Offshore wind industry seeks ‘New Deal’ at North Sea Minister’s meeting

Ministers are meeting to discuss how they can strengthen cooperation on offshore wind. Industry body WindEurope says the situation in which the industry finds itself is such that their focus needs to be how can they ‘help rescue offshore wind.’

The wind energy body says a ‘New Deal’ for offshore wind is required that can then be agreed when the North Seas Heads of Government meet in Hamburg in January 2026. WindEurope also argues that a Tripartite Contract for the development of offshore wind is essential, and says the European Commission needs to adopt the concept by the end of this year.

“Ministers should also focus on how they can help get those projects that have won recent auctions over the line, to a final investment decision,” said WindEurope. “The urgency is acute. There is a real risk as things stand that industry and investors lose interest in offshore wind.” It says the cost of inaction would be huge. Europe would miss out on jobs and investment. It would lose its technology leadership in offshore wind. Heavy industry would find it harder to decarbonise and remain competitive. And an essential element of Europe’s energy strategy would be gone.

“Europe needs more offshore wind to deliver its energy goals. Governments and society want it, and industry wants it to help them decarbonise. But as things stand the necessary expansion of offshore wind is not happening,” WindEurope argues.

“The business case for new offshore windfarms is not where it was and where it should be. A number of projects are getting postponed. Some Government auctions are failing. Europe needs a New Deal for offshore wind, where Governments commit to volumes and action, and industry commits to cost reductions, investment and jobs.”

WindEurope says Europe needs much more offshore wind, to strengthen energy security and reduce dependency on fossil fuel imports, bring down electricity prices, help electrify industry and meet climate targets, but it isn’t building enough capacity. It was meant to have 120 GW by 2030. It has 37 GW today and at best will get to only around 70 GW by 2030.

Over the last year there have been failed auctions in Germany, France, the Netherlands, Denmark and Lithuania. The current UK auction looks like it will only deliver half the volumes that were expected. At the same time many projects that won auctions over the last three years are struggling to get the necessary investments over the line.

“The problems vary from country to country. But the common thread is that the business case for new offshore wind is weaker than it used to be and needs to be,” WindEurope said. “Governments are taking action to improve things. Denmark, the Netherlands and – probably – Germany are moving away from the failed ‘negative bidding’ auction model to the much better Contracts for Difference (CfDs) that other countries use, which provide stable revenues, with windfarms paying the difference to Governments if they earn more than their auction price. Some other countries are then indexing their CfDs more and setting more realistic price ceilings in their auctions. But the collective Government effort is not enough.”

The wind energy body argues that a New Deal for offshore wind is needed in which Governments commit to clear volumes for new build, specifically 15 GW a year between them over 2031-40, with 10 GW a year of that backed by CfDs and the rest covered by agreements with industry. “This granular visibility on volumes and the prospect of stable revenues would unlock commitments from the wind industry on cost reduction, jobs and investments. And a collective effort is also required to ensure the grid and other necessary infrastructure is in place,” WindEurope said.

“Heavy industry is hungry for more offshore wind. It is seen as a stable form of energy which can reduce their energy costs and help them decarbonise. Companies want to sign power purchase agreements (PPAs) with offshore wind, but the prices don’t work for them today, not least if they have to cover the cost of electrifying their production.”

The Tripartite Contract can help, said WindEurope, the idea being that Governments act to de-risk investments in electrification of industry and in offshore wind, reducing costs so that the two sides can then agree a price. Public financial institutions would play an important role in the process. “But the Tripartite Contract will only work if the public sector action is meaningful. And the public financial support will need state aid clearance,” WindEurope concluded.