Offshore Wind Power to Drive Growth in Renewable Energy Market
Whenever people talk about renewable energy, the first thing that comes to mind is solar power. However, solar is not the only source of renewable energy. In truth, it is the most abundant source and in some cases, the cheapest to set up.
Setting up a solar power generation system or plant in small-scale is far cheaper than it would cost to set up a wind, hydro, or a geothermal plant. However, when it comes to looking at things on a grander scale, then the mathematics becomes tricky.
Therefore, renewable energy companies have been assessing alternative ways of producing power, more cost-effectively, through current renewable energy sources. Among them is wind power, which is predominantly produced onshore.
In onshore wind power production, the capacity generated from a given number of rotors at a given time can be hampered by obstacles that stand in the way (mountains, trees, buildings etc). This means that to produce a certain amount of power, companies might need to invest in more rotors, as well as, in addition to clearing the path for the wind to blow unhindered.
However, when it comes to offshore wind energy there are no obstacles to block the wind. As such, the wind is often stronger resulting in more power generation. The hindsight, however, is in setting up the power generations plant, which is more difficult and expensive than when the plant is on land.
Chart via US Department of Energy
Currently, Germany is the leading provider of offshore wind energy while China, the Netherlands and the UK follow closely. According to the US Department of energy, the global offshore wind power production could hit 18,000 MW cumulatively by the end of the year while production for the current calendar year will surpass 4,000 MW.
Statistically, Europe still dominates the global offshore wind energy market with 90% of the installed capacity as of 2016. However, Asia is also catching up fast with China and Japan leading the list of countries embracing offshore wind power.
In Europe, offshore wind power adoption has been driven by the desire to embrace renewable energy sources, coupled with a positive political will and an increase in the number of startups keen to exploit opportunities in the market. Real estate has also played its part, especially where property developers have been able to strike deals within the renewable energy market.
In the UK, green energy-friendly counties like Flintshire have witnessed a surge in offshore wind power production over the last few years because of an increased number of renewable energy startups in the region. For instance, while profiling office space in Flintshire county, real estate agency platform, Prime Office Space notes that “The Port of Mostyn has become one of the most important hubs for alternative energy production in Europe and its facilities are used by large multinationals like Siemens, Dong Energy, and Airbus.”
There is also a reasonable explanation as to why countries like Germany are leading when it comes to offshore wind energy. The rugged terrains given their mountainous landscapes would make installation and maintenance tricky. As such, the best option for them to generate wind power is offshore.
Looking forward, the offshore wind energy market is projected to grow at a CAGR of 16.2% through the year 2022. This implies that the market could hit $57 billion within the next 4-5 years based on the 2015 figure of about $20.3 billion. A recent research report published by Zion Market Research notes that “growing share of renewable energy is expected to drive the global offshore wind energy market.” It also adds that the increasing awareness about climate change and advances in technology will further boost the projected growth.
In summary, many people agree that climate change is real and that its consequences could be devastating if left unchecked. So, we all need to sit back and reevaluate our options for power generation. Solar power has been the dominant source for several years while wind energy has experienced a slower growth.
However, with offshore wind energy generation increasing year-over-year, the renewable energy market could be set for a major boost. On the other hand, climate change advocates continue to push for reduced usage of non-renewable energy sources.
Nick is the editor of CAGRValue.com a growth investing focused blog, which discusses emerging industry trends and the best growth opportunities in the market. Follow our latest guides on Investing in general, and especially Growth Investing.Opinions expressed here are my own and do NOT represent an investment advice or recommendation.
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