Overcoming Turbulence in the Offshore Wind Sector

In its latest Insights Briefing Overcoming Turbulence in the Offshore Wind Sector the ETC highlights the need for governments and the offshore wind industry to join forces and restore confidence in the market, drive down costs and accelerate the clean energy transition. Strong government support and targeted action are required to ensure that offshore wind has the potential to cheaply deliver lots of clean electricity around the world.  

Offshore wind is already producing large-scale clean electricity at a competitive cost worldwide. From 2015 to 2023, global capacity has expanded 6x from 12 to 74 GW, producing energy for around 90 million households, and with vast potential to scale further.   

However, in 2022-2023, inflation, supply chain bottlenecks and higher interest rates led to rising offshore wind costs. A perceived offshore wind ‘crisis’ ensued, particularly in UK and US markets, as many projects and contracts there were cancelled. 

While cost increases were significant, they are expected to be short-term, and there are promising future prospects for further substantial cost declines and increases in deployment. 

The analysis identifies five key recommendations to return confidence in offshore wind around the world and bring down costs: 

1. Set clear targets for medium and long-term deployment growth (i.e. to 2035 and beyond), supported by a pre-defined schedule of government-backed auctions.
2. Design government auctions and contracts to increase the certainty that contracted volumes will be delivered.
3. Streamline planning, permitting and grid connection processes while also reinforcing the grid.
4. Encourage harmonisation of turbine components and sizes to provide clarity on the features of turbines which will be installed in the future.
5. Address specific supply chain bottlenecks through targeted action (i.e. through guarantees or subsidies for transportation vessels where appropriate).