China, which is on track to overtake the UK and become the world’s largest offshore wind market, offers niche opportunities for experienced Scottish companies.
“The opportunities are there, but in very specific parts of the supply chain,” Kevin Liu, head of energy, Asia Pacific, at Scottish Development International (SDI), told Energy Voice.
SDI has been busy on the ground in China visiting all the major offshore wind developers and engineering contractors to figure out what the Chinese companies cannot do themselves, added Liu.
Liu said SDI has discovered several Chinese firms that are genuinely interested to work with the Scottish supply chain. These include State Power Investment Corporation, Huadian Heavy Industries, as well as Guangdong Electric Power Design Institute.
The Opportunities
Significantly, there are three broad thematic areas where Scottish companies could get a foothold in China’s ballooning offshore wind market.
The first market opportunity is around cables, said Liu.
“The Chinese have their own cable laying vessels. They have the personnel. They have the capability themselves. But very often they lack some of the very necessary equipment to go with cable laying. That includes some of the pre-laying burial surveys, that are increasingly done by remotely operated vehicles (ROVs) underwater. As they are going into deeper waters, they simply cannot use divers, as in people, to go underwater,” added Liu.
Another example of the niche opportunities around cables is “protection systems, which are these buoyancy kits that go around a cable, which are then required to hold a cable in place, so they are not floating about in the sea,” said Liu.
The second market opportunity is around operations and maintenance. A report by Carbon Trust has identified that the operations and maintenance expenditure (OPEX) aspect of offshore wind in China marks the most noticeable gap in terms of local capabilities.
“This includes vessels that can take people and crew out to offshore wind assets further away from shore. As well as trained personnel that can climb up and down the turbines located in deeper waters. There is also a need for subsea instruments and ROVs for subsurface work in deeper waters,” said Liu.
Operations and maintenance are an area where China is lacking in capability, or at least there is not enough of that capability to go around, given the huge build out that China is undergoing, he added.
The third market opportunity covers floating sub-structures. This covers the “floating platforms that hold up the turbines, as well as the cable protection that needs to be in place, and the mooring and anchoring systems, which Scotland is particularly good at because of our oil and gas experience,” said Liu.
Still, China is renowned for being a difficult market to crack. Scottish companies are not actually working in China’s offshore wind sector yet. “It’s an ambition. There are a few companies that are starting to offer consulting work for Chinese companies, but not really equipment suppliers and that’s ultimately where we want to get to, the capital goods, not just services,” added Liu.
China drives record offshore wind growth
Worldwide offshore wind installations are expected to more than double in 2021 driven by a rush of Chinese activity, reported the Global Wind Energy Council (GWEC).
China connected 3.1GW offshore wind to the grid in 2020, more than half the 6.1GW added globally, GWEC said on 9 September. This year Chinese developers are rushing to beat an end-of-year deadline to claim government subsidies for 7.5GW of projects.
With just under 10GW built by end-2020, China is on track to overtake the UK as the world’s biggest offshore wind market by cumulative installations this year, said GWEC.
However, GWEC’s Global Offshore Wind Report 2021 estimates the Chinese market will slow markedly in 2022 after central subsidies end later this year. Future expansion will be more dependent on provincial support and the industry’s ability to compete in the power market.
“We’ve seen unprecedented growth of offshore wind over the past decade with the UK, China and Germany leading the way. Looking to the next three decades, Asia will need to emerge as the world’s most prominent offshore wind region to deliver this massive scaling-up of capacity, accounting for 40% of the 2,000 GW needed by 2050, followed by Europe with 32% and North America with 18%. While this may seem like a huge challenge, it is just a drop in the water compared to the 71,000 GW of technical offshore wind potential that exists in the world today and goes largely untapped,” said Feng Zhao, head of market intelligence and strategy at GWEC.
Even with growth slowing in China, GWEC is optimistic about offshore wind’s expansion potential, particularly in emerging Asian markets, such as Japan and South Korea. Novel floating wind technology also offers the potential to develop new markets.
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