In the wake of Donald Trump's election as U.S. President, all eyes have been trained on the U.S. Offshore Wind market and future, with his promise to stifle the U.S. Offshore Wind market in favor of oil and gas. But a recent lackluster performance from a leading Scandinavian country suggests the slow down in offshore wind energy projects may be spreading.
Denmark's latest offshore wind farm tender in the North Sea has failed to attract any bids, authorities said on Thursday, in a further setback for the industry.
After a year of challenges, the global offshore wind industry no longer has much prospect of hitting the lofty targets set by governments in the U.S., Europe and elsewhere, hindering efforts to fight climate change. "This is a very disappointing result," energy and climate minister Lars Aagard said in a written statement.
"The circumstances for offshore wind in Europe have changed significantly in a relatively short time, including large price and interest rate increases," Aagard added. The Danish Energy Agency said it would start a dialogue with market participants to identify reasons for the lack of bids, adding that a number of companies had expressed interest during the initial market dialogue.
Danish offshore wind farm developer Orsted said it had opted not to bid due to an unfavourable risk-reward balance and acknowledged the changing industry factors such as higher inflation, rising interest rates and supply chain bottlenecks.
"To mitigate the impact of this and support the ongoing expansion of offshore wind energy, industry and policymakers should work together to create the necessary conditions for a sustainable future for offshore wind," Orsted's Chief Commercial Officer Rasmus Errboe said in a written comment.
Denmark had in April launched its biggest offshore wind tender to date, offering no subsidies to companies competing for the right to erect turbines on six sites with a combined capacity of up to 10 gigawatts.
The deadline for bids for three sites in the North Sea was on Thursday, while the deadline for an additional three sites in the Baltic Sea and Kattegat is on April 1, 2025.
No subsidies were offered in the tender.
Shell, one of the major energy companies which have touted offshore wind as a key market they can invest in as part of the world's energy transition, on Wednesday said it was stepping back from new offshore wind investments in a move mirrored by others.
Denmark, also home to turbine maker Vestas, has been a pioneer in both onshore and offshore wind, thanks also to its favorable wind speeds.
(Reuters + Staff Report)