Offshore wind: Both challenges and enormous opportunities lie ahead

Business Developments & Projects

January 8, 2024, by Adnan Durakovic

The offshore wind industry has faced significant headwinds in the past couple of years, with most of the negative effects tracing their origin back to the start of the COVID-19 pandemic and the geopolitical turmoil caused by Russia’s aggression against Ukraine.

This has led to supply chain instability and cost inflation which has resulted in a number of projects being postponed and even canceled, most notably in the United States, with the latest example being bp and Eqinor’s Empire Wind project in New York.

The question that arises now is how best to respond to the pressures of the rising costs and keep the pipeline of projects as insulated from the negative effects of this doldrum as possible?

This was the main topic of the ‘Offshore wind: Business as (Un)usual’ session at the Offshore Energy Exhibition and Conference (OEEC) in Amsterdam.

A majority of panelists speaking at the session seems to agree that the best way to tackle these issues is to introduce standardization measures to the supply chain, and maybe focus a little less on constantly innovating and more on actually building out the projects that are in the pipeline.

This was certainly one of the sentiments expressed during the discussion.

“We talk about challenges a lot, but what we have ahead of us is an enormous opportunity,” Renske Ytsma, Director Offshore Wind Development Continental Europe at RWE, said.

Ytsma added that RWE plans to invest EUR 55 billion in renewable energy capacity by 2030, 35 per cent of which will be invested in offshore wind.

”Yes, costs have increased, inflation is there, interest rates are not the same as they were before, but we can deliver. And if the policies don’t go the way we had expected, let’s make sure that we deliver as an industry,” Ytsma said.

Other panelists included Tore Guldbrandsøy, Partner & Head of Benelux, Rystad Energy; Arnaud Wyers, Renewable Explorer, TotalEnergies; Frank Oomen, Head of Offshore Wind Benelux, bp; and Ruben Dijkstra, Managing Director Benelux, Ørsted.

According to Wyers, a lot of focus has been put on upstream, on the production, and the focus should also be on the rest.

”We are building a news system here, renewable system, so there is the grid that needs attention, and there is the demand that needs attention,” Wyers said.

”So if we want good business cases for our projects, we need to have good plans also for the electrification.”

Looking at the bigger picture, Oomen pointed out that one of the main challenges the industry will face in the next decade is deciding on the best way to add the electricity produced to the energy mix.

‘‘If you look at the challenges from our point of view, it is not the offshore wind itself,” Oomen said.

“The main challenge will now be, with all those electrons being produced offshore, how do we integrate them in the system in a proper way? Is it electrons to electrons? Is it electrons to molecules? I think that is the big challenge now for offshore wind.”

One of the topics discussed was the role of the governments in efforts to protect the industry from the negative effects of the current and future geopolitical and economic turmoils.

According to Dijkstra, governments should go beyond just setting new capacity targets to provide more certainty for the developers and accompany the set targets with policies that will drive the demand for green electrons.

”The days where the cost price reductions were the norm, we seem to have hit rock bottom and we see the cost of offshore wind going up,” Dijkstra said.

”The policy on creating the demand for these green electrons, green hydrogen, is what we need to drive this transition and to believe that these massive offshore wind targets will materialize. We need to make sure that we synchronize offshore wind supply with demand for decarbonization in industry.”

The whole session ‘Offshore wind: Business as (Un)usual’, is available for viewing below: