Peter Lloyd-Williams.Photo: ©Gareth Davies

The story of offshore wind changed again last year. Following ten years in which declining levelized cost of energy (LCOE) statistics had sparked an exhilarating sensation of “pay less, get more,” 2023 was characterized by industry layoffs as cost inflation, estimated to be as high as 30–40%, shook the industry.

Investors started to exert pressure on developers to ensure that projects could still reach the rates of return that had been previously anticipated after they noticed a major decline in the sector’s conditions. It was becoming harder to convince people to invest money in new offshore wind projects.

Developers seem to be becoming more selective about the areas in which they work, avoiding those that they believe are inappropriate for their approach. Several recent industrial trends have demonstrated this. RWE has left Taiwan and Italy, Mainstream Renewables has left the US, and there has been little reaction to the most recent Gulf of Mexico leasing cycle. All of this is a far cry from the historic $4.4 billion in lease costs that developers spent at the New York Bight auction round in 2022.