore wind and hence greater amount of energy can be produced using fewer turbines.

Offshore wind has a number of other things going for it was well. They include:

** Offshore wind is suitable for large scale development near major demand centers many of which are located near coast lines. “This limits the need of long transmission lines and minimizes transmission losses,” the firm said.

** Land-based wind projects often face public opposition because they are perceived by some to destroy the beauty of the landscape. “Offshore wind is out of sight and therefore less likely to be opposed;”

**Offshore wind has some of the highest load factors amongst all renewable technologies due to the rich resource.

But cost continues to hold back offshore wind development. “The biggest challenge facing offshore wind is its high cost relative to other renewables, which is why policy support for offshore wind is not as prevalent as onshore wind,” Bernstein said.

Offshore wind requires more investment in equipment than on-shore options.

“For example offshore wind turbines require offshore foundations, HV export cables to connect the project onshore, an offshore sub-station, specialized installation vessels to transport the turbines and foundation offshore, cable laying vessels,” Bernstein said.

As a result capital expenditure costs for an offshore wind project are an estimated 1.6X more expensive than a land-based wind project.

Bernstein Research and Sanford C. Bernstein are affiliated with Alliance Bernstein. Bernstein is a major global investment-management and research firm. The firm’s website indicates that Bernstein has 46 locations in 21 countries.

About Wayne Barber 4201 Articles
Wayne Barber, Chief Analyst for the GenerationHub, has been covering power generation, energy and natural resources issues at national publications for more than 20 years. Prior to joining PennWell he was editor of Generation Markets Week at SNL Financial for nine years. He has also worked as a business journalist at both McGraw-Hill and Financial Times Energy. Wayne also worked as a newspaper reporter for several years. During his career has visited nuclear reactors and coal mines as well as coal and natural gas power plants. Wayne can be reached at wayneb@pennwell.com.