Offshore wind power - current outlook

Offshore wind energy is bound to become one of the top renewable energy sources in the future. Even now, offshore wind energy offers excellent investment opportunities due to its big growth potential.

Investments in offshore wind energy projects are likely to outpace the growth of onshore wind energy projects by around 10 percent in the next five years.

The main advantage of offshore wind turbines compared to the wind turbines on land is the fact that offshore winds blow 40 percent more often than on land, meaning that offshore wind energy projects can produce more electricity than the ones on land.

EU leads the way in developing offshore wind technologies. Britain has the biggest number of operating offshore wind farms. U.S. is yet to enter the offshore wind energy market.

Many energy experts believe that offshore wind energy projects are still economically viable even despite the very harsh natural conditions that dominate offshore (which significantly increase installation costs).
Some recent studies have showed that return on investments for offshore developments can be as high as 18 percent meaning that some of these projects should be very attractive for investors.

Large wind turbine located offshore

The installation costs of offshore wind energy projects are connected with high costs ( around twice the amount needed for wind energy projects on land), these projects also often require special ships, cables and engineering in order to withstand harsh natural conditions in form of high winds and corrosive salt water.

Current costs to install a offshore wind turbine are around $5 million per megawatt of capacity, while turbine on land has installation costs between $2-2.5 million per megawatt of capacity.

The banks still do not give adequate support for new offshore wind energy projects mostly because they connect sea-borne structures with high risks, and the result of this is that the banks demand twice as much equity from developers for offshore wind projects compared to the ones on land.

Offshore wind technologies have only started developing so they still carry some risk, meaning that they require caution from investors, but it is widely expected that an increase in manufacturers supplying offshore turbines will lower total costs making this segment far more interesting to investors.