A big industry too
Offshore wind has moved well beyond the technology demonstration phase. By the end of 2017 there were 4,149 grid-connected wind turbines operating in Europe’s waters, with a total capacity of almost 16 gigawatts. According to trade body WindEurope, 623 new turbines were erected in 2017, an all-time record. Across the continent, 11 wind farms are currently under construction, all of them in either German or U.K. waters. And the industry signed off on a further six new projects last year, which will add 2.5 gigawatts of additional capacity at an estimated cost of €7.5 billion. WindEurope expects total installed offshore capacity in Europe to pass the 25 gigawatt mark by 2020.
The geographical distribution of offshore wind energy tells an important story. Today, 84 percent of global installed capacity is in Europe, and just two countries – the U.K. and Germany – account for 60 percent of the world total. In part, that’s because physical conditions are favorable. Both countries are wealthy, densely populated and sit alongside the shallow, windy North Sea.
Policy also plays an important role. Until now, offshore wind investors have relied on subsidies, often in the form of long-term power price guarantees, to reduce the significant risks involved in such complex, large-scale projects. However, that situation is changing rapidly. Bigger, more efficient and more reliable turbines, and the industry’s growing maturity, have halved the price of offshore-generated power over the past five years. When the U.K. auctioned 15-year subsidized power contracts last year, two offshore wind projects won their bids with a guaranteed price of £57.50 ($75.40) per megawatt hour, only £5 ($6.50) more than the expected commercial wholesale price of energy over the contract period.