Building inflation-protection measures into tenders, speeding up permitting and unblocking grid-connection queues were common issues faced by global wind policymaker – not to mention European concerns about China’s seemingly unstoppable market dominance and its implications for the wider market.
Perhaps most significantly, on both sides of the Atlantic, policymakers faced an embattled industry confident enough to simply walk away from major offshore projects or tenders. With penalty charges becoming more economical than proceeding with certain projects under old power purchase agreements, 2023 saw leading developers refuse to accept terms that would push firms across the supply chain into greater unprofitability.
So, with a spate of project cancellations in the US and Vattenfall’s decision to shelve Norfolk Boreas in the British North Sea, policymakers were pushed hard to act proactively on the viability of projects and, to their credit, some did.
Bolder, bigger wind installation targets were announced by policymakers even before they met at COP28 to agree to tripling renewable energy capacity, and by December it looked like serious action plans had begun to replace empty rhetoric.
While, a grey clouds still loom on next year’s horizon, the oft-mentioned ‘perfect storm’ for the wind industry had hopefully been abated as the year came to an end.
Europe’s policy year
The European Commission announced plans for policy measures to support the wind industry via the Net Zero Industry Act (NZIA). The final version of the NZIA adopted in November moved to limit single-state dominance of renewables supply chains and will require EU members to include inflation-indexing mechanisms in tenders to protect against cost rises.
The commission also plans to reform the EU’s electricity market, and there were proposals for a new critical Raw Materials Act, while North Sea countries came together to develop a port strategy for offshore wind.
As the year came to a close, EU members signed the bloc’s , designed to boost the industry on the continent and help countries meet their renewable energy targets.
While restrictions hindering onshore wind development were eased in several European countries – such as Poland, Germany and even the UK – activity in some markets like Norway continue to be hit by tax burdens deemed unfair by the industry. Some policy shifts had little immediate effect – such as the UK lifting its de facto ban on new onshore wind while Germany’s u-turn on plans to allow onshore wind developers to return ‘toxic’ power deals secured at auction was deemed “incomprehensible” by the industry.
The Netherlands also suffered a major setback to its momentum on renewables following a shock election victory for the anti-wind, far-right Party for Freedom.
There was bad news Denmark too as the country announced it had scrapped its ‘open door’ policy for offshore wind because of its incompatibility with EU rules.
With 2030 now in sight, reforms to slow permitting and grid queues have gained serious traction across Europe. Germany got to work on these issues, but EU legislation requires others to follow quickly.
But while planning and network reforms were welcomed by industry, the structure and prices of wind tenders were criticised, and policymakers urged to improve them.
All change in the UK
That was no more apparent in Europe than in the UK. Following similar action by companies in the US, Vattenfall threw a glaring spotlight on the need to improve economic viability of projects awarded through the UK’s contracts for difference (CfD) scheme, when it shelved its 1.3GW Norfolk Boreas project citing inflation and soaring cost increases of 40%.
Along with others, it warned that CfD prices on offer in 2023 for the UK’s fifth renewables auction in September were too low. While the government added a little extra to the pot, it was not enough to tempt a single offshore project to the bidding room. Following a backlash, the UK government raised the maximum price available for offshore wind contracts in next year's auction.
As the year came to a close, there were tentative signs that Vattenfall may in fact go ahead with Norfolk Boreas in light of the increased strike price on offer in CfD allocation round six.
Meanwhile, with elections looming in 2024, the opposition Labour party vowed to increase the UK’s wind targets, promised faster grid connections and announced the launch of GB Energy, following the example of other European countries with state-owned energy companies acting as developer, such as Ørsted, Vattenfall and EDF.
US policy
President Joe Biden's Inflation Reduction Act (IRA) has been dubbed a gamechanger for US by senior industry figures, but 2023 brought a few more “growing pains” for policymakers than anticipated.
Nowhere was that more evident than in the neighbouring eastern states of New Jersey, where Ørsted scrapped its Ocean Wind 1 and 2 projects, and New York, where BP and Equinor took multi-million dollar impairment hits rather than proceed with three joint venture projects (Empire Wind 1 and 2 and Beacon 1).
While state regulators had been largely reluctant to green-light contract renegotiations for older projects approved before the cost crisis – which typically had either fixed nominal prices or a fixed annual escalator – they have adapted the process for others, and there has been greater state coordination. New Jersey has issued further tenders with better cost protection mechanisms, as has New York. Similarly, states like Rhode Island and Connecticut are including inflation protection mechanisms in tender frameworks.
There was solid progress in terms of grids and transmission development policy across the US, including a federal initiative to accelerate wind farm connections but further reforms were demanded to avoid projects being left in limbo. Other federal-level initiatives built on the success of the IRA, including the passage of a law to streamline permitting for wind and other energy projects.
Having launched its offshore wind strategy at the end of March, the Biden administration said in autumn that it plans to hold the minimum amount of oil and gas auctions required by law to proceed with all of the country’s planned offshore wind lease sales.
Canada and South America
North of the border, in Canada, Nova Scotia published its first offshore wind roadmap, and decided to focus on developing the regulatory framework for areas co-managed with the federal government, ahead of considering waters under its sole jurisdiction.
Elsewhere in the Americas, Colombia looked to enter the offshore wind market, while Brazil advanced a legal framework which will see the government designate areas for offshore wind development but exclude areas such as oil fields.
Meanwhile, Chile moved to change how it pays generators as it strove to shield its booming renewables sector from a wave of bankruptcies.
Asia/Asia-Pacific
There were warnings from industry voices that the APAC region’s complex regulatory regimes and grid congestion could see its offshore wind boom slowed by a decade, although this estimation did not include excluding China, which continues to steam ahead with installation.
Taiwan announced provisional rules for its next offshore wind auction, which will see up to 3GW of capacity up for grabs in January.
India’s offshore wind potential has long been discussed but regulatory uncertainty, complexity and limited financial support may hinder the nascent sector, commentators warned.
Australia moved forward with its ambitions, as the federal government declared a new area of the Pacific Ocean off New South Wales as suitable for offshore wind. The move boosts the project development plans of companies including Equinor, BlueFloat and Simply Blue.
Vietnam also published wind installation targets plans for 2030, but it faces significant challnges to get there.
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