Renewables

Europe adds only 2.1 GW in offshore wind in H1 2023

Europe builds only 2.1 GW of new offshore wind in H1 2023 windeurope

Photo: Nicole Klesy from Pixabay

Published

August 18, 2023

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Published:

August 18, 2023

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European companies commissioned just 2.1 GW in offshore wind capacity in the first half of 2023, of which 1.4 GW in the European Union, while final investment decisions were taken for a further 5 GW, according to WindEurope. The industry association stressed the EU should be adding an average of 11 GW of offshore capacity per year by 2030 to reach its energy and climate targets.

The offshore wind supply and logistics chain urgently needs new investments – and the EU’s Net-Zero Industry Act won’t deliver them in its current form, WindEurope said.

Auction design is also another red light, so governments must allow for cost indexation and avoid uncapped negative bidding.

In the first half of 2023, Europe’s offshore wind capacity grew by 2.1 GW to 32 GW. The Netherlands accounted for more than half of the additions, and the rest was in the United Kingdom, Germany, and Norway.

Investments were delayed in 2022 over the regulatory uncertainty caused by government intervention

WindEurope pointed out that investments were delayed in 2022 over the regulatory uncertainty caused by government interventions in power markets.

Even though it was always been clear that more would be built in the second half of the decade, the current pace, with 1.4 GW in H1 2023 in the EU, is still below par and it has catching up to do, the association said.

It warned that last year didn’t bring a single new investment in large-scale offshore wind in Europe. Final investment decisions were delayed as inflation added to project costs and investors were spooked by government interventions in electricity markets. Six big projects worth a combined EUR 15 billion reached the investment phase, for 5 GW of capacity, but some endeavors remain delayed and many investors are still hesitant, the association stressed.

EU needs to put money on the table

Europe needs to expand its offshore wind supply chain to support this big ramp-up but, according to WindEurope, necessary investments in factories, workforce, and infrastructure are not happening fast enough either.

“Europe needs to fix its regulations (e.g. permitting and market design) to make the business case for such investments. Public support will also be needed. But the EU’s Green Deal Industrial Plan and Net-Zero Industry Act fall short as they stand,” the association said.

It added that the EU needs to put money on the table that would help scale up the supply chain – and not just fund innovation.

Negative bidding is not good

According to WindEurope, governments need to fully index auction prices to cover inflation between the auction and the actual procurement of equipment. Offshore wind turbine costs have increased by up to 40% over the last two years.

If governments don’t recognize it, they’ll lose projects, just like the UK has lost Vattenfall’s Boreas offshore wind project, the association said.

Governments also, in its view, mustn’t fall for the temptation of uncapped negative bidding – requiring developers to pay however much they can for the privilege of building an offshore wind farm.

Of the 12 GW offshore wind awarded in actions so far this year, 60% was through uncapped negative bidding, the report notes. It adds significantly to the costs of building and developers will have to pass them on to electricity consumers and the supply chain, both of which are already struggling, WindEurope said.

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