Offshore wind supply chain 'can boost profits'

Posted on 28 January 2025

Offshore wind supply chain 'can boost profits'
Report claims industry can thrive despite 'critical systemic challenges'

The offshore wind supply chain can boost profits despite challenging times ahead, according to a new report from Shoreline Wind.

The white paper offers an optimistic analysis of the opportunities and challenges facing the sector as the industry prepares to meet ambitious 2030 clean power targets.

The global offshore wind sector is on the brink of unprecedented growth, with a record 10.8GW of new capacity installed in 2023, bringing the total to 75.2GW worldwide.

The Global Wind Energy Council (GWEC) forecasts that 140GW of new installations will be needed between 2024 and 2028, requiring annual growth rates nearly triple the current pace.

With demand surging, driven by ambitious 2030 targets, offshore wind is uniquely positioned to drive a significant portion of the energy transition, the report said.

Despite these opportunities, the white paper warns that the supply chain must address several systemic challenges.

Competitive tenders have historically led to a “race to the bottom”, forcing developers to accept lower strike prices and pay higher costs for development rights.

For example, UK strike prices plunged from £150/MWh in 2014 to under £40/MWh by 2020, while in Germany, developers recently paid €12.6bn for 7GW of development rights.

This competitive environment has contributed to project delays and, in some cases, failed tenders, including the recent auction in Denmark.

The ripple effects of these dynamics have tightened profit margins across the supply chain, curtailing investment in innovation and scaling capacity, the report warned.

Smaller supply chain companies are particularly vulnerable, with many unable to compete against lower-cost rivals.

Shoreline Wind founder and chief product officer Ole-Erik Endrerud said: “Offshore wind’s global supply chain is facing critical systemic challenges.

“To achieve the 2030 targets, the industry needs to move beyond short-term cost-cutting and focus on building a resilient, innovative supply chain that can deliver consistently, and at scale.”

Shoreline Wind’s white paper calls on governments to provide clearer policy direction, driving long-term investment security.

Developers can also drive change by removing barriers for supply chain companies. Standardised contracts, improved payment terms, and greater predictability can empower smaller firms to invest in innovation and efficiency, the report said.

Source: reNews (https://renews.biz/98426/offshore-wind-supply-chain-can-boost-profits/)

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