European Developers Propose a New Offshore Wind Deal

With the European wind sector facing competitiveness and security challenges, wind developers in the region have issued European governments a new call to action to protect the lifeline of the industry.

With EU targeting wind to contribute 35% of its electricity by 2035, countries across the region are making strides in expanding renewable energy capacity, especially in the offshore wind sector. But developers are concerned that the build-out has slowed in the past few years with the offshore sector facing increased risk and uncertainty. Some of the factors contributing to this include cost inflation, declining commercial viability and lower investor confidence.

To reverse the downward trend, developers at this year’s WindEurope summit want EU governments to auction at least 100GW worth of Contracts for Difference (CfDs) over ten years. Through the auction, the governments should guarantee fixed price and indexed contracts to create bankable projects.

In addition, wind farm developers want governments to plan the commissioning deadlines of the 100GW evenly, with 10GW annually from 2031-2040. This will help create market predictability, while ensuring there is sufficient time for investments. These measures - backed by power purchase agreements - will help the European offshore wind industry achieve 15GW installations annually by the 2030s.

“Wind energy is already driving industrial growth and energy independence across Europe, we just need to scale up. This calls for increasing viable demand for wind energy, and strengthening wind’s market environment,” said Henrik Andersen, WindEurope Chairman.

One of the notable challenges identified for competitiveness is the high electricity price in some European countries. In its report released this week, WindEurope said that the high electricity prices are driven by taxes and levies, slowing renewables-based electrification and undermining use in the industrial sector.

“Electricity is overburdened with taxes and charges compared with gas. In Spain for instance, electricity charges for households are 19 times higher than gas charges,” reveals the report.