December 10, 2018

Wood Mackenzie has recently upgraded its Global Wind Power Market Outlook Update: Q4 2018 by 2% compared to the outlook published in the third quarter, partly due to favourable developments in emerging offshore wind markets such as South Korea, Japan, and the USA.

More than 680GW of new wind power capacity will come online globally over the 10-year outlook, according to new research by Wood Mackenzie Power & Renewables. Offshore wind comprises nearly 40% of a global forecast upgrade, Wood Mackenzie said.

Most upgrades occur in the medium-term, boosting annual capacity additions from 2020 to 2023 by an average of 2.7GW.

Europe

The maturation of the European offshore sector continues to be a strong driver of wind in the region.

“With 16GW of offshore wind power capacity installed in Europe by the end of 2018 and more than 47GW expected to come online in the region from 2018 to 2027, the European offshore sector continues to be a focal point of growth for the wind power industry,” said lead author Luke Lewandowski, director of Americas power & renewables research.

Several of the key upgrades analysed in the fourth quarter outlook update highlight an indirect consequence of the European offshore experience: announced and expected offshore commitments from emerging offshore wind power markets.

“The European offshore wind power experience has encouraged governments in other regions to support offshore wind to comply with carbon reduction strategies and renewable energy targets as well as more firmly secure domestic power supply,” Lewandowski said.

Asia Pacific

Favourable announcements from the governments of Japan and South Korea resulted in a more than 1.5GW upgrade quarter on quarter (QoQ), Wood Mackenzie said.

By the end of the 10-year outlook, this support will yield an installed offshore base of more than 2GW in each country, the report said. A significant rate of growth, considering that neither country has more than 100MW of offshore wind power capacity installed today.

USA

The fledgling US offshore market also received an upgraded QoQ.

“Attractive price signals are expected to motivate an increase in state-level procurement activity from both pioneering states, such as Massachusetts and New York, as well as new entrants over the long-term, such as California and Delaware,” said Lewandowski.

The upgrade will increase installed offshore capacity in the US to approximately 10GW by the end of 2027, representing 15% of all new capacity over the 10-year outlook.

Wind Turbine Order Intake

Firm offshore turbine order intake in China through three quarters comprised about 25% of order intake in the market, indicating the increasing importance of the offshore sector to the local industry. Although the 10-year outlook for China’s offshore sector remains unchanged QoQ, the strong turbine order activity in 2018 confirms China’s rising position as the leading global market in the offshore sector, as it will account for nearly a third of new offshore capacity added globally from 2018 to 2027, according to the report.

Global order intake capacity increased 28% YoY in Q3/2018 and is up nearly 40% through the first three quarters of the year. Although the China market continues to drive firm turbine order volume, there are plenty of encouraging signs from other regions, particularly in Africa. The share of order intake capacity from the offshore sector grows as demand proliferates globally. Although not all order announcements include a specific project location, the assumption is that a large share of this segment is destined to fulfill safe harbour orders in the US market ahead of incentive expiration, Wood Mackenzie said.