Rising costs and supply chain disruptions, which have been caused by a challenging economic environment in recent years, have resulted in failed auctions and cancelled projects in several countries. Nevertheless, offshore wind continues to be competitive and is poised for remarkable growth.
Advantages of offshore wind
Firstly, it offers decarbonisation and energy production on an industrial scale, operating more consistently and efficiently than most onshore renewables due to stronger and more reliable winds. Additionally, extensive areas are available for development, often with fewer conflicts as compared to onshore wind.
We estimate that the global offshore wind market will expand from just under 90 GW at the end of 2024 to above 400 GW by 2035, with China alone accounting for more than half of this growth. Achieving this growth will require expanding the supply chain, including manufacturing capabilities, installation vessels, and equipment, as well as addressing workforce skill shortages. Fortunately, auctions and lead times provide visibility into future demand, allowing supply chain components to scale up accordingly.
Globally, the offshore wind industry is expected to expand
Having overcome recent obstacles, Europe is expected to continue expanding its capacity, led by established markets like the UK, Germany, and the Netherlands. Meanwhile, China dominates the global industry, driving innovation and cost reductions. Its expertise will benefit other Asia-Pacific countries, which are expected to see significant growth. In contrast, the US faces uncertainty due to political and regulatory challenges, thereby slowing progress and creating cost competitiveness concerns. Continue reading if you would like to receive more detailed insights into the most important countries and regions in the offshore wind sector.
China’s offshore wind industry has achieved remarkable cost reductions and technological advancements, solidifying its position as the global leader in offshore wind
China’s dominance in the sector has grown dramatically in recent years, now boasting over 40 GW of capacity—about 50% of the global total. In 2023, its installations accounted for more than two-thirds of new global additions. China is the only country where this form of energy is already cost-competitive, making it a global leader.
However, China’s leadership extends beyond sheer output; its turbine manufacturers are also driving innovation. A standout achievement includes the installation of a 26 MW offshore turbine, capable of generating approximately 100 GWh of electricity annually, enough to power 55,000 homes.
Challenges
Chinese manufacturers face significant barriers in Europe and the US, which will likely persist in the short term. Concerns about quality, energy security, and sustainability standards have restricted market penetration.
The European Union is currently investigating whether to impose tariffs on Chinese wind turbines, following similar measures that target Chinese electric vehicles. Such trade barriers reflect broader geopolitical tensions and efforts by Western governments to protect domestic industries from what they perceive as unfair competition.
Outlook
China’s coastal provinces, which account for the majority of the country’s energy demand and emissions, provide ideal locations for offshore wind projects due to their proximity to population centres and favourable sea depth conditions.
Asia-Pacific is benefiting from China’s advance in offshore wind
While we expect China to dominate offshore wind development in the Asia-Pacific region from 2025–2030, it is projected that South Korea, Vietnam, Taiwan, and Japan will see substantial growth and play a key role in the overall expansion during the next decade. These countries are following China’s lead, leveraging low-cost Chinese turbine imports and developing local supply chains.
Chinese manufacturers are expanding globally by establishing local production facilities, which, along with shared infrastructure (e.g., vessels), is helping to accelerate adoption in the region.
Europe is expected to continue expanding its offshore wind capacity
Europe has long been a global leader in offshore wind energy. With abundant shallow waters in regions such as the North Sea and the Baltic Sea, combined with excellent wind resources, the continent is ideally suited for this form of renewable energy. Additionally, energy production from these installations peaks in winter, which aligns well with the high energy demands of cold European countries during this time.
Offshore wind technology itself originated in Europe, and until China overtook it in 2020, Europe held the title as the world’s largest offshore wind energy producer.
Challenges
In 2024, there was less interest in offshore wind auctions and tenders across Europe. Developers were hesitant about participating in tenders that required large payments for development rights, which led to lower concession payments and fewer bids in countries like Germany, the Netherlands, and Denmark. This reduced participation can be attributed to various economic challenges, such as cost inflation, high interest rates, and supply chain disruptions. Developers are now more focused on ensuring profitability and consolidating their existing portfolios rather than aggressively expanding. In response, several countries are revisiting their auction approaches to reflect the persistently high development costs.
Outlook
Despite these challenges, there are many reasons that support the projections for steady growth. Well-established markets with supportive regulations are expected to lead regional installations over the coming years.
The US offshore wind market faces uncertainty due to economic and political obstacles
The US offshore wind market is in its infancy, with just 1 GW of installed capacity by the end of 2024. While the Biden administration set ambitious goals to accelerate deployment, political shifts, regulatory hurdles, and economic challenges have significantly slowed progress.
Much of this momentum was disrupted by the election of Donald Trump in November 2024. Trump’s presidency marks a stark policy shift, with offshore wind becoming a target for regulatory slowdowns and increased uncertainty.
Challenges
Costs have increased by about 50% since 2022, due to the economic landscape and supply chain disruptions. Although the possibility of repealing tax credits is slim, such a move could further increase the costs by about one-third, raising the price from the current cost of about USD 150/MWh.
Outlook
The theoretical potential for offshore wind in US federal waters and the Great Lakes is immense, with over 4,000 GW of capacity. The Northeast is particularly rich in offshore wind resources, with conditions that make it economically competitive, such as shallow seabeds and high wind speeds. Therefore, the United States represents an optional market for future growth, but not a definite one.
How to add exposure to offshore wind to your portfolio
The global offshore wind industry is poised for significant growth, driven by declining costs through technological innovation and economies of scale. China will remain the dominant force, accounting for the majority of future installations and influencing global supply chains.
The offshore wind sector has a complex supply chain that encompasses various types of companies engaged in the process. We see opportunities for investors amongst others in the following areas: Wind equipment producers, power equipment producers, infrastructure providers, and power producers.