Offshore Wind Energy Market is Estimated to Witness High Growth Owing to Government Support
The offshore wind energy market utilizes wind farms constructed in oceans or seas to harvest wind energy for generating electricity. Offshore wind turbines are mounted on monopile foundations fixed into the ocean floor. Due to high wind speeds, offshore wind is a promising renewable source of energy that can help countries meet decarbonization goals. Wind turbines capture the kinetic energy of wind and convert it into electrical energy that is fed into the utility grid. Some key use cases of offshore wind energy include powering homes, buildings, and electric vehicles. The global offshore wind energy market is estimated to be valued at US$ 5.78 billion in 2023 and is expected to exhibit a CAGR of 14% over the forecast period 2023 to 2030, as highlighted in a new report published by Coherent Market Insights.
Market Dynamics:
Government support in the form of incentives and offshore wind energy targets is a major driver boosting the offshore wind energy market. To address climate change, many countries have set goals of achieving net-zero greenhouse gas emissions and increasing their share of renewable energy. For instance, the European Commission wants to increase offshore wind capacity to 300 GW by 2050. The UK has set a target of producing 40 GW of power from offshore wind by 2030. Further, the USA aims to deploy 30 GW of offshore wind capacity by 2030 under its recent Inflation Reduction Act. Such supportive policies will attract investments in the offshore wind sector and drive its growth over the coming years. Another driver is ongoing technological advancements. Wind turbine manufacturers are developing larger and more efficient turbines capable of generating power even at lower wind speeds offshore. This improves project economics and makes offshore wind more competitive compared to traditional sources of energy.
SWOT Analysis
Strength: The offshore wind energy market has significant growth potential due to various government initiatives and policies favoring renewable energy sources. Offshore locations provide abundant wind resource potential and help maximize energy generation throughout the year. Advanced offshore wind turbine technologies enable higher capacity factors and better energy yields compared to onshore installations.
Weakness: High upfront installation and infrastructure costs associated with offshore wind projects make energy production more expensive compared to other renewable sources. Challenging offshore conditions and a harsh marine environment increase maintenance requirements and operational expenditures over time. Complex approval and permitting procedures further delay commercialization of offshore wind farms.
Opportunity: Rising global commitments to reduce carbon emissions and transition to cleaner sources of energy present major opportunities for offshore wind power expansion worldwide. Emerging offshore wind markets in Asia Pacific and Americas are expected to drive future demand and technology innovation. Increased private sector investments and improvements in substructure designs can help boost the competitiveness of offshore wind energy.
Threats: Uncertainty regarding long-term pricing and revenue policies poses challenges to the bankability of offshore wind projects. Dependency on government subsidies threatens commercial viability without fiscal support. Logistical and technical challenges of operating in offshore environments expose projects to risks of delays from adverse weather or mechanical failures.
Key Takeaways
The global Offshore Wind Energy Market Share is expected to witness high growth over the forecast period driven by supportive policy frameworks and initiatives aimed at renewable capacity addition.
Regional analysis: The Asia Pacific region is expected to emerge as the fastest growing regional market for offshore wind energy due to ambitious targets sets by China, Taiwan, Japan and South Korea. China alone has planned over 50 GW of new offshore wind capacity by 2025 as part of its renewable energy goals. Northwestern European nations continue to dominate existing installed capacity while emerging markets in Eastern Europe, Americas and Africa represent major untapped opportunities over the long term.
Key players operating in the offshore wind energy market are Arlo Technologies Inc., Ring (owned by Amazon), Nest (owned by Google, a subsidiary of Alphabet Inc.), Wyze Labs Inc., Logitech International S.A., Blink Home Security (owned by Amazon), D-Link Corporation, TP-Link Technologies Co., Ltd., Ezviz (a subsidiary of Hikvision), Reolink Digital Technology Co., Ltd., Zmodo Technology Corporation, Canary Connect Inc., Netgear Inc., Eufy Security (a division of Anker Innovations), Swann Communications Pty Ltd.
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