Asia offshore wind market still spinning despite virus

Source: By Nathanial Gronewold, E&E News reporter • Posted: Wednesday, August 12, 2020

Key Asian markets are moving rapidly to build offshore wind power despite the global economic downturn.

In Vietnam, a developer is preparing to install the foundations for what will become the nation’s first offshore wind turbines. Taiwan’s government is preparing a new round of offshore lease sales for wind power. And Japanese authorities are designating special offshore wind development zones and inviting industry players to submit their plans.

Analysts say these moves show the Asia-Pacific region is poised to become one of the strongest growth markets for offshore wind energy. China is seen as leading Asia’s offshore wind builds, but international investors — especially European wind power technology companies — are busy looking outside China because they expect Beijing will continue to lock them out of its market in favor of domestic firms.

In a recent industry status briefing, Erik Kjaer, a senior adviser with the Danish Energy Agency, said his work with Vietnam’s power authorities is evidence that Hanoi’s government is determined to see offshore wind succeed in Southeast Asia. And, to achieve that goal, it’s rolling out the red carpet to foreign investors.

“There was a vision or idea for creating a Southeast Asian hub for offshore wind in Vietnam, and I think that was a very foresighted way of attacking this new technology,” Kjaer said.

He said an assessment he worked on concluded that Vietnam can host at least 160 gigawatts of “potential for floating and bottom fixed combined” offshore wind energy projects.

Offshore wind developers in Vietnam are focused on the country’s south. That’s where Mainstream Renewable Power is pressing ahead with the 800-megawatt capacity Phu Cuong Soc Trang offshore wind project. Mainstream says it is currently designing the foundations that will underpin the project, with the aim of launching construction in 2021.

Vietnam and Taiwan are among the nations in the region that have coped well with the pandemic, which may explain why the pair is pressing ahead with offshore wind development schedules. The Global Wind Energy Council, a Brussels-based trade group, considers Vietnam and Taiwan as two of the top five offshore wind markets with the greatest potential.

“While Europe continues to be the leading region for offshore wind, countries in the Asia-Pacific region, such as Taiwan, Vietnam, Japan, and South Korea, as well as the U.S. market are quickly picking up the pace and will be regions of significant growth in the next decade,” GWEC analysts said in their latest Global Offshore Wind Report.

Though total worldwide offshore wind power capacity was estimated at roughly 29.1 gigawatts at the end of 2019, the new report projects that figure to rise to more than 234 GW by the end of this decade, “led by exponential growth in the Asia-Pacific region.”

Developers have high hopes for the Southeast Asian market, where power demand is expanding rapidly.

But some say inadequate project financing and excessive red tape are hindering what could be one of the world’s hottest offshore wind markets.

During a recent panel, Olivier Duguet, CEO of the Blue Circle, said a lack of structure has slowed down his company in Vietnam. The Blue Circle manages offshore wind project development from offices in Singapore, Thailand, Vietnam and Cambodia.

“There’s absolutely no local experience in good practice, no industry association whatsoever, and international standards are absolutely absent from all the projects, which have been built so far by local players because so far it has been a local market only,” he said.

To hedge their bets, developers also are building up their footprint in the region’s richer markets.

Industry insiders are scheduled to gather online this week to discuss the market status and future of offshore wind energy in Taiwan. There have been concerns about the effect of COVID-19, but Taiwan’s Ministry of Economic Affairs recently signaled it wants to press ahead. It is busy finalizing rules for a new round of offshore project auctions planned for early 2021.

Taiwan is aiming for large-scale projects, with an upcoming auction that’s designed to entice investments for a 1-GW wind farm off the country’s west coast. Taipei’s energy regulators want to see 15.5 GW of offshore wind capacity feeding the grid by 2035.

Japan may be the next country to make major moves into offshore wind energy.

Japan already is second only to the United Kingdom in floating offshore wind, but progress badly stalled there after the mid-2000s according to the GWEC report. Tokyo is now racing to catch up with China and compete in the emerging global market.

The Dutch engineering firm IX Wind says it first established an Asia office in Taiwan two years ago, but it since has expanded to include a presence in Tokyo.

Aside from the COVID-19 crisis, the company’s timing seemed just right — the Japanese government began accelerating its offshore wind push this summer by declaring four additional offshore wind promotion zones and opening formal talks with the industry regarding its plans.

Ten potential sites for large-scale offshore wind power development have been identified in total so far across Japan, from a prospective location off Nagasaki to coastal regions of the northernmost main island of Hokkaido.

Leaders from key Japanese government ministries last month held the first “industrial consultations on strengthening competitiveness in the offshore wind power industry” in Tokyo with members of the Japan Wind Power Association.

There, the government and companies agreed to set a goal of developing 10 GW of offshore wind power capacity in Japan by 2030 and to ramp that figure up to 40 GW by 2040.