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Governments’ collective target to have offshore wind capacity jump fivefold annually by 2030 is unrealistic and would require $27 billion of secured investment by 2026 if it is to meet that growth in annual installations, excluding China, by the end of the decade, Wood Mackenzie said in a new report on Thursday.
Governments in the U.S. and Europe plan to significantly increase offshore wind capacity to boost green energy and reduce dependence on foreign fossil fuel sources.
The Biden Administration alone targets to build 30 gigawatts (GW) of offshore wind by 2030. The Administration said in February this year that offshore wind rights in the Gulf of Mexico—the stronghold of the U.S. oil and gas production and export facilities – would contribute to the U.S goals of deploying 30 GW of offshore wind by 2030, as well as 15 GW specifically of floating offshore wind by 2035.
In the UK, the ambition is to deploy up to 50 GW of offshore wind by 2030, with up to 5 GW coming from floating offshore wind. The UK currently has around 14 GW of offshore wind capacity, enough to power over 10 million homes.
Chris Seiple, Vice Chair, Power and Renewables at Wood Mackenzie, co-author of the report, said that “Nearly 80 GW of annual installations to meet all government targets is not realistic, even achieving our forecasted 30 GW in additions will prove unrealistic if there isn’t immediate investment in the supply chain.”
“Adjustments and new policies by governments and developers will be required to transform the supply chain to deliver offshore wind projects at industrial scale,” Seiple added.
Investment is currently difficult to raise, due to low offshore margins, WoodMac says. Moreover, the uncertainty of project timing could result in very different supply-chain needs, the consultancy noted.
“The uncertainty surrounding project timing is a large reason why supply chain participants hesitate to expand further,” said Finlay Clark, Senior Research Analyst at Wood Mackenzie and co-author of the report.
By Charles Kennedy for Oilprice.com
Charles is a writer for Oilprice.com