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| Lots of good news – and good numbers – again in offshore wind  Things are looking up again for offshore wind in Europe. 2023 saw a record 4.2 GW of new offshore wind farms come online, up 40% on 2022. And €30bn of new investments were confirmed – covering 9 GW that'll be built over the coming years. The supply chain is also seeing a turnaround, with new factories announced in Poland, Denmark, Germany, the Netherlands and Spain. 2023 was the best year on record for new offshore wind installations in both the EU and across Europe as a whole. Europe built 4.2 GW of offshore wind in 2023. That's 1.7 GW more than in 2022. 3 GW of that was in the EU, an increase of 2.1 GW year on year.The Netherlands, France and the UK installed the most new capacity. This includes the 1.5 GW "Hollandse Kust Zuid" project in the Netherlands – now the world's largest operational wind farm. Record investments in new offshore wind Offshore wind investments in Europe also reached a new record. A total of €30bn was raised across 8 wind farms. This will finance 9 GW of new offshore capacity. This record comes after legal uncertainty and unhelpful market intervention had led to a drop in offshore wind investments, falling to an all-time low of €0.4bn in 2022. It also means that projects which had to postpone their final investment decision in 2022 are now moving ahead – excellent news for Europe's energy security and competitiveness. 2023 saw several positive developments, leading to new confidence and optimism among Europe's offshore wind players. The European Union published its EU Wind Power Package with 15 immediate actions to support the European wind sector. 26 European Governments signed the European Wind Charter, committing to swiftly implement the actions ascribed to them in the Wind Power Package. Over in the UK the Government raised the ceiling price by 66% for the upcoming offshore auction round (AR6). Not a single offshore wind developer had bid in the 2023 CfD auction round (AR5) after the UK Government failed to adjust the maximum ceiling price to the market reality of inflation and higher input prices. The new AR6 ceiling price could help the UK attract record investment in offshore wind in 2024. That's not the only good news from the UK: Orsted reached final investment decision on Europe's biggest project, the 2.9 GW Hornsea 3 offshore wind farm in the UK. RWE acquired the 4.2 GW Norfolk Offshore Wind Zone portfolio and underlined its determination to resume the 1.4 GW Norfolk Boreas project, which has previously been halted. 2024 – a big year for offshore wind auctions If all countries run their 2024 auctions as planned at least 40 GW will be auctioned this year. Germany, Denmark, the UK, France, and Netherlands are the top five countries auctioning capacity over the next two years. France will announce the results of Europe's first commercial-scale floating offshore wind tender. Germany will auction 8 GW in 2024 alone. As a comparison: Europe auctioned 13.5 GW of new offshore wind capacity in 2023. But 70% of all auctions in 2023 used uncapped negative bidding, asking wind energy developers to pay for the right to build an offshore wind farm. This needs to change! Uncapped negative bidding poses several big risks. Developers have to cover the additional costs of negative bids. They can either pass them on to the electricity consumers, who are already suffering from high prices, or on to the wind energy supply chain, which is already struggling with inflation and cost increases. Negative bidding also adds to the overall project risk which in turn drives up capital costs. This is particularly challenging with higher interest rates now. As a result uncapped negative bidding puts the realisation of projects at risk. Take Germany: none of the large projects awarded under their uncapped negative bidding auctions in 2023 has reached final investment decision so far. Big investment in Polish offshore wind Poland's first commercial offshore wind farm, the 1.2 GW Baltic Power project, reached final investment decision in 2023, marking the start of Poland's offshore wind development plans. By 2040 Poland wants to have 18 GW. Today Poland does not have any offshore wind. Ambitious expansion targets, legal certainty and clear visibility on future projects are key to attracting supply chain investments. And Poland's ambition is paying off. Vestas announced plans to build a new blade factory in Szczecin, Poland for its flagship V236-15.0 MW offshore wind turbine. The factory is expected to start operations in 2026. Together with Vestas' previously announced plans to establish an assembly factory for offshore nacelles, Vestas could provide 1, 700 direct jobs in Szczecin by 2026. Windar Renovables has signed a concession agreement with the Port Authority of Szczecin for a planned offshore tower factory in Poland creating an additional 450 direct jobs. Baltic Towers are building another new tower factory in Gdańsk. Scaling up the supply chain In addition to the investments in Poland, three new foundation manufacturing facilities for offshore turbines are being built by Sif in Rotterdam, Baltic Structures in Esbjerg and by SEaH in the UK. Europe needs more of these investments to avoid bottlenecks in the offshore wind supply chain. Europe is set to build around 5 GW of offshore wind annually over the next three years. This is not enough to reach Europe's climate and energy security targets. It adds to the need to install more offshore wind towards the end of the decade. European countries will need to build 24 GW a year in the period 2027-2030 to reach the 2030 targets. But today's offshore wind supply chain can only produce around 7 GW each year. Investments in expanded and new factories, like the one now announced by Vestas, are indispensable. In parallel Europe needs to ensure the supporting infrastructure for offshore wind is in place. This means investing in grids, ports, and vessels. Here we've seen the first signs of progress. Europe's leading manufacturers of offshore power cables are all expanding their factories which should ensure they can meet the growing demand for cable to connect offshore wind farms in Europe. Bladt Industries are building a new factory in Denmark for offshore substations. Smulders and Neptun Werft are building a new facility in Rostock (Germany) to make converter platforms. And Dragados are expanding their offshore substation platform manufacturing operations in Cadiz (Spain). write your comments about the article :: © 2024 Construction News :: home page |