OCTOBER - 20239of local content rules and require different strategies as countries work to ensure compliance with World Trade Organization regulations that restrict local content policies. The size of the economy compared with the size of the offshore wind opportunity will also influence local content rules. For offshore wind-industry participants, the ability to establish and mobilise local workforces and industries will be needed to compete effectively on local content.Systems integration: Systems integration involves combining offshore wind projects with other technologies and capabilities that help economies decarbonise and produce greater value from the offshore wind project. It can include, for instance, pairing offshore wind with electrolysers to produce hydrogen, energy storage, interconnections to multiple regions, providing ancillary services and floating solar projects.Systems integration will be most important in markets where the share of renewable resources is high, providing reliable supply is increasingly challenging and where governments are committed to reaching net-zero targets and will, therefore, support green hydrogen development. The three wind-energy islands proposed in Denmark and Belgium that pair together in different combinations offshore wind, interconnections to multiple markets, storage and hydrogen production are the most prominent and ambitious examples of systems integration to date.Wood Mackenzie expects more markets to adopt systems integration requirements as the share of renewables increases. Systems integration presents significant challenges to some offshore wind players, as the capital and range of capabilities needed spill over into additional technologies, power-market wholesale marketing and trading capabilities, and developing markets for green hydrogen.Ecological mitigation: Addressing environmental impact and coexistence with fishing and aquaculture will be critical to quelling stakeholder opposition to offshore wind projects. Most offshore wind projects are closed off to other users of the sea, which impacts commercial fishing, in particular. With offshore wind acreage set to grow rapidly in the coming years, finding ways to enable coexistence with other uses will improve the chances of success for developers.Optimised use of the sea is most important in areas such as continental Europe, where space is more limited. This is pushing developers to use larger turbines to enable greater MW per square kilometre. However, increasing MW/km2 can also have a detrimental impact on capacity factors.Successfully addressing ecological mitigation requires an understanding of and willingness to collaborate with other users of the sea early in the project lifecycle. Technological innovation will be required to diminish the environmental impact during installation and optimise the output of the turbines, which will, in turn, reduce the acreage required per GWh and, ultimately, not only reduce the environmental impact but possibly leave it improved.Sustainability: One final factor that is just starting to enter tenders, but which will soon become another frequent parameter, is sustainability. Sustainability will primarily take two forms in offshore wind ­ reducing the lifecycle emissions of offshore wind projects and the recyclability of the projects. Offshore wind is one of the lowest CO2-emitting renewable technologies per KWh. Still, there are opportunities to reduce emissions intensity such as procuring green steel, reducing the length of supply chains to cut emissions from transport, and purchasing parts produced in countries with greener electricity supplies.With 85% to 95% of offshore wind turbines already recyclable, the challenge has been turbine blades, which are made of composite materials such as glass or carbon fibre. Innovations over the past year have created a path for the blades to be recycled, paving the way for policymakers to use recyclability as a bidding criterion in tenders. Indeed, recyclability is already lined up to be part of three upcoming tenders. Systems integration will be most important in markets where the share of renewable resources is high, providing reliable supply is increasingly challenging and where governments are committed to reaching net-zero targets
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