Global offshore wind power capacity additions are expected to reach 129GW in the next decade with a compounded annual growth rate (CAGR) of 26%, according to Wood Mackenzie Power and Renewables Research as of Q2 2019. The Asia Pacific region will be a key contributor with 45GW, more than one third of the global total. We see great potential in offshore wind development against the backdrop of favorable government incentives and market conditions. At the same time, some growing pains are ahead for major offshore markets in the region.
China is ramping up the scale of offshore projects near demand centers, even as the onshore market is expected to peak in the next few years. Intense pressure to reduce costs to reach the goal of grid parity with coal by 2020 for onshore units is also flowing over to offshore market as it scales, and presents both challenges and opportunities for developers.
Taiwan region will see a gap of 5 GW in power capacity by 2025 as the government plans to shut down nuclear plants. Offshore wind is poised to fill this gap as more than 5.7 GW of projects have been approved and planned for commissioning by 2025. A relatively stable regulatory regime, a supportive government, and openness to foreign investment are supporting the future growth.