This text discusses the financing of offshore wind projects and the success they have achieved in terms of cost management and timely completion. It highlights the findings of a report by EY, which revealed that offshore wind projects had the lowest delays and cost overruns compared to other large power sector projects. The text also mentions the record low tariffs offered by companies like Ørsted and Vattenfall for offshore wind projects. It emphasizes the role of project finance lenders in the success of early offshore wind projects and how financial engineering played a critical role in reducing the levelized cost of electricity. The text also briefly mentions some challenges faced during the early days of offshore wind projects and the involvement of oil & gas contractors in the sector. It concludes by emphasizing the importance of having buffers and the right expertise to deal with unexpected problems in offshore wind projects.
| Signal | Change | 10y horizon | Driving force |
|---|---|---|---|
| Offshore wind projects have lower delays and cost overruns compared to other large power sector projects | Improvement in project efficiency and cost management | Offshore wind projects will continue to have lower delays and cost overruns | Enhanced project management and technological advancements in offshore wind |
| Record-low tariffs for offshore wind projects | Transition from high feed-in tariffs to competitive market prices | Offshore wind projects will be competitive and provide cheaper electricity | Increased confidence in the competitiveness of offshore wind and advancements in technology |
| Project finance lenders played a prominent role in the success of offshore wind projects | Increased involvement of project finance lenders in financing offshore wind projects | More project finance lenders will finance offshore wind projects | Growing interest in renewable energy investments and potential for attractive returns |
| Early offshore wind projects faced construction and operational challenges | Development of solutions to address unexpected problems | Improved problem-solving capabilities in offshore wind projects | Emphasis on time and funding buffers, and skilled personnel in project teams |
| Oil & gas contractors faced challenges in the offshore wind sector | Exit of most oil & gas contractors from the offshore wind market | Marine construction work dominated by dredgers and specialized contractors | Differences in project requirements and technical features between offshore wind and oil & gas |
| Importance of time and funding buffers, and skilled personnel in offshore wind projects | Continued reliance on buffers and skilled personnel to deal with unexpected problems | Projects will maintain buffers and have skilled teams to handle challenges | Mitigating the consequences of unexpected issues and implementing effective solutions |