Strong headwinds buffeting confidence in UK offshore wind

The shifting mood: from confidence to caution

For much of the past decade, the UK’s offshore wind industry has been a symbol of climate leadership. It helped drive down the cost of renewable power, attracted tens of billions in investment, and created an entire industrial ecosystem along Britain’s coastline.

That confidence is now under strain. Rising costs, higher interest rates, and a tougher global financial climate have disrupted even the most established developers. In the last year alone, several flagship projects – including Ørsted’s Hornsea 4 – have been delayed or cancelled because the business case no longer stacked up.

Meanwhile, the government’s latest announcement of a £1.08 billion budget for offshore wind Contracts for Difference (CfD) has been met with alarm from analysts. It is roughly 40% lower in real terms than the previous round and could fund less than 5 gigawatts of new capacity – far short of what’s needed to meet the 2030 decarbonisation goal.

Critics say this signals a quiet watering down of the UK’s net-zero commitments in favour of keeping household energy bills under control. Supporters argue it’s a necessary recalibration – a move away from “renewables at any cost” toward a more fiscally disciplined approach. Both may be right.

Economic strain: a perfect storm

The economics of offshore wind have shifted dramatically. Developers are dealing with inflation in raw materials, shortages of specialist vessels, and higher capital costs caused by global interest rate rises. At the same time, supply-chain congestion has delayed essential components like subsea cables, converters, and rare-earth magnets – many of which depend on Chinese production.

Where once developers could rely on falling prices and generous subsidy regimes, today they face tighter margins and longer payback periods. Financial institutions, too, have become more cautious. Gigawatt-scale projects now require larger and more diverse pools of capital, with lenders demanding tougher terms and longer due diligence.

The result is a slowdown – but not a collapse – in project delivery. The industry is consolidating around fewer, stronger players with realistic expectations, while speculative bids and overly optimistic price assumptions are being weeded out. This could be a strong sign that the hype is almost over with what’s left is looking more sustainable.

The geopolitical fault line

Perhaps the most striking development lies beyond economics: geopolitics. The UK’s floating offshore wind ambitions – particularly in Scotland – are increasingly entangled in the trade rivalry between the US and China.

Chinese turbine manufacturer Ming Yang Smart Energy has proposed a £1.5 billion investment to build a major floating wind turbine plant in Scotland, promising thousands of jobs and a vital domestic manufacturing boost. But US politicians have warned London against approving the deal, citing security concerns over Chinese-made turbines and their embedded operational software.

It’s a complex dilemma. On one hand, Scotland’s ScotWind and INTOG leasing rounds depend heavily on access to large-scale floating turbine technology – an area where Ming Yang is one of the leaders. Commentators point out that, without this technology, most of ScotWind can’t happen. On the other, blocking Chinese participation risks angering Beijing and slowing the rollout of vital projects

The situation highlights how energy policy, national security, and industrial strategy are now inseparable. Floating offshore wind, once seen purely as a climate and innovation story, has become a test case in how nations balance security alliances against clean-energy ambitions.

A global industry under pressure

The UK is not alone. Across Europe, failed offshore wind auctions in Germany, Denmark, and the Netherlands show that cost inflation and policy uncertainty are global. Even the United States, once buoyed by the Inflation Reduction Act, has cooled under President Trump’s renewed hostility toward wind energy.

Global data tell the story: more than 24 gigawatts of offshore wind projects have been cancelled since 2023, and the International Energy Agency has cut its growth forecast by a third to 140 GW by 2030. In this climate, the UK’s commitment, though trimmed back, still stands out as relatively strong.

The supply-chain squeeze

Every link in the offshore wind supply chain is under stress. Specialist installation ships are fully booked for years ahead. Fabrication yards and ports need heavy investment to expand capacity. Raw materials – from steel and fiberglass to rare earths – are in tight global supply and increasingly subject to export restrictions.

The result is spiralling costs and delivery risks that no single company can absorb. Analysts argue that diversification of suppliers, greater transparency in sourcing, and collaboration across the sector will be essential to building resilience. Legal protections, such as flexible pricing and “force majeure” clauses, are becoming standard features in contracts.

Industry cooperation – among developers, ports, manufacturers and government – is no longer a nice-to-have; it’s now a necessity.

Shows of strength

Yet despite the turbulence, Britain’s offshore wind sector remains fundamentally strong.

It has 15.6 GW already operating, more under construction than any other European nation, and a deep pool of engineering expertise. The government’s decision to extend CfD contracts from 15 to 20 years will also help lower financing costs and improve investor certainty.

Crucially, the case for offshore wind as a national asset has never been stronger. A UCL study published in 2025 found that UK investment in wind between 2010 and 2023 produced a net consumer benefit of £104.3 billion, driven by lower electricity prices and reduced gas costs. This reframes wind as a profitable national investment that has enhanced energy security.

Meanwhile, the floating offshore wind pipeline in Scotland and the Celtic Sea offers a long-term strategic opportunity. If supported properly, it could anchor new domestic supply chains and revitalise coastal economies from Port Talbot to Inverness.

Even critics acknowledge that the UK’s Contracts for Difference model, pioneered over a decade ago, remains one of the world’s most effective frameworks for low-carbon investment – and one that other countries are now copying.

Straight talking

In such an unsettled landscape, the industry’s success now depends not just on technology and budgets, but on confidence – from investors, from local communities, and from political stakeholders.

That means clarity and transparency must guide how the government and industry communicate strategically. Investors need credible signals that the UK remains committed to its clean-energy goals. Communities need reassurance that offshore wind will deliver real local benefits. And international partners need to see that Britain can balance open markets with national security.

Poor communication breeds uncertainty: good communication builds trust. It’s also vital in managing the geopolitical narrative – showing that the UK can cooperate with allies while maintaining strategic independence in its energy transition.