The annual global growth of the offshore wind sector will increase to 19.1GW by 2020, from the 4.3GW in 2018, according to Commerzbank AG.
Commerzbank anticipates the global wind market to continue to grow, albeit with regional fluctuations, with an average growth rate of 15% in the offshore wind sector in the next ten years.
The German bank said it sees significant potential in the U.S. offshore wind market and is also optimistic with regard to Asia, particularly South Korea, Japan and Taiwan, where it has already participated in the project financing of one offshore wind farm and is currently reviewing another transaction.
“If we want to achieve our CO2 emission reduction targets, we have to significantly expand wind energy in Germany. At the same time, all market participants need to establish an international footprint, in order to tap into new markets and increase cost efficiency,” said Berthold Bonanni , Head of the Energy unit (CoC Energy) at Commerzbank AG.
According to Commerzbank, the trend of falling remuneration rates and lower levelised cost of electricity (LCoE) for renewable energies will make power purchase agreements (PPAs) more attractive.
The anticipation of rising power prices can offer industrial electricity consumers the opportunity to hedge their electricity price by contracting green power for the long term, the bank said, adding that increasing awareness of companies’ carbon footprint led to a rise in the demand for green PPAs.
However, in order to secure project financings on the basis of long-term PPAs with tenors of 10 to 15 years, only off-takers with good credit ratings can be considered.
“From today’s perspective, we deem it unrealistic to achieve political wind energy installation targets exclusively on the basis of PPAs due to the limited availability of creditworthy offtakers. In order to enable the much-needed expansion of renewable energies and to achieve the CO2 reduction targets, PPAs make sense as a supplement to a subsidy regime,” Bonanni concluded.