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RCG: Global offshore wind investment sets new record in 2020

Global financial investment for offshore wind set a new record in 2020 with USD 30 billion, surpassing the previous high of USD 22 billion from 2018, according to The Renewables Consulting Group (RCG).

According to RCG’s Global Renewable Infrastructure Projects (GRIP) database, the total capacity financed for offshore wind in 2020 reached 8,370 MW across the European, Americas and Asia Pacific, excluding China, regions, eclipsing the previous total of 6,438 MW financed in 2018.

“Global offshore wind continues its extraordinary growth,” stated Maxwell Clarke, Associate in RCG’s market intelligence team. “Despite the pandemic, 2020 saw more offshore wind capacity financed than any year before. Across global markets, record capacity investments were not only seen in firm commitments to build projects, but also in capacity acquired through mergers and acquisitions.”

The UK led the way with both contracts for difference (CfD)  subsidy secured and merchant supported projects from the third allocation round (AR3) in 2019 committing to firm investments and saw more than 3,658 MW in capacity secure investment with 2,950 MW supported by the CfD mechanism.

China’s offshore wind market, slated to surpass the UK as the leading global market in operational capacity by the end of this year, experienced unprecedented growth and project deployment last year, RCG said.

In 2019 the Chinese market introduced price-based tenders and announced that the FiT rate for projects consented in future tenders would be phased out for 2022, requiring bid prices to compete with wholesale market rates from then on. In order to qualify for the FiT, projects successful in lease auctions since 2019 must commission the site by the end of 2021 resulting in a development rush that has seen over 5 GW of new capacity come online in 2020, with over 10 GW at various stages of construction.

“The data clearly demonstrates the importance of markets that feature a clear mechanism to market,” Clarke said. “With offshore wind and renewable energy touted by many as a global success story in the face of the COVID-19 pandemic and a pillar of future energy generation and economic growth, emerging markets must formalize secure route-to-market mechanisms for real project investment to be realized.”

RCG concludes that in 2020 and early 2021 this need for project de-risking has been recognized in Greece, Sweden, Brazil, Romania and Bulgaria, with governments openly exploring offshore wind frameworks and incentivizing forward market growth.