Britain’s Offshore Wind Industry Is Running Out Of Air

The offshore wind industry has long been the poster child of Britain’s push into green energy.

Championed by politicians as a controversy-free alternative to onshore wind and solar farms, the Government wants offshore wind capacity to surge from 13 gigawatts today to 50 gigawatts by 2030.

“Offshore wind provides a secure and resilient source of energy,” Grant Shapps, the Energy Security Secretary, told MPs last month. “And we are already global leaders.” [emphasis, links added]

Yet behind the scenes, the picture looks far less rosy.

A string of major projects is under threat from spiraling costs, sclerotic planning rules, and shrinking subsidies.

Industry sources warn that it risks tilting the economy into negative territory. “Things are very hard out there right now,” one source says.

Schemes developed by Ørsted, Vattenfall, and Red Rock Power are among those understood to be most at risk, despite them only winning subsidy contracts last year.

Adding to concerns is a sense that ministers are not listening to the industry’s warnings, with more than one senior figure describing Shapps as a “remote” figure who rarely meets with them.

“It’s not like he’s beating down the industry’s door, let’s put it that way,” says one insider.

The malaise is triggering fresh questions about whether the Government’s 2030 target is still achievable – and if the long–assumed maxim that offshore wind costs will keep falling can hold.

“It has turned into a perfect storm for the industry,” says Ana Musat, executive director for policy at industry group RenewableUK.

Britain’s offshore wind industry exploded over the past decade, with most development concentrated off the east coasts of Scotland and England.

Capacity has grown tenfold since 2010, when it stood at just 1.3 gigawatts, with ever-bigger turbines boosting output.

One example is Dogger Bank, a phased development in the North Sea that will eventually generate enough power for six million homes.

It will use turbines more than twice as tall as Big Ben and will be the largest offshore wind farm in the world.

But rising supply chain costs globally – fueled by energy prices that jumped after the Ukraine war – have slammed the breaks on this progress.

Inflation has also forced loss-making manufacturers of components such as turbine blades and nacelles to demand higher prices, just as rising interest rates are making it more expensive for projects to secure financing.

General Electric’s renewables business, which makes the 260-meter-tall Haliade X turbines used at Dogger Bank, reported a $2.2bn (£1.7bn) loss in 2022. The division has been loss-making for eight straight quarters.

Rival manufacturers Siemens Gamesa, Vestas, and Nordex also posted further cumulative losses of €3bn in the same year, notes Kathryn Porter, an independent analyst at energy consultancy Watt Logic.

“There has been this narrative that wind-farm costs are falling and will keep falling, but the reality is these prices are too low.

“Turbine manufacturers have effectively been selling at a loss – and those losses have become huge now.”

Other factors are aggravating the situation too. The “bigger is better” approach to turbines is leading to more failures, costing manufacturers more in warranty claims, Porter says. …

In an effort to cut costs, some developers are attaching the turbines using cheaper foundations on the sea floor, the executive adds.

“Offshore wind is not the Nirvana that everybody thinks it is,” they add. “The risks are enormous. And the rewards are not very good.

“Everyone is going for the biggest turbines, the cheapest foundations, and they’ve all gone for cabling solutions that mean if you get a failure, you could lose the wind farm.”

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