March 8, 2021
Within several North European countries, offshore wind farms are now being constructed based on a zero-subsidy and fully market regulated off-take regime which has governments around the world mesmerized as the great green transformation is often associated with significant tax payer contributions. The phenomenon in North Europe is, however, based on a fully built-out supply chain and long-term commitment to offshore wind through a substantial pipeline of projects. As the rest of the world wants to be part of the offshore wind bonanza, the build-out of the local supply chains happen at a different pace and with different political and legislative frameworks. Making market entry into a new market should therefore be carefully analyzed and considered upfront. At Panticon, we possess and intimate understanding of the established markets as well as the new offshore wind markets.
When a local supply chain for offshore wind does not yet exist, the wind components need to be imported from global manufacturing sites. This makes construction as well as operations of the offshore wind farm assets more expensive compared to a site where production takes place locally. The allure for governments around the world is to view offshore wind from the perspective of subsidies and in some European countries where a local supply chain exists, market pricing has taken over and tax payer money will soon not be spent on offshore wind farms any more.
When transplanting offshore wind farm development from an existing market with an existing and vibrant local supply chain to a new market with limited or no offshore wind supply chain, the cost structure changes significantly. It may take a decade before the local supply chain has been fully built out and the new market can expect to cut back on offshore wind subsidies. The pace of this subsidy phase-out is dependent upon the local conditions, legislation, and offshore wind commitment. A steady investment environment coupled with a sufficiently large pipeline of future offshore wind farms are important factors to consider for new markets. In this recording, you can learn more about offshore wind and the different pace with which globalization of the supply chain is moving forward in different new offshore wind markets. The recording has panels that touch upon how competencies are built in a new market, how COVID-19 impacts the construction of an offshore wind farm in a new market, and how offshore wind vessels are developing differently across various markets globally.