Offshore wind reaches crossroads, as spiraling costs and supply chain issues force developers to reassess projects - EY research
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Arnaud de Giovanni, EY Global Renewables Leader, says:
"The offshore wind sector has reached an inflection point at a time when the climate emergency is demanding urgent investment to meet global net zero targets. For offshore wind to fulfill its role in global decarbonization, it is necessary to mitigate risks that are beyond the control of developers, guaranteeing them a reasonable return on their investments. Tensions in the offshore supply chain could be alleviated by standardizing technologies, offering greater certainty to manufacturers and developers. And governments need to devise strategies that simplify and expedite the consenting process, minimizing risks between the issue of offtake agreements and final investment decisions."
Ben Warren, EY Renewables Corporate Finance and RECAI Chief Editor, says:
"The UK's recent challenges in the offshore wind sector echo a broader, global struggle. When auctioning contracts for offshore wind generation, governments need to reflect economic conditions in the design of the auction. Considering moving away from cost-only auction formats and incorporating factors other than cost, such as environmental considerations and job creation, would boost the supply chain, improve deliverability and benefit wider society."
Nordic countries climb the Index; Japan and Chile fall in the rankings
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The top three RECAI markets remain unchanged. The US retains 1st position, fuelled by significant solar growth as a result of incentives from the Inflation Reduction Act. Germany remains in 2nd position, having experienced substantial growth in its onshore wind sector; new capacities installed by the end of September surpass the total installed in 2022. And despite halting national-level subsidies, China continues its upward trajectory in offshore wind, maintaining its overall 3rd position.
The Nordic countries continue to pursue their renewable energy ambitions, with Denmark, Sweden, and Norway climbing two, three, and five places respectively.
Japan slips three places to 13th position. Despite abundant natural resources and a commitment to reduce fossil fuels, it is falling behind other leading economies in terms of solar and wind deployment. Similarly, Chile drops two spots to 16th position. Notwithstanding new battery storage targets, Chile continues to struggle with intermittency issues due to solar curtailment across the country.
To view the RECAI Top 40 in full, the normalized RECAI ranking and the corporate power purchase agreement index, as well as analysis of the latest renewable energy developments across the world, visit ey.com/recai.
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