Asia Pacific is the most important region for the energy transition, but it is Europe that has long been at the forefront of large-scale commercial offshore wind development. Indeed, learning from the European experience will be critical if Asia Pacific is to build a successful regionally connected offshore wind industry.
Key to this success will be collaboration. As witnessed in Europe – where the offshore wind business was born – the shared challenges of supply chain, infrastructure and regulation were all solved by working together, across the region, Liming Qiao, Head of Asia at the Global Wind Energy Council (GWEC), told Energy Voice.
The offshore wind market in Asia Pacific is expected to experience massive expansion over the next five to seven years, particularly in the more advanced economies of Japan, South Korea and Australia, as governments face increasing pressure to hit their net-zero emissions targets, added Qiao.
Significantly, this presents opportunities for European companies to play a key role in the development of Asia’s offshore wind sector. Asia is expected to require experienced European contractors and consultants, who can enable the local supply chain to develop its own skills faster through technology transfer.
Research from GWEC shows regional collaboration on infrastructure and supply chains, as well as developing harmonious regulations with policymakers, will be the key to accelerating Asia Pacific’s energy transition.
China leads the way
By the end of 2022, Asia replaced Europe as the world’s largest regional offshore wind market by cumulative installations. China has led the way, after overtaking the UK as the world’s top offshore wind market in 2021, the Asian giant further consolidated its market share in 2022, noted GWEC in its Global Wind Report 2023.
Indeed, by the end of 2022, cumulative offshore wind installations in China exceeded 30 GW, a milestone that took Europe more than three decades to achieve. The rest of the region is starting to catch up. Japan, South Korea, Taiwan, India, Vietnam, Philippines, and Australia, all have huge potential and ambitious installation targets.
China targets 100 GW by 2025, 200 GW by 2030 and 1,000 GW by 2050. Nascent markets have also set goals. South Korea plans 14.3 GW by 2030, Taiwan eyes 20.5 GW by 2035, Japan aims for 10 GW by 2030, while India is targeting a lofty 37 GW by 2030.
Crucially, continued collaboration and dialogue are needed to accelerate the development of offshore wind in Asia Pacific.
Qiao said it was imperative for emerging and developed markets to come together to discuss how they can kickstart regional collaboration at the very first edition of GWEC’s APAC Offshore Wind & Green Hydrogen Summit, which will take place in Australia in late August.
The summit will spotlight the crucial topic of Asia Pacific collaboration. It will involve top government officials, private sector leaders, and civil society representatives, focused on advancing the uptake of offshore wind and green hydrogen in the region.
Offshore wind targets
Despite setting ambitious targets, governments across Asia Pacific are struggling to turn them into action at the speed required to achieve them. Offshore wind is a complex infrastructure requiring detailed knowledge and experience of robust marine governance frameworks, electricity market design, as well as supply chain and industrial policy, said Qiao.
GWEC reports that many markets are still lacking adequate policy and regulation to facilitate offshore wind development. At the same time, there is a great deal of global best practice to learn from, especially through public private partnerships, to help emerging markets speed up the regulatory process.
Europe built a robust offshore wind industry through regional collaboration around infrastructure and supply chain, as well as research and development, which led to significant cost reductions and the rapid build out of installed capacity, added Qiao.
Asia Pacific can learn from the European experience, especially with demand for offshore support vessels, heavy-lift equipment, turbines, towers, nacelles, blades, and other components, set to surge later this decade. The regional supply chain is not big enough to support this.
Crucially, the industry in Asia Pacific needs to be built on the back of co-operation rather than localisation, which will stymie development, warned Qiao.
Recent increases in commodity prices, coupled with the emergent impacts of shrinking supply chains in Europe, are pointing to a huge opportunity for countries in Asia in the global wind energy supply chain. This also presents opportunities for European companies to partner with both the public and private sector in Asia.
Taiwan is striving to develop a local supply chain capable of serving not only the local markets, but also the rest of Asia, through local content requirements with manufacturers and suppliers.
Although Japan and South Korea have well established contracting bases, with the necessary knowledge, experience and equipment to undertake large-scale infrastructure projects, they lack experience in offshore wind. For this reason, a pragmatic approach based on alliances with established European contractors is the best way to learn quickly.
The top three turbine players, Vestas, Siemens Gamesa and GE, are all seeking dominant positions in the emerging offshore wind market in Asia. There is a significant gap in turbine technology compared with local players.
Other key components, such as gear box, power converter, generator and transformers, will be areas of opportunities for European players given their technical expertise over local companies.
Ultimately, regional collaboration will be key. GWEC plans to discuss and identify opportunities for standardisation, optimising production and transportation, and eventually achieving economies of scale, to effectively reduce overall cost for sustainable long-term offshore wind development, in Asia and Australia, at the maiden APAC Offshore Wind & Green Hydrogen Summit.
GWEC said it will address these challenges with industry players and governments across the region, to find solutions, rather than wait another four to five years, when it will be too late to solve them. Major companies taking part in the event, include Copenhagen Infrastructure Partners (CIP), Shell, Iberdrola and Corio Generation.
Moreover, the summit offers the opportunity for engagement with the region’s top level government officials, private sector leaders, and civil society representatives, all focused on driving the uptake of offshore wind and green hydrogen in the Asia Pacific region. It offers the opportunity for the supply chain to expand vital business connections and lay the groundwork for the rapid development that will happen in the coming years.
GWEC will also release its latest Offshore Wind 2023 report at the summit, which will be packed full of valuable insights. Moreover, the groundbreaking event is expected to shape the future of renewable energy in the Asia Pacific region, in Australia, and beyond, said Qiao.
Australia is moving fast to attract international and local developers with a strong political support for renewable energy and ambitious targets, noted Qiao.
Discussions at the summit will be centred on cross-cutting themes such as: project development, finance, supply chain, marine spatial planning, legislation, and regulatory best practice, permitting and market design.
Crucially, Asia’s offshore wind industry is set to rival the size of Europe’s within the space of ten years. Although the path to get there remains unclear, the opportunities are enormous as the region’s installed offshore wind capacity will surge, supported by strong government policies, predicts GWEC.