The offshore wind sector is set for major developments in 2025, following a dramatic 2024 marked by record achievements and significant challenges. With more projects expected to reach financial investment decisions and new capacity coming online, the industry is poised for continued transformation. Here are five critical themes shaping offshore wind in 2025.
By Peter Lloyd-Williams, Senior Analyst – Offshore Wind, Westwood Global Energy Group, UK
1. It’s the economy – will macroeconomic conditions become more favourable for offshore wind?
Offshore wind projects rely heavily on debt-based financing and large infrastructure investment, making them vulnerable to economic changes. Rising interest rates and high commodity prices have created significant challenges in recent years. However, there are signs of improvement. Interest rates are gradually falling, and commodity prices have eased from their 2022 peak. This should provide some relief, although potential tariffs from the incoming Trump Administration could drive up costs through trade friction. Lower financing and material costs will be critical for improving project profitability and sustaining growth.
2. More on the menu – will developers continue opting for the largest (possibly Chinese) turbine models or start to favour standardised options?
Turbine manufacturers have adopted two strategies to meet market demands. Some favour ever-larger models for better economies of scale, while others push for standardised designs to streamline production and reduce costs. Developers will need to balance these approaches. Larger turbines, such as those exceeding 20MW, could reduce the number of installations required but carry risks related to supply chain reliability and availability of installation vessels. Many of the biggest turbines are from Chinese manufacturers, whose performance in European markets is largely unproven. Regulatory pressure to demonstrate that proposed technologies are available at the time of leasing may also encourage more conservative choices. Still, if supply chains can support them, larger turbines are likely to remain attractive.
3. Float forwards – will the floating offshore wind supply chain start to take shape?
Floating wind projects gained momentum in 2024, with major subsidies secured in countries such as the UK, France and South Korea. In 2025, tenders in areas such as the Celtic Sea and Utsira Nord in Norway could help define a commercial-scale floating wind supply chain. However, significant challenges remain. Even well-funded projects can falter because of political or economic shifts and scaling up floating wind will depend on putting steel in the water. The coming year will reveal whether optimism in this sector translates into tangible progress.
4. Walking the walk – will government support finally measure up to lofty ambitions?
While many governments have ambitious offshore wind targets, their financial and regulatory frameworks have not always matched these goals. High-profile leasing rounds in the UK, Denmark and Japan have failed to attract the expected level of interest, highlighting policy gaps. However, recent reforms may reduce regulatory hurdles in 2025. New markets, including India and the Philippines, will also provide insights into how well emerging economies can foster offshore wind development. A more supportive policy environment is critical for sustaining investor confidence and meeting capacity targets.
5. Invest at leisure, divest in haste – what next for oil and gas companies in offshore wind?
Oil and gas companies entered offshore wind with significant investments but began scaling back in 2024 because of poor returns and investor concerns. These companies divested 4.3GW of projects and reduced capital spending. In 2025, their retreat may continue, leaving renewable energy specialists to dominate the market once again. This shift could restore the sector to its pre-2020 state, with established developers leading growth. However, the long-term involvement of oil and gas firms remains uncertain, as some may reconsider strategies depending on market conditions.
So, there is much to think about heading into 2025, from macroeconomic trends to supply chain strategies and government action. Once again, the coming year promises to be a fascinating one.
