Europe’s energy transition under pressure
Offshore wind power is central to Europe’s decarbonisation and energy security strategy. It reduces dependence on imported fossil fuels, stabilises electricity prices, and helps heavy industries cut emissions. Yet despite strong demand from governments, citizens, and industry, the sector’s expansion has stalled.
Today, Europe operates 37 GW of offshore wind capacity, far from the 120 GW target set for 2030. At best, current trajectories suggest reaching only around 70 GW by 2030—barely half the planned goal.
Why offshore wind matters
Offshore wind is among the most cost-efficient renewable solutions. It is cheaper than new gas or nuclear plants, supports 100,000 European jobs, and strengthens industrial sovereignty as much of its supply chain is European-made. A single offshore turbine can power 16,000 homes—a symbol of clean, large-scale efficiency.
A wave of failed auctions
Over the past year, offshore wind auctions in Germany, France, the Netherlands, Denmark and Lithuania have failed to attract sufficient bids. In the United Kingdom, the latest tender may deliver only half the expected capacity. Meanwhile, many projects that succeeded in auctions between 2021 and 2023 now struggle to secure final investment decisions, undermined by inflation, supply-chain pressure, and unstable policy frameworks.
The common denominator across Europe: the business case for new offshore wind is weaker than it should be.
Shifting policy models
Some governments are adjusting course. Denmark, the Netherlands, and Germany are abandoning the flawed negative-bidding model in favour of Contracts for Difference (CfDs), which offer revenue stability. CfDs allow wind farms to pay back any extra profit beyond the agreed price to the government, ensuring predictability for investors.
Other countries are indexing CfDs to inflation and setting more realistic auction price ceilings. These measures are steps in the right direction but remain insufficient to unlock the investment needed to meet 2030 and 2040 goals.
A “New Deal” for Offshore Wind
Experts are calling for a New Deal for Offshore Wind, a coordinated European framework where governments commit to adding 15 GW annually between 2031 and 2040—with 10 GW per year under CfDs and the remaining 5 GW backed by industry agreements.
This commitment would give developers and manufacturers visibility, enabling the industry to promise cost reductions of up to 30%, new investments, and job creation. A coordinated approach must also ensure the expansion of grid capacity and supporting infrastructure, critical for connecting offshore wind to industrial demand centres.
Tripartite Contracts: Linking Wind and Industry
Heavy industries are eager to secure stable, low-carbon electricity through Power Purchase Agreements (PPAs) with offshore wind operators. However, current prices remain too high, particularly for energy-intensive sectors electrifying their production lines.
The European Commission’s proposed “Tripartite Contract” aims to bridge this gap. Governments would help de-risk investments in both offshore wind and industrial electrification, reducing costs on both sides and enabling viable PPA prices. Public financial institutions would play a vital role—but state aid clearance will be essential for its implementation.
This mechanism could become a cornerstone of Europe’s green re-industrialisation—if adequately funded and coordinated.
North Seas Ministers Meet in Ostend: A Defining Moment
Energy Ministers from the North Seas countries are meeting in Ostend to strengthen regional cooperation on offshore wind. Their discussions could shape the sector’s future.
The priority: adopt a New Deal for Offshore Wind, to be endorsed by Heads of Government in Hamburg in January, and fast-track the Tripartite Contract proposal before year-end. Ministers must also help advance stalled projects to final investment decisions, ensuring Europe doesn’t lose momentum.
The Cost of Inaction
Without decisive action, Europe risks losing its competitive edge in offshore wind. China is already outpacing Europe in new installations. The economic and industrial consequences would be severe:
- Lost jobs and investment opportunities;
- Declining technological leadership;
- Slower decarbonisation of heavy industry;
- Weakened energy security and resilience.
Europe’s offshore wind revolution—once a global success story—now stands at a critical juncture. Only a robust, united New Deal can restore investor confidence, drive down costs, and secure a sustainable, competitive energy future.
