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Europe sees offshore wind boom in 2017, but long-term market prospects unclear

Europe added a record 3,148 MW of offshore wind capacity in 2017, but firm long-term commitments will be needed to maintain the sector's momentum, WindEurope said Feb. 6.

According to the industry group's latest market report, Europe overcame a slowdown in new capacity additions in 2016 to increase the continent's total installed capacity to 15,780 MW as of the end of 2017. Thirteen offshore wind farms were finished, including the world's first floating offshore wind farm, Hywind Scotland. An additional 2,900 MW of projects are under construction.

The increase is a sign that "offshore wind is now a mainstream part of the power system," said WindEurope CEO Giles Dickson, thanks to declining costs and Europe's target of obtaining 35% of its electricity from renewable sources by 2030. By 2020, WindEurope expects offshore wind capacity in Europe to reach 25,000 MW. To reach that goal, governments will need to make more firm commitments to offshore wind, Dickson said.

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"We'll see further growth in 2018 and 2019. But the longer term outlook for offshore wind is unclear," he said in a statement. "Very few countries have defined yet what new volumes they want to install up to 2030."

Under current forecasts, European Union member countries will see the number of new grid-connected projects drop off as the countries hit their green energy goals for 2020 as part of the EU's Renewable Energy Directive. "Much depends what new offshore wind volumes governments commit to in the National Energy and Climate Action Plans for 2030," Dickson said.

The transition from government-subsidized feed-in tariffs to competitive auction systems has slowed the flow of money coming into the sector. New investments fell from €18.2 billion in 2016 to €7.5 billion in 2017, according to the report. However, auctions held in 2016 and 2017 should lead to €9 billion in final investment decisions in 2018.

Governments will play a key role in nurturing investments and maximizing Europe's potential, Boston Consulting Group wrote in a separate Jan. 24 report. Raising capacity targets and improving grid infrastructure, in particular, will help grow the market.

"If governments invest significantly in grid infrastructure and expand their tender pipelines, European capacity could rise by a [compound annual growth rate] of 16% — or 7 to 8 GW per year — and reach about 100 GW by 2030," the BCG analysts concluded.