Offshore Wind set to accelerate in Asia
Government policy and pressure to progress clean energy plans is expected to turn Asia into a global leader in offshore wind according to new research by international law firm Ashurst
The report, Powering Change: Energy in Transition, compiles the views of more than 2,000 senior business leaders from across G20 countries on the changing global energy market as it seeks to meet rising energy demand and a drive towards decarbonisation.
Offshore wind was selected by 32% of respondents in Asia as a technology in which they plan to invest, in the region, over the next five years. This would build on Asia’s existing offshore wind credentials, with significant numbers of companies in Japan (47%), China (38%) and India (35%) already investing in the technology.
The law firm said much of this investment will be driven by governmental pressure, with 64% of respondents from the G20 countries in Asia feeling extreme pressure to invest in low-carbon power from their respective governments. This is the largest source of pressure for low-carbon investment in the region.
China is in the process of becoming the largest offshore wind market in the world and is expected to overtake the UK as the largest offshore wind market globally by installed capacity in 2022.
Taiwan, Vietnam and Japan also all feature in the top 10. Of these, Taiwan has become one of the most exciting emerging markets in offshore wind for investors from around the world, as it has embraced western developers. The re-election of Taiwan’s president Tsai Ing-Wen in January means the country is now targeting 15.5 GW offshore wind by 2035.
Asia offers substantial international scope for foreign investors, with 18% of respondents in the G20 stating they already invest in or want to invest in renewable energy, energy transition and decarbonisation technologies in southeast Asia in the next five years. This mirrors the growing investment that has flowed from Japanese investment houses into offshore wind in European markets, where the technology is more mature.
Ashurst global co-head of power and utilities David Wadham said, “It is indisputable that investment in renewable energy and decarbonisation technologies is on the rise. Although there are notable market variations, we see this as the dominant trend in the energy sector across the board. Across the globe there is significant pressure on governments, corporates and financial institutions to take action now.
“Despite coal’s continued dominance across many parts of Asia, there is significant and growing investment in renewables in virtually every country in the region. The influence of China from a manufacturing perspective places it at the centre of the energy transition.”
Ashurst senior associate Peter Grayson said, “As one of the most energy-hungry regions in the world with a burgeoning coastal population, offshore wind is an incredibly sensible choice for countries across southeast Asia.
“Many companies from Asian countries have been investing in European offshore wind for a number of years and, as the technology has matured to subsidy free prices, it is natural that these countries are looking to their own shores instead.
“Not only are southeast Asian governments recognising the value offshore wind can provide across the region, but international investors are turning the tables and redirecting capital flows away from mature markets, catering to growing demand without adding to the climate crisis.
“The opportunities that will undoubtedly arise with the development of floating offshore wind will see the industry continue its emergence as the leading renewable energy power source in the region over the next decade and beyond.”
Beyond Asia, the upward trend in low-carbon investment is consistent globally. Across the G20, 94% of respondents expect their organisation’s investment in the energy transition to increase over the next five years, with the average increase expected to be a massive 43% in dollar terms.