Offshore wind capex to beat oil and gas in Europe, experts find

Capital expenditure in the offshore wind sector will match that in the upstream oil and gas industry in Europe in 2021 and surpass it in 2022, according to an analysis by energy research and business intelligence firm Rystad Energy.

The analyst said the oil market collapse caused by the Covid-19 pandemic is set to delay several oil and gas developments in Western Europe, leading to a possible downwards trajectory going into 2022.

Due to these circumstances as well as increasing activity in the offshore wind sector, Rystad has predicted the two markets could reach parity as soon as next year.

A spokesperson for the group said: “We anticipate that capital expenditure on offshore wind will surpass upstream O&G spending in Europe in 2022.”

The capex on offshore wind in Europe soared past the $10 billion (€8.85 billion) mark back in 2015 and has since hovered in between $10-15 billion (€8.85-13.3 billion) every year since, Rystad found.

Annual levels are expected to rise to about $13.8 billion (€12.2 billion) by the end of this year, consistently growing to more than $22 billion (€19.5 billion) by 2022, for an increase of approximately $11.2 billion (€9.2 billion), the analyst said.

The abundant oil supply and reduced demand for oil have taken their toll on the oil price, and, as such, the industry has stagnated and is expected to decrease by more than $8 billion by the same point by 2022.

Rystad Energy project manager for offshore wind Alexander Flotre said: “Offshore wind development in Europe is expected to flourish in the coming years as countries strive to reach their ambitious 2030-targets – and large investments will be required.

“Commissioning activity is expected to increase towards 2025, and projects expected to be operational in 2023-2025 are already driving up capital expenditure in 2020. This trend will continue in the coming years.”

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