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The Urgent Need for Investment to Secure the Future of UK Offshore Wind
The UK has long been a leader in offshore wind energy, with an ambitious goal of generating 50GW from offshore wind by 2030. However, recent news that BP, a global fossil fuel giant, is halving its renewable energy investment over the next two years due to profitability concerns raises uncertainty for the broader market. This announcement follows similar decisions from Equinor and Shell. If other key investors continue to withdraw from the offshore wind sector, the UK’s transition to sustainable energy could be at risk.
The offshore wind industry currently faces a range of challenges. Rising capital costs, market volatility, and broader economic uncertainty are hindering large-scale investment in projects. A global shift towards prioritising economic growth over green energy has heightened perceived risks, making it more difficult to attract investment. As a result, fewer companies are willing to commit to high-cost, long-term renewable projects. BP’s recent decision to scale back its green ambitions in favour of boosting fossil fuel production is particularly concerning.
Moreover, some oil and gas companies are easing their renewable energy investment targets due to reduced government pressure, which only worsens the situation. This shift in investment strategy is a worrying trend—if it continues and urgent funding doesn’t step in, the UK risks moving away from its net-zero goals.
This year is crucial for government policy, as it will lay the groundwork for meeting, or at least approaching, the 2030 offshore wind goals. Although the government and the National Grid ESO (Energy Systems Operator) understand the challenge and are sending the right strategic signals, market indicators remain contradictory. Zonal pricing is looming over investment decisions, with some investors hoping the government will go against the advice of its regulator, Ofgem, on this issue.
Until the government clarifies its stance, developers must factor in significant uncertainty into their projects. While the government has stated that AR7 Contract for Difference (CfD) winners will be “insulated” from zonal pricing changes, the specifics remain unclear. Furthermore, developers are still waiting for a clear date on connection queue reforms. Rising costs and grid delays, due to the scale of necessary infrastructure upgrades, are causing many Final Investment Decisions (FIDs) to be delayed. Bold strategic planning is essential, but it must align with market realities to avoid deterring investors. Upcoming decisions on the cap and floor mechanism, future CfD allocation rounds, and the ongoing Review of Electricity Market Arrangements (REMA) are key opportunities for providing the clarity needed.
The government has also indicated it is focusing on specific offshore projects, identifying those that need to be “unblocked” (Ben Golding, Mission Control, SR Grid and Networks Conference 2025). With many offshore schemes in the pipeline, developers will hope that if the government is indeed selecting winners, their projects will be among those chosen.
More immediately, energy prices are set to rise again in April, with little indication they will return to pre-crisis levels. The last price shock cost the UK £44 billion. As energy security becomes an increasingly vital national security issue, should consumers bear the full cost of these fluctuations? Had the UK advanced further in its energy transition and reduced its reliance on gas, the impact of the crisis would have been less severe, with energy costs less vulnerable to global market shifts. Given the geopolitical instability affecting global markets, investing in homegrown energy has never been more crucial.
To remain competitive in the offshore wind sector, the UK must act swiftly. Countries like Germany and the Netherlands are making significant progress, with Germany installing 1,639 turbines and achieving 9.2 GW of capacity in 2024 alone. Securing investment and adapting the regulatory framework to support a competitive and dynamic industry are essential steps to maintaining the UK’s leadership in offshore wind and ensuring long-term energy resilience.
If the recent pullback by oil and gas companies signals a broader decline in offshore wind investment, the gap between the UK’s current capacity and its renewable energy targets will continue to grow. Key players must step in to support the sector, as a well-supported offshore wind industry will provide affordable, sustainable energy, and help reduce the UK’s dependence on fossil fuels.
