Is the East Overtaking the West in Offshore Wind?

Rapid Deployment and Falling Costs in Asia Challenge European Dominance

By David Sheret, Co Founder and Executive Director at Archer Knight

The offshore wind industry took root in Europe over the past two decades, with pioneers like Denmark, the UK and Germany building the first large-scale wind farms at sea. This early mover advantage allowed European companies to gain extensive expertise, and countries like the UK to have the largest installed offshore wind capacity globally.

However, there are increasing signs this European dominance may be challenged by the rapid growth of offshore wind in Asia, especially China. While Europe still accounted for over 70% of global installed offshore wind capacity in 2021, Asia's share grew to 28% as countries like China and South Korea ramp up deployment.

China gives a glimpse of the staggering pace possible. This month, Chinese wind turbine manufacturer Goldwind erected a massive 16 megawatt offshore turbine in just 24 hours, claiming a new speed record. While details are scarce, the company said optimised construction processes were key, heralding further cost and time savings.

The turbine is one of Goldwind's signature 16 megawatt models, boasting record-setting output. Last quarter, it was reported that one of the turbines delivered 384.1 megawatt-hours of electricity within 24 hours - enough to power 170,000 households.

Projects using these next-generation turbines are also setting speed records. China Three Gorges constructed the Phase II of the Zhangpu Liuao offshore wind project in China in just 13 months, and is thought to be now operating at full capacity of approx 302 megawatts.

Rapid deployment and falling costs are converting Asia's enormous potential into reality; a leading market intelligence firm estimated that Asia Pacific will have over 70 gigawatts of offshore wind capacity by 2030, not far behind Europe's projected 90 gigawatts.

While European firms still dominate offshore wind technology and expertise globally, Chinese competitors are catching up fast and increasingly able to provide integrated solutions.

For instance, Chinese turbine maker MingYang is contracted to provide turbine, foundation and cabling solutions for the Ulsan offshore wind project in South Korea. Locally, some developers believe working with Chinese partners enables faster and cheaper project execution compared to European firms.

Cost is a major advantage. Chinese wind turbines can cost less than half of European models, transforming project economics. Chinese manufacturers also offer attractive financing options to gain market share, including joint ventures that help fund projects.

To compound the challenge, supply constraints and inflation in Europe have hampered the offshore wind boom envisioned by countries like Germany, Norway and the UK. Project cancellations have rocked leading developers like Orsted and Shell due to soaring costs.

Yet Asian governments continue doubling down on offshore wind through auctions and incentives aimed at building thriving domestic industries. Markets like Taiwan, Japan, South Korea and Vietnam are expected to install almost 30 gigawatts of offshore wind by 2030 - nearly a third of Europe's forecast, according to one market intelligence firm.

While European firms still dominate critical areas like turbines and cables, they face supply shortages and stiff competition from Asia. In turbine foundations, Asian firms already supply over 75% of global demand. As their expertise and resources grow, they could leverage domestic advantages to reshape the global offshore wind market.

Yet for all the bullish outlook, offshore wind everywhere remains constrained by infrastructure and supply bottlenecks. There may simply not be enough vessels, ports and skilled workers to enable projects at the pace politicians envision. Streamlined designs and improved logistics would help, but 48 meter blades are still 48 meter blades. And heavy lift vessel are in high demand throughout a number of offshore sectors and life cycles.

This could cap offshore growth and stymie forecasts across Europe and Asia. Project delays and cancellations will likely persist, leaving room for either region to establish or squander their competitive lead in the 2020s offshore wind gold rush.

True project leadership will require looking beyond speed and scale, toward creating sustainable industries that benefit local economies. Europe maintains vast institutional knowledge but needs more ships, factories and workers. Asia has drive and resources, but still trails Europe in vital technical experience. Whichever region fuses these strengths most effectively could remain the epicentre of global offshore wind over the long run.

The realisation of offshore wind's promise for affordable, secure clean energy will not depend on the supremacy of East over West, or vice versa. Rather, it requires cooperation and coordination across regions and sectors to construct robust, equitable supply chains that disseminate knowledge and prosperity.

The destiny of offshore wind remains profoundly interlinked between East and West - competitors today but partners tomorrow. Realising the full potential of offshore wind demands visionary leadership ready to rise above regional rivalries. It necessitates brave, pioneering investments and policies aimed at fostering constructive exchange of ideas, resources and capabilities.