Fitch Ratings: Investment Grade Possible for Offshore Wind Projects

Operational offshore wind projects may be rated investment-grade, subject to adequate mitigation of technical and operational performance risk, Fitch Ratings said in a report.

Offshore wind farms under construction are exposed to materially greater challenges compared with onshore projects and their ratings are likely to be constrained in most cases to speculative-grade, Fitch ratings said in the report titled Offshore Wind Projects – Evolving Dynamics.

Challenging weather conditions lead to uneven availability and operating and cost profiles for offshore projects compared with onshore peers.

Dependency on vessels to transport personnel, equipment and perform maintenance, if not adequately managed, may result in material deviations from budgets.

Key factors driving Fitch’s assessment of operating risk are the project’s location, the operation and management set-up, the technology used and the project’s technical design and scope.

Positively, higher turbine capacity and wind speeds result in greater and more stable offshore generation per MW compared with onshore projects.

Estimated capacity factors average 45% compared with 33% for Fitch-rated onshore wind projects, although the accuracy of energy production forecasts is still open to debate.

In Fitch’s opinion simpler topography reduces some of the uncertainties in offshore production estimates while wake losses are more difficult to estimate due to the larger size of arrays and projects.

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