The European market for offshore wind is entering into a new phase with the newly adopted EU Strategy on Offshore Renewable Energy. We provide a status along with our expectations to the offshore wind market.
On 16 February 2022, the European Parliament adopted the European Commission's new EU Strategy on Offshore Renewable Energy to boost uptake in offshore renewable sources to create sustainable and inclusive growth in the EU. Today, the EU's offshore wind capacity is approximately 12 GW. The new strategy sets a target of 60 GW offshore wind capacity by 2030 and a whopping 300 GW by 2050 (with 40 GW ocean energy capacity such as wave and tidal), thus making the offshore renewable energy market increasingly interesting and relevant for the stakeholders throughout the supply chain and investors alike.
Denmark has a unique position as a pioneer in wind power. The world's first offshore wind farm was built in Denmark in 1991. Now, wind power is one of the most widespread forms of renewable energy in Denmark – and an increasingly fast developing form of renewable energy across the globe.
In the following, we will address the state of affairs and set out our expectations for the Danish offshore wind market. This, based on our role as adviser to bidders on all offshore wind projects in Denmark in the last 10 years.
Status on the Danish offshore wind market
At the close of 2021, the winning bid for the Danish Thor Offshore Wind Farm established history in Danish offshore wind, as it was the first time in Denmark that an offshore wind farm will be constructed entirely without subsidies. Rather, the Thor Offshore Wind Farm contains a significant economical upside for the Danish state. In this respect, it is worth noting that an impressive field of six bidders were ready to take up the task – underlining the potency of the Danish offshore wind market.
The firm political focus on renewables is also reflected in the plan to develop and build the world's first energy islands, which will be a milestone in the green energy transition – and yes, offshore wind is a major factor in the energy island plans.
Due to Denmark's history with wind power, many key players in the supply chain to the wind turbine OEM's are located in Denmark. Many are contributing with brand new technologies to support, contribute and feed the development of the wind sector.
The vast and speedy development of the market for renewables increases the complexity of the projects, including the complexity of navigating the regulations. It is not unusual to see projects that extend further than what was intended with the relevant regulation. Solving such complications requires a keen understanding of the specific project, the legal framework, and sometimes also the political process along with the sector in general.
The Danish offshore wind market has never been more interesting – but also never been more complex – than it is right now.
Our expectations for the near future – and what to pay attention to
We expect an increased focus on development and investment in offshore wind in Denmark and globally – including in the companies throughout the supply chain. Both established and up and coming ones with new initiatives and technologies.
The market development entails increased complexity and requirements as a stress test to the current regulatory framework – not only in Denmark. It is now apparent that wind farms are not only playing a significant role in the context of producing green energy – but also to power other projects as part of the green transition. Examples of this are energy islands and carbon capture storage facilities and of course as a key player in respect of Power-to-X facilities. Further, offshore wind farms can be used in integrated grids with wave- and solar energy plants to support even larger projects and facilities. Also, some offshore wind farms are already floating – making the site selection more agile without the ocean bed and depth being a limiting factor.
The initiative and will to power the green transition with haste is present. The question is whether the regulatory framework can keep up to speed – and whether the advisers have the capability and foresight to navigate it.