Offshore wind energy utilizes wind farms constructed in bodies of water, usually in the ocean, to produce electricity from wind power. With no requirement for land, offshore wind power plants can be substantially larger than their onshore counterparts. Each offshore wind turbine is typically three to five megawatts in capacity and the farms have a minimum of 30 turbines. Europe has been pioneering the development and installation of offshore wind power with favorable coastal geography and strong political will to transition to renewable resources.



The Global Offshore Wind Energy Market is estimated to be valued at US$ 33 billion in 2024 and is expected to exhibit a CAGR of 12% over the forecast period 2024 to 2031.



Key Takeaways

The key players operating in the Offshore Wind Energy Market Growth are Ørsted, Vestas, GE Renewable Energy, Senvion, Siemens Gamesa Renewable Energy, and MHI Vestas.



The growing demand for renewable sources of energy coupled with supportive government policies driving the transition to green electricity is propelling the offshore wind energy market. Countries around the world have set ambitious targets to increase the share of renewable energy in their overall energy mix to reduce carbon footprint.



Various nations in Europe and Asia are investing heavily in offshore wind projects to take advantage of strong winds in coastal areas. Countries like China, UK, Germany, Denmark are aggressively expanding their offshore wind capacities to meet both domestic power needs and export opportunities.



Market Drivers

Low carbon emission mandates by governments globally to mitigate the effect of climate change are a key driver for the offshore wind energy market. As per the Paris Agreement, countries have pledged to shift to clean energy sources and lower greenhouse gas emissions. Favorable policies promoting offshore wind projects through tax incentives and feed-in-tariffs are encouraging heavy investments in this sector. Furthermore, declining technology costs and higher turbine efficiencies are making offshore wind a more economically viable solution for a greener future.



The ongoing geopolitical uncertainties and conflicts are posing challenges for the growth of the offshore wind energy market. The Russia-Ukraine war has severely disrupted supply chains and inflated energy and commodity prices across Europe and globally. This has negatively impacted project commissioning schedules and increased capital costs for several offshore wind projects under development. Developers are facing delays in turbine procurement and construction works due to supply bottlenecks. Rising steel, copper and aluminum prices needed for turbine manufacturing have upped overall project costs.



Further, economic sanctions against Russia by European nations and the US amid the ongoing conflict have shaken investor confidence. This has made developers and investors more cautious about allocating new capital to offshore wind projects. The financial community has become wary about long term returns and risk profiles of investments in capital intensive renewable energy infrastructure. Project financing is becoming difficult to arrange at viable terms.



To sustain growth momentum, governments and industry stakeholders need to implement mitigating policies. Financial support through rebates, tax credits and low interest loans can help absorb some cost impacts for developers. Streamlining of permitting procedures can aid in recovery of schedules. Regional cooperation among European nations for joint development of transmission infrastructure can boost interconnectivity and facilitate larger scale offshore deployment. Investing in port infrastructure upgrades will also support faster installation activities. With proactive policy interventions, the sector can still achieve its decarbonization targets over the long run despite current geopolitical challenges.



The Offshore Wind Energy Market Size and Trends in Europe commanded the largest share in terms of value in 2021 led by major markets of UK, Germany, Belgium, Netherlands, Denmark and Ireland. Strong policy push through national renewable energy targets, presence of technological hubs and skilled workforce have propelled Europe to the forefront in harnessing offshore winds. Within the region, the UK and Germany have emerged as key hotspots with the most advanced pipeline of largescale projects under various stages of development.



In the Asia Pacific region, China is anticipated to see the fastest market growth during the forecast period, owing to its ambitious renewable capacity additions agenda. Presence of over 7,000 km of coastline provides huge untapped potential for ocean winds. With the government setting an ambitious target of installing over 100GW of offshore wind capacity by 2050, China is aggressively investing in nurturing domestic supply chain capabilities and project execution competencies. Other emerging APAC markets including South Korea, Vietnam, Taiwan and Japan are also initiating efforts to harness their offshore wind resources via pilots and demonstration projects.

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