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Offshore wind, climate goals at risk without quicker permitting: GWEC

04 July 2022 Keiron Greenhalgh

Governments around the globe must quicken the pace of offshore wind lease permitting if they want to hit both their targets for the sector and climate goals, Global Wind Energy Council (GWEC) officials warned 30 June, even as offshore wind construction reaches previously unheard of levels.

Speaking at the launch of the trade group's annual report on the state of the offshore wind sector, GWEC Head of Offshore Wind Rebecca Williams said "there's actually no shortage of ambition" ahead of a new era of growth, but turning 2030 and 2050 goals into concrete, steel, and carbon fiber on the water was a different matter.

Offshore wind farms currently take an average of nine years globally from lease to full commissioning and "that just can't happen going forward," said Williams, adding in a presentation: "We don't have the time to wait" if climate and net-zero goals are to be met.

Globally, more efficient and streamlined processes are needed for offshore wind permitting, with time the main bottleneck to the industry's growth, even after a record year of installations in 2021, Williams said.

Simplifying permitting boosts investor certainty and market volumes, which in turn supports healthier competition in auctions and more sustainable development of supply chains, she added.

GWEC offered a number of recommendations in the report for governments if they want to match their words with action, especially in light of the current energy supply crisis. The recommendations include mandating maximum lead times to permit wind farms and implementing an emergency clearing house mechanism for legal disputes to prevent extended delays.

Speedier permitting is a call often heard from offshore wind advocates on both sides of the Atlantic, and now finally being heard in the corridors of Strasbourg and Washington in recent weeks.

The European Commission (EC)'s REPowerEU Action Plan sees permitting being "drastically accelerated" while the Biden administration is looking to up the pace for infrastructure project permitting, including wind farms. The EC plans to write into law the principle that renewables are presumed to be in the "overriding public interest."

Larger seabed leases needed

In addition to speeding the process up, authorities worldwide must offer more opportunities for leasing, Williams said. Recent auctions (See Net-Zero Business Daily stories here and here) had led to an "overheating" of leasing, due to "artificial constraints on the amount of seabed offered," she said. With inflation marching higher alongside energy price rises, "it doesn't make much sense" to be constraining leasing, she added.

Offshore wind development flourishes in an environment with long-term system planning, where policies and regulation are aligned to deliver clear objectives, Williams said.

Williams also said the past year showed how exposed renewable industries are to geopolitical dependencies, commodity price cycles, logistics bottlenecks, and trade barriers.

Some easing of the commodity pricing pressure may be on the way though, say analysts at S&P Global Commodity Insights. Sharp price increases in steel should abate in 2022, the analysts said in a May report.

Likewise, with the logistics for the US solar industry under particular pressure, the Biden administration teamed up with governors from 11 East Coast states in late June to bolster local supply chains as America seeks to kickstart its nascent offshore wind sector. Known as the Federal-State Offshore Wind Implementation Partnership, the White House said it hoped to expand the partnership to states on the West and Gulf coasts in the future.

Ambition flourishes

Planning on an industrial scale will be needed, GWEC said, because over 700 GW of offshore wind projects are at different stages of development worldwide, of which 120 GW is floating wind.

As many as 54 countries may have installed floating offshore wind capacity by 2050, according to a study released 20 June by the UK-based research center ORE Catapult. At the moment, only China, Norway, Portugal, and the UK have any operational capacity at all.

Over the past 12 months, GWEC Market Intelligence increased its forecast for how much offshore wind capacity will be operational in 2030 by 45.3 GW or 16.7%, and now expects 316 GW will be in service by the end of the decade. The trade group expects government targets will take the world to around 370 GW of capacity by 2031, close to the GWEC/IRENA Offshore Wind Energy Compact's target of 380 GW of offshore wind installations by 2030.

S&P Global currently expects 245.81 GW of offshore wind capacity to be online by 2030, with over 31 GW of that entering service in 2030.

The offshore wind industry saw 21.1 GW of new capacity connected to the grid in 2021, the biggest annual total yet, GWEC said, boosting global capacity to 56 GW. China contributed 80% of new offshore installations in 2021, the fourth straight year it has topped the table. GWEC expects Asia will replace Europe as the world's largest offshore market by the end of 2022. And although Europe may regain that crown, it will take until 2031, the trade group said.

Currently, 23 GW of offshore wind capacity is under construction, GWEC said. With a 49.5% market share, Europe has the lead in offshore wind project construction, followed by Asia (46.4%) and the US (4.1%). China is the most active market with 7.8 GW under construction, followed by the UK (5.6 GW), the Netherlands (2.3 GW), Taiwan (2.1 GW), France (1.4 GW), and Germany (1.1 GW), it added.

But growth is relatively slow compared with the pace needed to reach net-zero, GWEC Head of Policy and Projects Joyce Lee said during the launch presentation.

"The implementation gap, as identified in the report, is a very serious and key aspect of everything that is going to happen in the next few years. We need to make this a reality," added GWEC CEO Ben Backwell, noting that governments and stakeholders must work with the industry to prepare the right frameworks to hit the targets set. "Everything is simply too slow," he warned.

More installation vessels needed too

Another hurdle facing the offshore wind industry is a lack of installation vessels, according to S&P Global analysts Andrei Utkin and Catherine MacFarlane. The ever-increasing size of turbines is at the center of installed capacity growth and sustained cost declines. As a result, next-generation turbines require upgraded and new large wind turbine installation vessels (WTIVs). However, a potential shortage of vessels could slow down the deployment of the technology, they said in a May report.

Eight vessels in the existing 17-strong fleet are to undergo crane upgrades to carry out installation of next-generation turbines, Utkin and MacFarlane reckon. A further 11 newbuild WTIVs, all capable of installing next-generation turbines, are being constructed—six of which were ordered within the past year. However, seven vessels are likely to become obsolete from the fleet by 2030 because of their technical inability to install turbines larger than 10 MW, the analysts say.

In a related obstacle to offshore wind goals, including those of the Biden administration, the American Clean Power Association and offshore wind companies on 23 June called on Senate leaders to nix language in a House of Representatives-passed Coast Guard authorization bill. The bill—the Don Young Coast Guard Authorization Act of 2022 (HR 6865)—is meant to boost the involvement of American workers in the construction of offshore wind farms and transmission by regulating the vessels and workers involved, but the companies and ACP say the bill could see 19 offshore wind projects canceled.

Posted 04 July 2022 by Keiron Greenhalgh, Senior Editor

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.


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