BAKU, Azerbaijan, October 21. Annual investments in offshore wind technology will increase to $120 million by 2030 from $20 billion in 2020, Akif Chaudhry, Principal Analyst at Wood Mackenzie, a global research and consultancy group, said, Trend reports via WoodMac.
According to the expert, the share of offshore wind spend in total renewable energy investments is expected to grow from 6 percent in 2020 to 25 percent in 2030.
“The growth in capacity will be more significant, reflecting falling unit costs as the industry scales up. Growth in offshore wind is practically limitless with the emergence of floating turbines capable of tapping wind resources in remote locations,” he said.
Chaudhry noted that it will take time for major manufacturers in the industry to achieve the needed scale.
“Utilities, including Ørsted, RWE and Iberdrola, have locked in much of the offshore wind pipeline through 2026. But the UK, Europe, the US and Japan are among a host of governments accelerating lease auctions and centralised tenders in the push for net zero. The Majors are paying up for lease options, often partnering with incumbents and positioning to participate in the next wave of big projects later this decade,” he noted.
Offshore wind’s operating profitability is 25 percent higher than that of future oil and gas projects. It even surpasses deep-sea projects, the expert added.
“The long life of offshore wind projects also sets them apart from most deepwater and conventional upstream developments. Project lives are typically estimated at 30 years, delivering steady output with little decline in power generation. Only domestic gas and LNG projects come close to having a similar profile,” he explained.
This combination of higher margins and longer life means excellent cash flow generation throughout the life of the project, Chaudhry noted.
“An offshore wind portfolio will deliver an average operating cash flow margin of $4 per GJe [gigajoule equivalent] from 2025 to 2040. For a giant 3.6 GW project such as the UK’s Dogger Bank, that equates to around $9 billion of cash flow generation in real terms over the 15 years. Deepwater, LNG and conventional projects of comparable scale would generate $8 billion, $6 billion and $5 billion, respectively, over the same period, assuming $60 per barrel,” he said.
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