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European Offshore Wind Market Scheduled for Rebound in 2024

iStock
iStock

Published Jan 7, 2024 11:38 PM by The Maritime Executive

According to an analysis by S&P Global Commodity Insights, European nations will undertake about 50 GW of new offshore wind auctions in 2024, taking significant steps forward towards a goal of 300 GW of offshore wind by 2050.

A rebound is expected after 2023 proved troublesome for the European offshore wind sector. Factors such as surging raw-material prices, high borrowing costs and supply-chain challenges were blamed for the fallout. This saw offshore wind projects in key European markets canceled as losses also bogged down major renewable energy companies.

Remarkably, the European Union sought immediate action from member states, culminating in a new European Wind Charter. Signed last month by 26 energy ministers and more than 300 companies from the wind energy sector, the charter commits signatories to 15 immediate actions, including strengthening the competitiveness of Europe’s wind value chain.  

Against this background, S&P Global projects that wind auctions in 2024 will span established markets around the North Sea, including the UK, Germany, the Netherlands and Denmark, as well as upcoming markets Norway, Ireland and Finland, which are in the initial phase of tapping into offshore wind resources.

Among the highly anticipated auctions this year is the sixth contracts for difference (CFD) auction in the UK, which failed to attract a single bid last year. The low bid ceiling offered by the government at the time dissuaded developers to stay away from the auction. This has already been rectified: the UK government increased the price cap for 2024 by almost 66 percent, from $56/MWh to $92/ MWh in 2012 prices. As a result, the energy lobby group RenewableUK projects that the 2024 auction round could add more than 8 GW of potential offshore wind capacity.

Other notable offshore wind auctions this year include the 4 GW Ijmuiden Ver in Netherlands. Denmark is also expected to launch around 9 GW of offshore wind auctions spanning five different sites, and Germany has also planned to hold tenders for 8 GW of new offshore wind capacity in 2024.

Meanwhile in France, the government has earmarked $4.5 billion through funding from European Commission for construction of two floating wind farms, each with a capacity of between 230 MW to 280 MW. The tender for the two sites is scheduled to launch this year. In addition, France is also expected to announce winners of four separate tenders for fixed-bottom wind farms that have been finalized recently, including the 1.5 GW Normandy 2 and 1 GW Sud- Atlantique.