Floating Offshore Wind: A potential solution to meet global decarbonisation needs

By Labanya Prakash Jena, Regional Climate Finance Adviser, Indo-Pacific Region, Commonwealth Secretariat; and Prasad Ashok Thakur, Alumnus, IIT Bombay and IIM Ahmedabad

Floating offshore wind turbines are affixed on platforms that are firmly moored to the ocean bed and conn­ec­ted by dynamically suspended cables. As a technology, floating offshore wind (FOW) can be considered supplementary to fixed-seabed wind technology. It d­e­ploys fixtures and component configurations that are compatible with conventional systems, including power substations, undersea transmission networks and feed-in infrastructure of the existing grids. The deployment of FOW turbines in open seas involves conventional tugboats, bu­o­ys and anchors. These characteristics en­able FOW to function in tandem with the existing electrical ecosystems and established component supply chains. The newly given access to deeper waters allo­ws for cherry-picking of offshore wind farm site locations that offer the highest wind speeds while aiming for the lowest possible environmental and socio-economic impacts.

Huge energy generation potential

Unlike other renewable energy sources, offshore wind power has a significant ad­van­tage in generating substantial amo­unts of electricity. The International Energy Agency (IEA) projects that the annual glo­bal potential for offshore wind power generation can be over 420,000 TWh, more than sixteen times the global power de­mand, with the year 2022 as reference. In addition, FOW provides benefits such as more consistent wind patterns, minimal visual impact and greater flexibility in ad­hering to noise restrictions.

Current status and future trajectory

FOW is at a major turning point, similar to seabed-fixed offshore wind at about a decade ago. Although floating wi­nd technology and pilot projects have ex­isted for over 10 years, the number of FOW turbines in operation as of October 2022 is only around 50. However, this is expected to change, with the global ins­talled ca­pacity of FOW estimated to surpass 5 GW by 2030 and 25 GW by 2035. Ad­ditionally, the progress achieved in sea­bed-fixed offshore wind will accelerate the development of floating offshore wi­nd, similar to how the offshore wind in­dustry evolved from onshore achieveme­nts. By then, FOW projects will be desig­ned to harness winds as distant as 300 km from coastlines, at ocean depths of up to 2 km. The large-scale adoption of FOW will enable coastal geographies, often de­nsely populated, to benefit from access to large-scale clean energy. Such an expon­e­­ntial transition will entail innovative approaches to improve technical designs, supply chains and excellence in project implementation spanning cons­truction, operations and maintenance. All these re­quire substantial investment, a policy and regulatory push as well as eco­system development.

Moving towards cost reduction

One of the key challenges in adopting FOW is its higher cost compared to other renewable energy sources. FOW is ex­p­ec­ted to become cost competitive with the near-shore fixed-bed wind technology in the medium term. FOW facilities use hardware components that are already dep­loyed in the fixed-bottom offshore wind, shipping, and offshore oil and gas sectors; this compatibility will save additional capital investment in creating new infrastructure exclusively for FOW farms. Other key drivers for cost optimisation are a reduction in turbine costs, floating platforms and opex. Leveraging such advantages is critical, as per the IEA’s Offshore Wind Outlook 2019. It describes a scenario where one in every nine new offshore wind turbines could be a floating one by 2035.


Success of FOW pilots: Giant strides in clean energy 

Globally, the number of FOW pilot projects is growing rapidly, especially in ad­vanced countries. In the US, plans are unfolding to tender out FOW sites around northern and central California, followed by the state of Oregon and the Gulf of Maine. These initiatives are envisaged to be a part of the country’s plans for ins­talling 15 GW of FOW by 2035. In the UK, the eastern coast of Scotland hosts two FOW facilities at present. This is in line with the FOW market estimate of 20 GW in the North Sea area in the medium term. Future opportunities are also being explo­red in England and Wales. The wor­ld’s first floating wind turbine in Norway has been operational for about 15 years. The Government of Norway aims to work with the private sector to commission 4.5 GW of FOW in the near future. Across the world, Japan’s Offshore Wind Promotio­n­al Law provides a favourable policy framework for FOW auction processes. Accor­dingly, the country organised the world’s first FOW auction to commission a 16.8 MW farm. In nearby South Korea, six private players have joined hands to fulfil the target of installing 7.5 GW of FOW near the coastal city of Ulsan. As FOW technology grows, it can be the harbinger of en­ergy independence for several regions of the world. It is hoped that, over time, the benefits of FOW will be shared across borders. Simultaneously, it can become a tool to deliver climate justice to least de­veloped countries (LDCs) and Small Is­land Developing States.

Creating a conducive policy and regulatory environment

It may not be practical to anticipate that floating offshore wind will compete directly with seabed-fixed offshore wind. Re­ne­wable energy providers can benefit from feed-in tariffs (FiTs), which offer a reliable and transparent revenue source. FiT re­duces the risk for developers that are un­sure if they can generate enough revenue to cover the project cost throughout the investment lifetime. Floating wind en­ergy requires substantial investment to prog­ress from commercial demonstration to market maturity, making the revenue sta­bility provided by FiT payments especially advantageous. FiTs can promote in­vestment and reduce technology costs by fostering economies of scale and le­arning by doing, particularly in these are­as. A re­ver­se auction, which considers ma­rket development and the falling cost of technology, is the best FiT mechanism. Policymakers open a market for a fixed quantity of FOW and developers bid co­mpetitively. This approach avoids administrative price setting, resulting in potentially greater cost efficiency.

It is important to avoid pitting the two tec­h­nologies, offshore wind and FOW techno­lo­gies, against each other too early in tenders or seabed auctions, as this could hinder the development of the latter. Ins­tead, introducing floating wind through dedicated tenders or supportive mechanisms until it can compete on equal terms with more established technologies would be better.

The renewable portfolio standard (RPS) is another regulatory mechanism to increa­se renewable energy production. Since it is technology-neutral, nascent and expensive technologies are out of favour. This crowds out potential new industries, inclu­ding FOW, and forecloses potential supply chain or soft cost breakthroughs. The al­­ternative is to create a carve-out for FOW. This entails specifying a portion of the overall RPS that must be fulfilled using FOW. RPS can increase the deployment of FOW technology, resulting in a rapid price reduction of the technology.

Long-term certainty is the key for both FiTs and RPS. With FiTs, it is essential to provide a reasonable compensation period for FOW investors, ensuring they receive a fair return on their investments. Similarly, long-term targets should be established under the RPS to allow FOW investors to recover their return on investments.

Need for skill development

The development of floating wind technology will require the acquisition of new skill sets and the establishment of new supply chains, particularly in the design, production, handling and installation of floating fo­undations, mooring lines and dynamic array cables. With the expected build-out of seabed-fixed offshore wind in the near  to mid-term and the rapid expansion of FOW, the market may face a shortage of relevant skill sets and suppliers. Therefore, there is an urgent need to develop the necessary skills. This can be ac­hieved by partnering with engineering co­lleges and skill training institutions.

Public-private partnership

In order to maximise the benefits of FOW, it is important to tackle various obstacles. One of these challenges is to establish st­andardisation and commoditisation of the technology as well as scale up the supply chain to bring down costs. To achieve th­is, partnerships between public and private entities are necessary. For example, private companies can handle the design, production and development of offshore wind farms while public sector entities can create supportive port infrastructure to evacuate energy.

As FOW evolves to become a bankable solution to the world’s decarbonisation ne­eds, a holistic ecosystem approach can help countries in balancing the needs of diverse stakeholders by empowering them to become a part of the global green energy transition. Strategic competencies must be summoned to integrate FOW into our shared future.