Global Offshore Wind Power Market Webinar

Transcription

1 Analyst PRESENTATION Global Offshore Wind Power Market Webinar 12 January 214 Michael Guldbrandtsen 1

2 214 Contents Global offshore wind market to grow at 22% through 223 After a contraction in 216, the global offshore wind power market will grow significantly from 217 resulting in a CAGR of 22% between 214 and 223 More clarity on short- to mid-term support for offshore wind in Europe China will catch up with Europe Offshore wind is an industry for large players Competition between OEMs is expected to increase in the coming years, potentially with further consolidation to come Offshore wind levelised cost of energy will be drastically reduced Offshore wind LCOE will be reduced from around 15/MWh today to around 84/MWh in 225, meaning that offshore wind will be approaching grid parity Pressure to bring down levelised cost of energy Global average turbine rating will increase from 3.9GW today to 5.9GW in 22 Jacket foundations will become more widely used, but the use of monopile foundations is being stretched in Europe Transition to 66kV inter-array cables Risk of a bottleneck in foundation installation vessels 2

3 Offshore wind demand China to lead global growth through 223 Global offshore wind growth Installed (GW) Cum. 213 AMER e e APAC e EMEA e +22% CAGR e 19e 9.9 2e e e e China alone will account for 48% all new global grid-connected offshore wind capacity from 214 to 223 3

4 Offshore wind demand Large pipelines in the biggest markets Development status Germany UK US Norway China Denmark Netherlands Spain France Canada Greece Sweden Finland Estonia Poland Ireland Italy Belgium 1, 2, 3, 4, 3,694 3,45 3,389 2,575 1,825 7,371 6,59 6,294 5,853 5,62 5,372 4,485 4,622 9,954 15,233 19,11 In construction In development (consented) In development (not consented) Early planning 31,95 41,776 5, (MW) Many offshore wind projects are in early planning stage or are actively being developed 4

5 Offshore wind demand Development will remain concentrated in a few markets Global offshore grid-connections Americas Grid connected capacity, GW p.a. [% of global market] [%]. 14 [1%].1 17 [4%].4 2 [3%].5 23 Grid connected capacity, GW cumulated [% of global market] [%]. [2%].5 [3%] [3%] Europe Grid connected capacity, GW p.a. [% of global market] [79%] [6%] [45%] [31%] Grid connected capacity, GW cumulated [% of global market] [89%] 8.4 [73%] 15.2 [59%] [48%] Asia-Pacific Grid connected capacity, GW p.a. [% of global market] [21%].5 14 [39%] [51%] [66%] Grid connected capacity, GW cumulated [% of global market] [11%] 1. [25%] 5.1 [39%] [49%] Offshore wind market will require investments of approximately 47 billion in 223, mainly concentrated in Asia-Pacific and Europe 5

6 Offshore wind demand UK and Germany will lead European offshore wind growth European offshore wind growth Installed GW Other Europe France Sweden Belgium Germany U.K. 6.5 Denmark Netherlands Finland Norway +1% CAGR Grid-connections versus construction activity Capacity (GW) Offshore wind capacity under construction (MW) Grid-connected offshore wind capacity (MW) Cum e 15e 16e 17e 18e 19e 2e 21e 22e 23e 214e 215e 216e 217e 218e UK and Germany will account for almost 6% of all new grid-connected offshore wind capacity in Europe from 214 to 223 6

7 Offshore wind demand Limited growth outside China in APAC region APAC offshore wind growth Installed GW Cum e Other Taiwan.8 15e e South Korea Japan 2. 17e +33% 3. 18e China 4. 19e 5.1 2e e e e Chinese growth to take off The Chinese market is expected to experience fast growth after 216 with additional policy adjustments and supportive subsidies Offshore wind will play a growing role in Japan to compensate for lower nuclear power capacity Weak incentives to develop offshore wind projects limits the growth potential in Korea In Taiwan, progress is slow and apart from a FIT to boost offshore wind, the government plans to establish a local offshore industry cluster to attract foreign investments China will account for 89% of all new grid-connected offshore wind capacity in APAC from 214 to 223 7

8 Offshore wind demand US market will slowly gain ground from 216 US offshore wind growth Installed MW US market The first commercial-scale projects will begin construction by mid Federal environmental regulation pushing aging coal plants into retirement and state renewable electricity standards (RES) support the case for offshore wind power US is the only American market likely to have commercial-scale projects within the next decade Cum e 15e 16e 64 17e 18e 19e 2e 21e 22e 23e A new transmission backbone, the Atlantic Wind Connection is being planned to connect offshore wind along the East Coast from New Jersey to Virginia US will add new grid-connected offshore wind capacity of 2.2GW from 216 through 223 8

9 An industry for big players OEM and asset ownership market shares Turbine OEM market shares, YE214e Others 6. Ming Yang 5. Sinovel 6% 3% 4. BARD 3% 4% 3. Senvion 7% Top 1 asset ownership, YE214e 1. Blackstone 9. Centrica 4% 8. Statwerke München 5% 7. Longyuan 5% 5% 1.DONG Energy 26% Total 9.4GW 6. SSE Renewables 6% Total 5.5GW 2. MHI Vestas 18% 59% 7% 5. Ocean Breeze Energy 1% 17% 2. Vattenfall 1.Siemens 4. E.ON 14% 3. RWE Siemens has been an unrivalled leader in offshore wind, but with MHI Vestas and other M&As the competition between OEMs is expected to increase in the coming years 9

10 An industry for big players Few large OEMs to dominate turbine OEM market Global OEM competition for 5MW+ turbine segment 218 outlook Senvion GE/Alstom DEC United Power CSIC Haizhuang Goldwind Siemens MingYang Sinovel XEMC MHI/Vestas AREVA/Gamesa <35 turbines 35-6 turbines >6 turbines Note: Based on MAKE s estimated number of turbines installed in 218 More competition between fewer and larger turbine OEMs can be expected in the years to come 1

11 Euro/MWh LCOE to be drastically reduced Offshore wind LCOE will be drastically reduced Global offshore grid parity timeline scenario Offshore wind LCOE range Global wholesale electricity prices Defined scenarios Project cost estimates Sheringham Shoal Dudgeon 22 scenario 225 scenario Drivers of LCOE reductions LCOE 8. Larger turbines and farms Low cost substructures 3.1 Higher technical availability 5. Low cost HVDC 4.2 Reduced cost of capital Contingency/cost overruns Lead time reduction 225 LCOE Note: Unsubsidized LCOE Offshore wind LCOE will be reduced from 15/MWh today to 84/MWh in 22, meaning essentially that offshore wind will be approaching grid parity 11

12 LCOE to be drastically reduced Pressure to bring down levelised cost of energy Turbine ratings, e EMEA AMER 8. APAC Global average Increasing project sizes % MW MW e 22e Average Offshore Project Size Global average turbine rating will increase from 3.9MW in 214 to 5.9MW in 22, and European turbines will have an average rating of 7.4MW in 22 12

13 Average water depth (m) LCOE to be drastically reduced Changing project characteristics European project characteristics, e Bubble size indicate project size (MW) DE UK Other FR Distance from shore (km) 214 installations Average countryspecific water depth 14, 12, 1, Water depths of global projects 8, 6, 4, 2, (MW) Deep sea Near-shore Intertidal 14e 15e 16e 17e 18e 19e 2e 21e 22e 23e Offshore wind plants will move further from shore and be located in deeper waters 13

14 LCOE to be drastically reduced The use of monopiles is being stretched in Europe Global foundation technology, e (# of foundations) 2, 1,5 1, 5 Monopiles Gravity Jackets Floating Tripods Multipiles Cumulative offshore foundations in Europe, e ~53% of new globally installed foundations in 22 are jackets 7% 22% Monopiles Gravity 5% 3,31 foundations Jackets Tripods 66% 14e 15e 16e 17e 18e 19e 2e Jackets will gradually become more widely used, especially in APAC, whereas in Europe monopiles account for 66% off all new offshore foundations installed from 214 to

15 LCOE to be drastically reduced Transition to 66kV inter-array cables 66kV cable orders needed 66kV cables needed for 6MW+ turbine ratings Cost of offshore wind energy can be reduced by 1.5% from going to 66kV cables Developers are putting considerable pressure on developers to quickly develop 66kV cables, drive down cost and to commercialize Manufacturers are testing 66kV cables in 215, and cables could enter the European market in 217 In China, 66kV cables will only rarely be used, since Chinese projects are mainly intertidal and turbines are often connected directly to onshore substation For the rest of APAC, smaller turbine rating of 5MW does not make the transition to 66kV essential Transition to 66kV Cost reductions compared to 33kV Substation CAPEX Equipment CAPEX Availability Transmission losses 1.5% Cost reductions Inter-array cables, 22e 33kV 35% 65% 66kV Large size turbines (6MW-8MW) will use 66kV cables, and manufacturers are getting ready to deliver cables for UK Round 3 15

16 LCOE to be drastically reduced HVDC export cables limited to German North Sea Breakeven between AC and DC moved HVDC challenges Delays in grid connections and cost overruns Limited suppliers (ABB, Siemens, Alstom and CG Power) Lead time of 48-6 months HVDC 1% 22e 9% HVAC Due to the risks connected with HVDC technology, worried asset owners will look to HVAC export cables, even for projects located 8km offshore 16

17 LCOE to be drastically reduced Additional blade capacity needed Turbine assembly supply and demand Nacelles Blades Towers MW/year MW/year -11% 12, 12. 9, ,85 9, 9. 4, ,3 6, 6. 3, 5,7 4, # towers/year 3, 2, 1, , % 2,5 1,25 1,25 Annual demand 22e Capacity estimate Annual demand 22e EMEA Capacity estimate APAC AMER Annual demand 22e Capacity estimate (Committed and existing) More blade capacity to be built in both Europe and Asia-Pacific to meet demand towards 22 17

18 LCOE to be drastically reduced Foundation supply in APAC to ramp-up Balance of Plant supply and demand HVAC export cables Inter-array cables Foundations Cable km/year % Cable km/year #foundations/year 2, 1,67 +53% 1, , % 1, Annual demand 22e Capacity estimate Annual demand 22e Capacity estimate Annual demand 22e Capacity estimate EMEA APAC AMER Cable supply exceeds demand, but new foundation manufacturing facilities will have to be built in APAC to meet the surge in demand 18

19 # of vessels LCOE to be drastically reduced Bottleneck in foundation installation vessels Supply and demand for vessels Limited fleet for new requirements Vessel days % +1% Operational supply Track record supply Demand % -69% Jack-up vessels Heavy-lift vessels Jack-up barge e 15e 16e 17e 18e 19e 2e 6t crane & 2m water depth oper. 1,t crane & 3m water depth oper. 1,5t & 4m water depth oper. Today 22 Foundation installation vessels will be in short supply from in both Europe and Asia if no new investments are made 19

20 Offshore wind demand A bumby road ahead Challenges to the offshore wind industry Lack of long-term policy frameworks - In the absence of clarity of policy support beyond 22, the industry could lose vital momentum Supply chain bottlenecks - Local supply chains need to mature in order to avoid bottlenecks - The US offshore industry could be challenged by an underdeveloped domestic supply chain New and unproved technologies - New and unproved technologies need to mature to bring about the needed reductions in LCOE - Short-term obstacles threaten the smooth transition to 6MW to 8MW turbines Lengthy permitting procedures and delays in grid-connections - New markets both in Europe, Asia-Pacific and Americas need to ensure smooth and efficient permitting Despite a positive base case scenario of 82GW cumulated global grid-connected offshore wind capacity in 223, the market potential remains riddled with potential pitfalls 2

21 Contact Michael Guldbrandtsen consultmake.com 215 MAKE Consulting A/S. All rights reserved. Reproduction or distribution of this report in any form without prior written permission is strictly forbidden. Violation of the above restrictions will be subjects to legal action under the Danish Arbitration Act. The information herein is taken from sources considered reliable, but its accuracy and completeness are not warranted, nor are the opinions, analyses and forecasts on which they are based. MAKE Consulting A/S cannot be held liable for any errors in this report, neither can MAKE Consulting A/S be liable for any financial loss or damage caused by the use of the information presented in this report. Denmark Sønder Allé 9 DK-8 Aarhus T U.S. 117 N. Jefferson Street Suite 4 Chicago, IL 6661 T U.S. 225 Franklin Street 26th floor Boston, MA 211 T China Level 26, Shanghai Times Sq. Office Tower, Shanghai 221 T Germany Neuer Wall Hamburg T