In light of the postponement of multiple final investment decisions (FIDs) on projects and lower investments in offshore oil and gas, coupled with increased activity in the offshore wind sector, Rystad Energy, an independent energy research and business intelligence company, expects that the two markets will reach parity as soon as next year; the company anticipates that capital expenditure (capex) on offshore wind will surpass upstream oil and gas spending in Europe in 2022.
Capex towards offshore wind in Europe surpassed the $10 billion mark in 2015 and has since hovered in the range of $10 billion to $15 billion per year. Annual capex levels are expected to rise from around $11.1 billion in 2019 to around $13.8 billion in 2020, $18.2 billion in 2021 and more than $22 billion in 2022.
The abundant oil supply and reduced demand have reduced the price of oil, and consequently, annual capex towards upstream offshore oil and gas in Europe is expected to decline from more than $25 billion in 2019 to less than $17 billion in 2022.
“Offshore wind development in Europe is expected to flourish in the coming years as countries strive to reach their ambitious 2030-targets – and large investments will be required,” says Alexander Flotre, project manager for offshore wind at Rystad Energy.
“Commissioning activity is expected to increase towards 2025, and projects expected to be operational in 2023-2025 are already driving up capital expenditure in 2020. This trend will continue in the coming years,” adds Flotre.
Historically, Europe has been the key market for offshore wind development, accounting for almost 80% of global installed capacity at the end of 2019. While strong growth is expected in China, South East Asia and the U.S. in the years to come, Europe is expected to maintain its number one position through 2025 in terms of installed capacity.
From an installed base of 21.9 GW in 2019, European capacity is expected to increase to more than 53 GW by 2025, constituting an annual growth rate of 16%. While Europe’s ambitious plans for 2030 will require new tender rounds in the coming years, most of the commissioning activity towards 2025 is expected to come from projects that have already been approved.
The U.K. is the largest country in Europe in terms of offshore wind capacity and is expected to drive a big portion of the growth towards 2025, with mega-projects such as Dogger Bank, Sofia and additional Hornsea phases, among others.
The post European Offshore Wind Expenditure Set to Surpass Upstream Oil, Gas appeared first on North American Windpower.
Original source: North American Wind Power