Rystad Energy: Wind capex to surpass oil and gas

In light of the postponement of multiple final investment decisions (FIDs) on projects and lower investments in offshore oil and gas, coupled with increasing activity in the offshore wind sector, Rystad Energy expects that the two markets will reach parity as soon as 2021. Rystad Energy anticipate 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 US$10 billion mark in 2015 and has since hovered in the range of US$10 billion – US$15 billion per year. Annual capex levels are expected to rise from around US$11.1 billion in 2019 to around US$13.8 billion in 2020, US$18.2 billion in 2021 and more than US$22 billion in 2022, Rystad Energy states.

The abundant oil supply and reduced demand have taken their toll on oil price, and consequently annual capex towards upstream offshore oil and gas in Europe is expected to decline from more than US$25 billion in 2019 to less than US$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,” commented Alexander Flotre, Rystad Energy’s Project Manager for offshore wind.

Historically, Europe has been the key market for offshore wind development, accounting for almost 80% of global installed capacity at the end of 2019, according to Rystad Energy. While strong growth is expected in China, South East Asia and the US in the years to come, Europe is expected to maintain its number one position through 2025 in terms 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, Rystad Energy states.

The UK 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 currently on the cards, among others. According to Rystad Energy, other established countries such as the Netherlands, Germany, Belgium and Denmark are also expected to contribute to the increased spending levels, while newcomers such as France and Poland will add to the growth in the 2023 to 2025 period.

Read the article online at: https://www.energyglobal.com/wind/08062020/rystad-energy-wind-capex-to-surpass-oil-and-gas/