Key Takeaways
Germany received no offers in its August offshore wind auction, finding, similarly to the Netherlands and Denmark, that offshore wind developers do not want to undertake projects unless subsidies are guaranteed.
The cost of offshore wind is enormous, and unless developers can be guaranteed subsidies and a firm price, they do not want to proceed.
President Trump has issued an executive order temporarily withdrawing areas for offshore wind leasing and has called for a general review of wind energy.
Compared to Europe, few offshore wind projects have been completed in the United States due to their high costs, the high-interest-rate environment, and supply chain problems that started with the COVID-19 lockdowns.
Wind developers are finding that it is no longer economic for them to construct offshore wind facilities when government subsidies disappear. Offshore wind power developers are wary of taking on risky, zero-subsidy projects amid rising costs and supply chain issues. Most recently, Germany cut back on the capacity it will auction in its offshore wind tender in 2026, as its previous tender in August received no bids. According to OilPrice, in the 2026 tender, the capacity auctioned will be reduced to 2.5 gigawatts to five gigawatts, compared with an earlier plan of auctioning off six gigawatts of offshore wind capacity. That is much less than the 10 gigawatts without subsidies offered in the August tender. Germany’s offshore wind capacity additions are nowhere near its target of 70 gigawatts by 2045.
Via OilPrice, in the first half of 2025, Germany added 9.2 gigawatts of offshore wind — the same amount as it had at the end of 2024. Offshore wind turbines with a capacity of 1.9 gigawatts are currently under construction, and developers have taken final investment decisions on 3.6 gigawatts of capacity, while another 17.5 gigawatts have been awarded contracts in auctions.
Other European countries have faced similar results. In the Netherlands, two of three planned offshore wind sites were postponed because of a lack of potential bidders under a “zero subsidy” scheme. That made the Netherlands delay its goal to reach 21 gigawatts of offshore wind capacity to 2032 from its current date of 2030, citing high costs, supply chain difficulties, and “challenges in timely decision-making.” The Dutch government is looking into ways to reintroduce subsidies in its tenders for offshore wind facilities. The country has 4.7 gigawatts of offshore wind capacity. In an updated plan in Denmark, subsidy levels will now be based on the bids offered in the tenders.
Offshore Wind in Trouble in the United States and Elsewhere
President Trump, recognizing the high cost of offshore wind, issued an executive order, “Temporary Withdrawal of All Areas on the Outer Continental Shelf from Offshore Wind Leasing and Review of the Federal Government’s Leasing and Permitting Practices for Wind Projects,” shortly after taking office. While offshore wind is already one of the most expensive technologies being built, its costs have grown even higher due to high interest rates and supply chain problems. Unless companies can get higher-priced contracts for their wind energy, they are canceling projects. Norway’s Equinor, a leading developer in renewable energy, withdrew from offshore wind projects in Vietnam, Spain, and Portugal, citing unsustainable costs. Shell sold its stakes in projects across Massachusetts, South Korea, Ireland, and France and cancelled a $1 billion stake in a wind farm off the New Jersey shore. Furthermore, Japan has postponed some projects as developers have walked away from them.
President Biden had a goal of 30 gigawatts of offshore wind power by 2030, and his administration favored the technology and took steps to promote it, including lowering royalties, easing permitting, streamlining environmental documentation, providing generous wind subsidies, and quickly pushing through approvals. Some projects have been completed, such as the 132-megawatt South Fork Wind Farm off of New York’s Long Island. Dominion Energy’s gigantic 2.6-gigawatt, 176-turbine, Coastal Virginia Offshore Wind project is expected for the end of 2026. The project’s costs have risen by about $900 million (9%) to $10.7 billion.
Analysis
Offshore wind has proven to be a poor investment absent subsidies, requiring significant investments in undersea cables and comparatively large turbines. Offshore and onshore wind are unreliable and require backup power from costly batteries or from coal, natural gas, or nuclear generators. Moving away from subsidizing offshore wind toward greater investment in reliable generators will help Europe achieve lower electricity prices and greater reliability.
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