In its latest report, Overcoming Turbulence in the Offshore Wind Sector, the Energy Transitions Commission (ETC) discusses the offshore wind industry’s challenges, finding a need for a better effort between governments and industry leaders to restore market confidence, reduce costs, and accelerate the transition to cleaner energy.
Offshore wind has proven to be a powerhouse that provides large-scale, cost-competitive, clean electricity globally. In Western Europe, costs have plummeted by 60% from 2015 to 2022. This period also saw a substantial increase in global capacity—from 12 gigawatts (GW) in 2015 to 74 GW in 2023, powering approximately 90 million households. The sector faced headwinds in 2022-2023, such as inflation, supply chain issues, and higher interest rates, particularly affecting the U.K. and U.S. markets and leading to multiple project cancellations.
Although recent cost increases are mainly temporary, with costs already declining in Western markets, the ETC warns that higher finance costs might persist longer. China’s market has demonstrated how continued technological advancements and scaling can drive costs down even further. Adair Turner, Chair of the ETC, stresses, “Offshore wind is vital for the clean energy transition. It can generate electricity when the sun isn’t shining and doesn’t compete for land use. Now is a critical period to rapidly accelerate wind capacity if the world is to achieve net-zero emissions by mid-century. Governments should act now to restore market confidence by setting ambitious offshore wind targets and design auctions and contracts which provide market certainty and drive costs down.”
The International Energy Agency (IEA) highlights the immense potential of offshore wind, estimating that offshore wind could one day produce over 420,000 terawatt-hours (TWh) annually, far exceeding current global electricity needs. To support a net-zero economy, however, wind generation needs to increase tenfold by 2050, complemented by a thirtyfold increase in solar capacity.
Despite the potential, many countries need more installations to meet 2030 net-zero targets. Alistair Phillips-Davies, CEO of SSE, says, “The energy system of the future will depend on clean, secure, and cost-competitive electricity and this report shows the critical role offshore wind has to play. But to fully realise the technology’s potential, policymakers, system operators, regulators and the industry need to re-focus on scaling up the sector's capacity. Those that move fastest will unlock significant and lasting economic benefits.”
The ETC’s recommendations for governments include setting clear targets and auction schedules to ensure consistent capacity addition, designing risk-reducing auction mechanisms, streamlining regulatory processes, and promoting production efficiencies. Addressing specific supply chain challenges, like providing the availability of installation vessels for more giant turbines, is also critical.
By focusing on recommended areas, governments and industry can jointly propel the offshore wind sector toward a robust growth trajectory that fosters industrial growth, job creation, energy security, and emission reductions.
