BNEF: 2019 a Record Year for Offshore Wind Investment

Investment in offshore wind reached USD 29.9 billion in 2019, up 19% on 2018 and USD 2 billion more than in the previous record year of 2016, the latest data from research company BloombergNEF (BNEF) shows.

The last quarter of the year was particularly busy and saw a number of offshore wind deals, according to BNEF.

Among the offshore projects reaching financial close in the fourth quarter were the 432MW Neart na Gaoithe array off the Scottish coast at USD 3.4 billion, the 376MW Formosa 2 project off Taiwan at USD 2 billion, and the 500MW Fuzhou Changle C installation in the East China Sea, at USD 1.5 billion.

The first of France’s offshore wind projects to be financed, the 480MW, USD 2.5 billion Saint-Nazaire, got its go-ahead in the third quarter of 2019.

“Offshore wind developers in China brought forward 15 projects to beat a scheduled expiry of that country’s feed-in tariff. We expect the sector’s global momentum to continue in 2020, with the focus on gigawatt-scale projects in the British North Sea and the first commercial arrays off the U.S. East Coast,” Tom Harries, head of wind research at BNEF, said.

Overall, investment in renewable energy capacity worldwide was USD 282.2 billion last year, up 1% from 2018’s USD 280.2 billion, owed much to the late surge in offshore wind deals, BNEF said.

Onshore and offshore wind led the way with USD 138.2 billion invested globally, up 6% compared to 2018.

China Tops the Chart, US Climbs to Second Place

China was yet again the biggest investor in renewables, at USD 83.4 billion in 2019, but this was 8% down on 2018 and the lowest since 2013. It saw a 10% rise in wind investment to USD 55 billion, but solar fell 33% to USD 25.7 billion, less than a third of the boom figure reached in 2017, according to BNEF.

The US was the second-largest investing country in renewable energy capacity, at USD 55.5 billion, up 28% on 2018. Instrumental in this was a rush by wind and solar developers to qualify for federal tax credits that were due for scale-back in 2020.

“It’s notable that in this third year of the Trump presidency, which has not been particularly supportive of renewables, U.S. clean energy investment set a new record by a country mile,” said Ethan Zindler, head of Americas for BNEF, noting that the second-highest year for investment (USD 45.7 billion) came in Trump’s first year, 2017. “These technologies are more cost-competitive than ever, and the fact that there was a tax credit step-down on the horizon made the market particularly busy in 2019.”

Europe slipped behind the US in 2019, investing USD 54.3 billion in renewables capacity, down 7%. Spain led the way with USD 8.4 billion, up 25% on 2018 and the highest annual figure for that country since 2011.

The U.K. invested USD 5.3 billion, down 40% and its lowest since 2007. Germany was down 30% at USD 4.4 billion, its lowest since 2004, and Sweden was down 19% at USD 3.7 billion, but the Netherlands were up 25% at USD 5.5 billion, France 3% higher at USD 4.4 billion, and Ukraine 56% up at USD 3.4 billion.

2020 Outlook

Looking ahead, BNEF expects renewable energy investment to reach USD 300 billion, spurred on by increased financing of European offshore wind, further strong flows into US wind and solar, and more widespread deployment of projects without any long-term power price support set by governments.

BNEF expects a downward blip in offshore wind capacity additions in 2020 to follow 2019’s record year, before they accelerate again for the rest of the decade. A bumper year of new-build investment volume in 2020 is expected to feed the near-term offshore wind pipeline; including gigawatt-scale projects off the UK, the first commercial-scale financing in the US, and a rush to build in China.

This year could also see the commercial debt market lend to a floating wind project for the first time, with developers of over 100MW of floating capacity in France seeking a final investment decision, BNEF said.