Global Offshore Wind Industry in Shambles

Offshore Wind Turbines
November 22, 2023

The U.S. offshore wind industry, once seen as a beacon of growth in the renewable energy sector, is facing a turbulent period, with BP’s renewables boss going so far as to declare it “fundamentally broken.” This revelation comes as BP and Equinor grapple with setbacks and a significant $840 million write-down of their offshore wind projects off the coast of New York.

Series of challenges

Various challenges have cast a shadow over the offshore wind landscape globally. Equipment reliability issues, supply chain disruptions, and escalating costs have marred the industry’s recent successes. Even Orsted, the world’s largest offshore wind developer, is not immune, signalling potential write-downs of up to $5.6 billion after pausing the development of U.S. offshore wind projects.

The permitting obstacles, delays between signing power purchase agreements and project completion, and a lack of inflationary adjustment mechanisms are some of the many reasons triggering a challenging overview of the industry.

In response to these challenges, BP and Equinor are closely examining a 10-point proposal from U.S. regulators. This proposal aims to expedite project bidding in an “accelerated” process, providing a potential lifeline for companies grappling with financial setbacks.

While the challenges in the U.S. offshore wind industry are apparent, it’s crucial to recognize that these setbacks are not unique to a single region. The UK, a prominent player in offshore wind, recently faced a disheartening outcome in its latest offshore wind auctions. The failure to attract a single bid was attributed to global inflation and supply chain challenges, prompting calls for a re-evaluation of pricing caps that may be hindering industry growth.

Pivotal moment

The Global Wind Energy Council (GWEC) views the UK’s offshore wind auction failure as a pivotal moment for the industry globally. The council criticised the UK’s approach, emphasising the need for policies that attract investment and jobs rather than engaging in a race to the bottom on pricing.

As the offshore wind sector grapples with these challenges, industry stakeholders, governments, and investors must collaborate to address fundamental issues. Lessons must be learned, not only from the U.S. but also from global experiences, to ensure the long-term sustainability and success of the offshore wind industry as a key player in the transition to cleaner energy.

Public Relations offers strategic initiatives

In the wake of recent setbacks within the global offshore wind industry, Public Relations emerge as a crucial tool for advocating collaborative solutions between wind energy companies and the local stakeholders, including government. Through strategic PR initiatives, the industry can not only weather the storm but also ensure, for example, such auctions are financially viable.

Click here to find out more information on BCM’s Renewables PR Industry Experience.

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