Offshore Wind This Year: Reflections from the Helm
global MANAGING DIRECTOR – RENEWABLES
As 2024 draws to a close, the offshore wind sector finds itself at a critical juncture. The turbulence of 2023—marked by high interest rates, inflation, and escalating costs—has left a lasting imprint, demanding recalibration across the industry.
Looking back on the past year through a fresh lens, it’s clear that 2024 has been a year of adaptation, resilience, and strategic pivoting.
Navigating Through the Ripples of 2023
The economic headwinds of 2023 left many industry players grappling with hard truths. Inflationary pressures, supply chain disruptions, and surging interest rates forced developers to reassess project portfolios. Margins were squeezed, high-risk projects were deferred, and market participation was re-evaluated. TotalEnergies’ decision to pause its U.S. Attentive Energy project in November serves as a stark reminder of these ongoing challenges.
While material costs like steel and aluminium have stabilised somewhat from their 2021 and 2022 peaks, volatility persists. Debt—which now constitutes nearly 15% of project costs—continues to weigh heavily. The industry’s narrative has shifted from a race to the bottom on costs to a focus on stability and sustainability. Offshore wind remains a cornerstone of decarbonisation strategies, but its pathway has become more pragmatic, balancing ambition with realism.
Policy Shifts: Recognising Industry Realities
Governments have begun adjusting their approaches to reflect the new market dynamics. Competitive auctions, which often result in contracted offtake prices well below auction strike prices, are being restructured. European nations, in particular, are rolling out improved subsidies and better indexation mechanisms to ensure long-term viability. These changes align with my earlier comments about the need for policy frameworks that match the industry’s operational realities. In 2024, we saw these adjustments take hold, offering a measure of optimism for the sector’s future.
Geopolitical Headwinds: Global Challenges
On the geopolitical stage, shifting political climates have introduced new uncertainties. Changes in leadership and varying levels of commitment to renewable energy in key markets have raised concerns about delayed projects and increased risks. This has underscored the fragility of political backing in critical regions, reminding the industry of the importance of diversified strategies and resilience to external shocks.
Across the Atlantic, Europe has faced its own challenges. The rise of Chinese wind turbine manufacturers (WTGs) in European markets has been a significant development. Companies like Mingyang, Dongfang and Goldwind are gaining traction with competitive pricing and advanced technology, including prototypes exceeding 18 MW.
However, their entry into the European market is not without hurdles, including quality perceptions, trade restrictions, and geopolitical tensions. The EU’s investigation into Chinese subsidies has further complicated the landscape, emphasising the delicate balance between cost efficiency and geopolitical considerations.
Floating Wind: Opportunities Amidst Challenges
Floating wind technology has emerged as a focal point for innovation and investment in 2024. While it offers immense potential for deep-water deployment, it also presents significant cost and infrastructure challenges. COP29 in Baku underlined the critical role of floating wind in global climate strategies, with commitments to funding pilot projects and incentivising deployment in emerging markets.
The sector is at an inflection point. Developers and financiers must navigate the complexities of integrating new technologies, addressing supply chain constraints, and aligning with evolving policy frameworks. Despite the challenges, the broader message from 2024 is clear: offshore wind, particularly floating wind, remains central to achieving net-zero ambitions.
A Year of Reflection and Resilience
As we prepare to enter 2025, the offshore wind sector stands poised to build on the lessons of 2024. This year has been one of introspection and recalibration, but also one of progress. The industry’s resilience and capacity for innovation have laid the groundwork for a more stable and sustainable future.
In Part 2 of this series, we’ll delve deeper into the cultural and technological shifts shaping the sector, exploring the role of collaboration and innovation in driving the next wave of growth.
Stay tuned!
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