WindEurope: Investments in New Offshore Wind Projects Slide in 2019

EUR 6.1 billion was invested in four European offshore wind projects with a combined capacity of around 1.4 GW in 2019, marking the lowest amount invested and the capacity financed in a year since 2012, according to a report by WindEurope.

The four wind farms that reached the Final Investment Decision (FID) in 2019 are the 480 MW Saint Nazaire in France, the country’s first commercial-scale offshore wind farm; the 88 MW Hywind Tampen floating wind farm in Norway; the 382.7 MW Windpark Fryslân nearshore wind farm in the IJsselmeer, the Netherlands; and the 450 MW Neart na Gaoithe offshore wind farm in Scotland.

2019 saw a slide of over 40 percent in investments compared to 2018 when EUR 10.2 billion was invested into new offshore wind farms in Europe. The last year’s result is more than three times lower compared to the record EUR 20 billion invested in new offshore wind projects in 2016.

According to the report, “Financing and Investment Trends: The European wind industry in 2019”, non-recourse debt accounted for 77% of all investment in the new offshore wind farms, highlighting the importance of banks in wind energy financing.

Offshore wind farms reaching an FID in 2019 required a relatively high capital expenditure (CAPEX) leading to a slightly lower capacity financed compared with the previous three years, the report said.

Capital expenditure per MW for new offshore wind, which decreased between 2015 and 2018, increased in 2019, according to the report, with three of the four projects reaching FID being financed with a CAPEX of EUR 5 million per MW or more. These projects are Hywind Tampen, Neart na Gaoithe, and Saint Nazaire.

Possible reasons for an increase in CAPEX per MW in 2019 are the new technology used (Hywind Tampen), installation depths of over 50 metres and the use of jacket foundations (Neart na Gaoithe), and in the case of the Saint Nazaire project the proviso that wind turbine factories for the project had to be built on French territory, according to the report.

The CAPEX is expected to revert to levels seen in previous years, the report said.