Offshore wind investment increased by 79% in 2023, reaching a new high, according to BloombergNEF’s Renewable Energy Investment Tracker 1H 2024. Global offshore wind investment reached $76.7 billion, with China remaining the largest offshore wind market despite experiencing a down year, followed by the UK and the US.
The offshore wind industry faced challenges in 2023. Approximately 6.9GW of projects in the US and the UK cancelled their revenue contracts last year due to rising equipment and financing costs, permitting and grid connection hurdles, and supply chain delays, which affected many developers’ expected project returns. Despite the turmoil, firms such as Ørsted, Iberdrola, Northland Power, and Mitsui & Co were among those that reached final investment decisions on offshore wind projects in 2023.
BNEF predicts that governments will be more willing to pay for offshore wind and include more risk-sharing mechanisms in auction deals in 2024. Additionally, interest rates could start to fall, reducing the cost of borrowing. This could lead to more struggling projects reaching financial close in 2024.