By Peter Constantin Brun, DNV

The offshore wind industry has encountered serious headwinds in the last 24-30 months. This comes after a period of massive growth and expansion, also to new markets in North America and Asia.

The drivers of the previous growth were a combination of rapid technology innovation mainly driven by expansions of turbine- and farm size, and not least the very low interest rates from 2008-2022 stimulating and encouraging investments. 

However, since the aftermaths of the COVID-19 crises in 2022, component price inflation and higher cost of capital have challenged the business cases in many offshore wind projects.

Restoring offshore wind's attractiveness and bankability for investors will depend on three principal levers: supportive regulation and subsidies, continued turbine innovation, and greater industrialization and standardization across the industry.

Supportive policies can only do so much

On regulations, many governments have realized that new power generation technology—and not only offshore wind—has become more expensive (at least for some time).

The UK is a good example of timely adjustments of their policy frameworks in this regard with their Auction Round 7, which resulted in more than 8 GW in new projects. Also, Poland, the Netherlands and Denmark's latest successful CfD tender of 2 GW are other examples of successful, needed regulatory changes. However, it is only fair to assume that governments will not want to over-compensate and pass on a too high bill to the electricity consumers, so there are limitations to this measure.   

So, what can the industry then offer themselves to lower prices of offshore wind? It is a fact that offshore wind prices were reduced by more than 40% between 2008 to 2022. Apart from the lower interest rates, turbine innovation came from bigger rotors making the turbines much more efficient in capturing the wind resource. This innovation has played a role in price reductions.

However, going forward, evidence shows that turbine size will not automatically continue to deliver massive price reductions because bigger turbines also needs more steel, rare metals, etc., and there will be other costly limitations in the rest of the value chain (like f.x. installation vessels and port infrastructure and availability), not forgetting increased failure rates and more expensive main component replacements for larger turbines.  

Standardization offers the next cost-reduction opportunity

This has increased attention on a third potential solution: standardization and industrialization. Although these concepts have been discussed for many years, the industry today remains characterized by project-specific optimization and bespoke engineering solutions. While such approaches can minimize costs at an individual project level, they also limit opportunities for standardization, repeatability and economies of scale.

Thus, DNV and industry partners launched a joint industry project (JIP) in August 2025 of cost-modeling the unexploited potential of standardization and industrialization for offshore wind in the North Sea. Instead of talking only qualitatively about this, the group wanted to investigate the numerical cost potential of such a new approach for the industry. The goal was to test a fundamental, industry-wide shift in mindset, from continuous incremental turbine upscaling and project-specific engineering toward a more industrialized and standardized approach based on a limited range of wind turbine sizes.

By reducing complexity, lowering costs and improving delivery certainty, such an approach could enable greater efficiency and predictability. Through repeatable designs and economies of scale, the industry would strengthen project viability, restore investor confidence and support a more stable and scalable build-out.

The project conclusion was positive: cost modeling, informed by inputs from JIP industry partners, indicated that the collective European supply chain could achieve minimum 20% cost reduction within the next 15 years. Cost reductions arise from cumulative value-chain improvements rather than one measure.

Achieving these benefits would require sustained offshore wind deployment that supports high supply-chain utilization, a substantial increase in annual installation volumes and market conditions that ensure fair competition, enabling the European supply chain to remain competitive alongside non-European suppliers. 

Editor's note: DNV's "Industrialization and standardization in North Sea offshore wind" public summary report of the study published in early September.