Ørsted, the leading developer of offshore wind power worldwide, has urged European nations to enhance support for an industry facing serious challenges. The call comes amid new tariffs from Donald Trump that are adding pressure to its struggling operations in the United States.
Rasmus Errboe, Ørsted’s CEO, highlighted that the offshore wind sector in Europe is in a “difficult situation” due to increasing costs, supply chain issues, and uncertainty regarding electricity pricing. He pointed out that Trump’s recent tariffs would significantly affect project costs in the U.S., where Ørsted has encountered notable obstacles.
In a recent report, Errboe urged European governments to provide consistent annual support to help meet offshore wind targets and mitigate soaring costs. “If you want to ensure energy security, independence, and affordability in Europe over the next decades, we need to implement this change,” he emphasized.
Despite achieving a remarkable 70% drop in the cost of offshore wind electricity production from 2015 to 2020, costs have surged by 50% since then. The report stated that escalating costs and higher capital expenses due to increased risks are threatening the sustainability of project economics. Immediate and decisive actions are crucial to prevent the industry from entering a downward spiral.
Given Europe’s ambitious net-zero goals, the reliance on offshore wind power is critical, especially since there is limited onshore space. However, Ørsted’s statements reflect the substantial hurdles the industry is currently facing.
The company has faced a tumultuous time, halting two major U.S. projects in 2023 due to financial strains that resulted in multibillion-dollar impairments. As a result, Ørsted’s stock price has plummeted more than 50% over the last two years.
Errboe, who stepped into the CEO role this year, noted that new tariffs on aluminum and steel would affect ongoing projects like Revolution Wind and Sunrise Wind, although he does not believe they will jeopardize these initiatives.
He did not dismiss the possibility of further impairments in the U.S. business, which also involves onshore wind and solar energy. The future of the renewables sector in the U.S. has become increasingly uncertain not only due to tariffs but also Trump’s decision to halt specific federal funding for the industry and suspend offshore wind project permits.
In contrast, the EU aims to boost its offshore wind capacity to 60 gigawatts by 2030 and reach 300 gigawatts by 2050, up from the current 37 gigawatts. Similarly, the UK is targeting to more than triple its offshore wind capacity to 50 gigawatts by the end of the decade.
Ørsted is advocating for European governments, including the UK, to commit to supporting 10 gigawatts of offshore wind each year between 2031 and 2040 through contracts that secure a fixed price for electricity. This approach could potentially reduce industry costs by nearly a third over 15 years, by eliminating investment uncertainties that have led to increased financing costs and disrupted supply chains.
Errboe noted that the past few years have turned Europe’s offshore wind industry into a testing ground for various regulatory frameworks among member states. He believes a more coordinated approach across Europe is necessary to provide the predictability and stability that the industry needs.