How shipping can learn from offshore wind power to make its green transition competitive

Collaboration between governments and industry is crucial to make new green technologies competitive alternatives to fossil fuels.

In less than three decades, offshore wind power has gone from a single pilot project to a global industry. Today, energy from new offshore wind farms has become cheaper than energy from new coal-, gas or nuclear power plants. The price has fallen by more than 65% since 2012. The maturation journey of offshore wind might lend valuable insights to how we can mature other green technologies, including how we can make zero emission shipping competitive.

The development of offshore wind demonstrates how industrial innovation – and ultimately the birth of a new large-scale green technology – can happen when industry and governments collaborate. While industry can research, demonstrate and deploy new green technologies at scale, governments must set the framework for the market. Governments can do so by delivering certainty and predictability that enable industrial development, learning and growth of new and promising technologies.

The positive “ambition” loop

Over the past thirty years, governments around the North Sea have ensured demand for high quantities of offshore wind power through ambitious green energy targets, funding of public research and dedicated offshore wind policies.

Political support created a long-term market outlook for offshore wind power. This enabled industrial developers to take the leap and commit to developing offshore wind farms at an unprecedented scale, leading to an industrialization of the technology and subsequent cost reductions. The long-term outlook and price-certainty helped unlock financial resources, bring down the cost of the capital needed to drive innovation and supply chain build-out, and mature the technology and ultimately make it competitive.

Increasing volumes of offshore wind energy deployment have been instrumental in driving down costs. In addition to economies of scale, the larger market allowed for growing competition, technological improvements and a continuous maturation of the supply chain. And with lower costs, increased political demand could be justified. This generated a positive feed-back loop between government policy, industry maturation and cost reduction.

Figure: The “ambition loop” of offshore wind development

Going global

The most illustrative element of the successful development of offshore wind energy is its rapid globalization. North-Western Europe has long been the only home of offshore wind energy (excluding mainland China). This is changing rapidly, as governments in a growing list of new countries are all deploying or looking to deploy offshore wind energy at large scale. And more countries are expected to join in the future.

What we can learn

A development similar to that of offshore wind energy could happen for renewable hydrogen and other synthesized fuels that can be used to propel large oceangoing vessels. To begin the maturation journey, the power of scale, research and innovation must be applied to the technologies we choose to pursue.

Scale is crucial for the industrialization of technologies needed to decarbonize international shipping. This industrialization will have a key role to play in making these green technologies competitive alternatives to fossil fuels – not least in shipping. But it will require a well-orchestrated collaboration between governments and industry. And to this end, the offshore wind energy experience can be a source of inspiration.

Read Ørsted’s whitepaper on how the offshore wind industry matured – and what other industries can learn from it.