Offshore wind: Asia (reprise)

Investment Analysis Clubs Macro Economic Trends and Risks
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I accidentally deleted my own topic so am reprising it here. Just want to add something positive about offshore wind as a contrast to the never ending negative news stories we find here. Also want to add that a couple of big reasons why offshore wind projects are being cancelled in the west is that the materials to make turbines (aluminum, steel, copper) have gone up in price and there is a severe shortage of power cables.

    1. In the US, a major Nordic renewable energy company has abandoned two offshore wind projects due to supply chain challenges and a lack of available critical equipment. With a combined planned capacity of 2,248 MW, these would have powered over 1.5m homes a year.
    2. The UK faces similar challenges. According to BBC estimates, there are over Ā£200 billion worth of projects waiting to be connected to the grid. Thatā€™s despite a commitment to 100% carbon-free electricity by 2035, according to the sixth Carbon Budget. Leading energy companies have been told that some connections may take up to 15 years, far beyond that target. Navigating the power cable supply crunch | Inverto

The economics of offshore wind power works except for shortages in raw materials and supplies. This may be why China can build offshore wind without much problem, as their supply chain is totally domestic. I suspect the market will compensate as it normally does when shortages happen and these supply difficulties are temporary. I think in a couple of years, offshore wind will be expanding rapidly so this may be a buying opportunity for the more depressed wind companies.

There is already evidence that several Asian countries not named China are creating domestic offshore wind supply chains for what will be a booming industry. I would watch Vietnam in particular. Not just made in China: The growing offshore wind supply chain in Asia-Pacific - Aegir

Below is what I deleted.

Besides China, offshore wind is going big time in Taiwan and South Korea, with Vietnam and the Philippines in the wings. What these nonChina countries have in common is that they are currently dependent on fossil fuel imports and do not have much land to develop for energy production. All want to become energy independent for national security/economic reasons, Taiwan in particular.

South Korea: South Korea Unveils Plans for Massive 3.2 GW Offshore Wind Project | Offshore Wind

Vietnam: Denmark's CIP Inks Offshore Wind Agreement in Vietnam | Offshore Wind

Philippines: Philippines' 2 GW Northern Luzon Floating Wind Project Presses Ahead | Offshore Wind

Taiwan according to Google AI has 135 offshore wind projects online with 8 currently operating, including the 640 MW Yunlin wind farm Yunlin Offshore Wind Farm-News-Press Releases-Yunlin Offshore Wind Farm Officially Begins Commercial Operation

Taiwan seems to be the place to go if you are an engineer. Taiwan is creating an offshore wind industry to fuel its semiconductor factories - Rest of World

ā€œElectrical engineers often head into tech or semiconductor firms. But this new industry has opened doors for those with civil and mechanical engineering backgrounds to step into offshore energy work,ā€ Hsu said.

Even entry-level jobs in offshore wind are highly paid, at double the average salary seen in other industrial sectors. More experienced engineers earn twice as much.

Offshore wind apparently creates a lot of high paying jobs. Who knew?!?

Asia and Europe will likely dominate the future wind energy market.

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Apparently there is also a problem with cable failures. From a May 2024 postā€¦

But failure of these cables is all too common, to the point that the cost of insuring them is becoming prohibitive.

And from December 2023ā€¦

Cost of insuring offshore wind ā€˜doubledā€™ amid heavy losses
https://www.rechargenews.com/wind/cost-of-insuring-offshore-wind-doubled-amid-heavy-losses-leading-broker/2-1-1568387
Insurance providers have doubled the price of covering offshore wind projects after taking heavy losses in recent years, according to one broker, who set out what developers and the industry can do to bring costs back down.

Insurance has become ā€œmore expensive and difficult to procureā€ in offshore wind, said Robert Bates, head of claims at energy and infrastructure broker NARDAC.

DB2

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A new code of practice could save millions for the offshore wind industry by preventing subsea cable failure
ā€œIn a study carried out in 2019 by the University of Strathclyde, the average rate of power cable failure is approximately 0.003 failures/km/year for European wind farms. This means that a wind farm with 100km of power cable has a 30% chance of cable failure in any given year. The average downtime for an inter-array cable repair is around 40 days, and 60 days for an export cable.ā€

Commentary.

DB2

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The solution may come from Taiwan, which is designing and building submarine cables from its own company capable of withstanding not only natural threats but also Chinese sabotage. https://www.walsinenergy.com/#:~:text=Walsin%20Energy%20Cable%20System,submarine%20cables%20starting%20in%202027.

Here is one example of these enhance armored cables. https://www.4coffshore.com/news/crp-subsea-awarded-cable-protection-contract-for-taiwan-wind-farm-nid25939.html

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Compare that with the annual outage downtime of your typical US coal plant of 15% (about 55 days). In other words, Offshore wind, 30% chance of 50 day downtime for cable repair versus coal plant empirically observed average of 50 days downtime per year. https://www.nrdc.org/bio/rachel-fakhry/myth-247365-power-plant

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Floating offshore wind innovations will bring down costs and open up more areas where wind projects can be deployed. Most of the companies innovating in this space are not in the US - go figure. Hereā€™s one -

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Inflation is a big problem for renewables. From a Wood-Mackenzie study:

Renewable investments with subsidies and certainty on price and offtake can access cheaper finance, but the low cost of debt and low required returns are precisely what makes projects sensitive to interest ratesā€¦

In an illustrative example for the US, our analysis shows that a 2-percentage point increase in the risk-free interest rate pushes up the levelised cost of electricity (LCOE) by as much as 20% for renewables.

These headwinds are seen in news out of Japan this weekā€¦

In December 2021, Mitsubishi won in a Japanese auction projects in three Japanese sea areasā€¦Mitsubishi today announced it had decided not to proceed with their developmentā€¦

Mitsubishi sought to adapt to these changes by examining various options including reassessment of costs, project schedule, and revenue.

ā€œHowever, after discussions among the partners, we have determined that establishing a viable business plan is not feasible given the current conditions,ā€ the corporation said.

DB2

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I think renewables are good and the transition to more electric power and less fossil fuel power is a good idea. There are many ways to create electricity, wind and solar are just the newest versions.

What I have not seen discussed are the comparative investment and maintenance costs. In a micro environment, my sailboat, I liked the solar panels and hated the windmill, noisy, dangerous, and failure prone. The curious thing is that I also had an electric self steering gadget as well as a wind operated one. The electric one as a maintenance headache while the wind operated one just worked. Had I know this early on I would have save quite a bit of money not having the wind mill and the electric self steering gadget.

I think a similar comparative, wind-solar evaluation would be a very helpful. There should be enough world wide data to do it.

The Captain

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And in Australia wind turbines seem to be stalling.

Australia delays first offshore wind auction as global investment retreats
https://www.reuters.com/sustainability/climate-energy/australia-delays-first-offshore-wind-auction-global-investment-retreats-2025-09-16/
Australiaā€™s Victoria state has postponed its inaugural auction for offshore wind farm funding, citing global investment hurdles, in a setback to an industry deemed vital to the countryā€™s transition from coal-fired power to renewable energy.

The state government confirmed on Tuesday that it would delay the auction process, which had been scheduled for this month, and would release a revised timeline by the year-endā€¦

It comes days after Origin Energy said it would pause plans to develop an A$8 billion ($5.33 billion) farm in Gippsland as it was unable to meet the Victorian governmentā€™s original auction timeline. Other developers have also walked away. Spainā€™s BlueFloat Energy in July abandoned one of Gippslandā€™s most advanced projects, citing market conditions. In August, Norwegian energy company Equinor pulled out of the A$10 billion Novocastrian wind farm in New South Wales, after a series of earlier withdrawals in Australia.

Meanwhile, on the landā€¦

Meanwhile, years-long delays are blowing out rollout times on critical transmission lines needed to carry renewable power to the cities, while electric car purchases are stuck in the slow lane at 10% of new sales.ā€¦

Failure to deliver on climate promises is a sensitive topic for the Albanese government, which went to the 2022 election pledging that power bills would fall $275 by 2025. Instead, prices roseā€¦The government has distanced itself from Climate Change Authority modelling that suggested the renewablesā€™ rollout would cut $1000 from annual power bills.

DB2

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