Offshore Wind Market by Product (Components, Structures, and Service), Location (Shallow Water, Transitional Water, and Deep Water), and Regional Analysis (North America, Europe, and Asia-Pacific): Global Opportunity Analysis and Industry Forecast, 2021–2028

Global Offshore Wind Market Analysis

The global offshore wind market size is predicted to garner $61,443.7 million in the 2021–2028 timeframe, growing from $24,983.1 million in 2020, at a healthy CAGR of 12.9%.

Market Synopsis

To reduce greenhouse gas emissions and meet energy demand, countries have shifted their focus towards renewable energy sources to generate electricity. As a result, countries have increased investment in the renewable energy sectors. Besides, the U.S., EU, China, and India have come up with favorable policies and incentive programs to provide impetus to the wind energy sector. Such factors are expected to drive the global offshore wind market.

Installing wind turbine in shallow water is a complex process, thereby requires expertise and high capital investment. Furthermore, transporting components, structure, and other equipment to site is challenging. Such factors are expected to hinder market growth of global offshore wind market.

According to the regional analysis, the Asia-Pacific offshore wind market is anticipated to grow during the review period and generate revenue of $31,502.2 million in 2028, with a CAGR of 13.2%. The growing investment in renewable energy sector is the key factor driving the growth of offshore wind market in the region.

Offshore Wind Overview

Offshore wind farms are developed in bodies of water, especially sea. As offshore wind speeds are higher than on land, offshore farms generate more electricity per watt installed. The vast majority of offshore wind farms use fixed-foundation turbines in shallow waters. However, as of 2020, floating wind turbines for deeper waters are in the initial phases of development.

Impact Analysis of COVID-19 on the Global Offshore Wind Market

The novel coronavirus wreaked havoc across the industries, the offshore wind sector felt the impact during this unprecedented time. There is uncertainty about the economy's recovery, with many countries shut down and the shock of COVID-19 affecting global GDP and putting a significant strain on OEMs' and suppliers' revenue. Before the pandemic, the global offshore wind market was steadily growing. However, complete lockdown had disturbed the industry supply chain. Due to social distancing norms, companies were working with a limited workforce. As a result, companies had to reduce their production, thus leading to an increase in order backlog and revenue losses. Moreover, due to restrictions on travel, companies were unable to provide installation and maintenance services. These led to delay in the completion of offshore wind projects.

Increasing Investment in the Clean Energy Sources is Projected to Drive the Market Growth

To reduce carbon emissions, governments across the countries are taking necessary measures. Thus, encouraging governments to invest in renewable energy sources such as solar and wind energy. As a result, the amount of electricity generated from wind energy has grown significantly in recent years. The Union Ministry of New and Renewable Energy (MNRE) of India, has set a target of installing 5 GW of offshore capacity by 2022 and 30 GW by 2030.

Rising electricity demand and increasing concern for non-renewable energy sources are propelling the growth of offshore wind energy. According to the World Economic Forum, offshore wind is set to become a $1 trillion industry by 2040. Additionally, the declining price of wind turbine and advancements in wind technology have reduced the cost of generating electricity from wind energy. Moreover, growing competition among market players has led to decrease in installation cost, contributing to decrease the cost of electricity generated from wind turbine. As a result, the EU, China, and the U.S. are steadily increasing their offshore wind capacity, thereby driving the market growth.

To know more about global offshore wind market drivers, get in touch with our analysts here.

High Capital Cost and Logistics Issues to Restrain Market Growth

Offshore wind is eco-friendly and the most promising source available to generate electricity. However, the cost of support structures, electrical infrastructure, and turbines is significantly high compared to an onshore wind turbine. The support structures such as foundation cost are relatively high due to the high-water depth, surface area, and construction method. For instance, the support structure cost of a conventional onshore wind turbine is around 4%-6%, while the cost of an offshore wind turbine foundation is 20% - 22% of the total cost. Besides, the installation and construction techniques are not well developed, thereby driving-up the cost. Furthermore, these wind turbines operate in harsh environment owing to which they are susceptible to erosion, thereby require periodic maintenance.

Government Initiative to Reduce Greenhouse Gas to Generate Huge Opportunities

The burning of fossil fuels such as coal, oil, and natural gas results in significant amount of greenhouse gas emission. Due to the growing awareness related to the impact of non-renewable energy sources on the climate, the world is shifting towards the clean energy sources to generate electricity. According to the International Renewable Energy Agency (IRENA), the use of renewable energy in industrial sector to rise from the 14% in 2015 to 63% by 2050.

To meet the growing electricity demand, governments across the countries are investing in the renewable energy sources. For instance, according to the World Energy Council, China increased its renewable energy capacity by nearly half (117 GW) in 2020, almost doubling its own additions from the previous year. Besides, as per the Bloomberg, the U.S., investment in renewable sector increased by 28% in 2020. These factors are projected to provide growth opportunities for the offshore wind market.

To know more about global offshore wind market opportunities, get in touch with our analysts here.

Source: Research Dive Analysis

The components sub-segment is anticipated to have a dominant market share and generate a revenue of $36,866.2 million by 2028, growing from $14,715.0 million in 2020. Growing investment in renewable energy sector is the main factor propelling the component sub-segment market. For instance, on 1 November 2021, UK government announced to fund $218 million to build floating offshore wind ports and factories in Scotland and Wales. Besides, the Netherland, Denmark, Poland, South Korea, and Taiwan are expected to increase offshore wind energy installed capacity in coming years, thereby driving the component market.

Source: Research Dive Analysis

The shallow water sub-segment is anticipated to have a dominant market share and generate a revenue of $42,396.1 million by 2028, growing from $17,181.2 million in 2020. Most of the projects are undertaken in this sub-segment due to ease of transportation and maintenance. Furthermore, the foundation and electrical structure costs are relatively low compared to deep water sub-segment.

The deep water sub-segment is projected to grow with the highest CAGR of 13.5% from 2021 – 2028. The advancement in the wind technology and rising investment to develop floating offshore wind turbine are the main factor driving the market for deep water wind turbine.

Source: Research Dive Analysis

The Market for Offshore Wind in Asia-Pacific to be the Most Dominant

Asia-Pacific offshore wind market accounted for the highest market share in 2020. The region accounted for $12,516.5 million in 2020 and is estimated to reach $31,502.2 million by 2028, with a CAGR of 13.2%. Growing investment in the renewable energy sector is the main factor driving the demand for offshore wind in Asia-Pacific. Besides, due to growing awareness about harmful effect of fossil fuel on the climate, governments of China, India, and South Korea are shifting towards the clean energy sources, propelling the demand for offshore wind market.

The Market for Offshore Wind in North America is projected to grow with the highest CAGR

North America offshore wind market is estimated to reach $5,671.3 million by 2028, at a significant CAGR of 15.0%. The growing investment coupled with the rising energy demand, is propelling offshore wind market in the region. Furthermore, the U.S. and Mexico have increased their investments in the renewable energy sources. For instance, on 28 October, 2021, Biden-Harris administration announced to deploy 30 GW offshore wind energy in Atlantic and Gulf of Mexico by 2030.

Competitive Scenario in the Global Offshore Wind Market

Acquisition and investment are common strategies followed by major market players.

Source: Research Dive Analysis

Some of the leading Offshore Wind market players are Vestas, Siemens Gamesa, Goldwind, Shanghai Electric Wind Power Equipment Co., DEME, Nordex SE, Nexans, General Electric, EEW, and Envision.

Porter’s Five Forces Analysis for the Global Offshore Wind Market:

• Bargaining Power of Suppliers: The presence of large number of suppliers reduces their profits as the buyer can switch from one supplier to another based on the cost factor and demand.
  Thus, the bargaining power of suppliers is low.
• Bargaining Power of Buyers: There is significant number of suppliers in the market. Buyers can easily switch from one supplier to another.
  Thus, buyer’s bargaining power will be high.
• Threat of New Entrants: The offshore wind market is dominated by Siemens Gamesa, Goldwind, and Vestas. Since large investment is required, it discourages new entrants.
  Thus, the threat of the new entrants is low.
• Threat of Substitutes: Investments in solar and onshore wind are relatively high compared to offshore wind.
  Thus, the threat of substitutes is moderate.
• Competitive Rivalry in the Market: The presence of equal player and minimal product differentiation increase competition.
  Therefore, competitive rivalry in the market is high.