Climate change poses financial risks for offshore wind industry

By: Chloe Emanuel

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A joint study by Youwind Renewables and Climate Scale reveals that changing wind patterns due to climate change could significantly impact the financial performance of offshore wind projects. The study highlights the urgent need for the offshore wind industry to integrate climate scale models into financial planning to account for these uncertainties.

Offshore wind power is set to grow 15-fold over the next 20 years, becoming a $1 trillion industry. However, the sector faces challenges from climate change-induced variability in wind patterns, particularly in the mid-latitudes of the Northern Hemisphere, which could negatively affect wind resource projections and economic outcomes.

Recent data from Europe’s 2021 wind drought, which saw a 30% drop in energy production, underscores the potential risks. The Youwind and Climate Scale study, published in the IOP’s Science Journal of Physics, Conference Series, analysed climate change impacts on the economic indicators of offshore wind projects in the Irish Sea, Princess Elizabeth Zone, and Fortaleza, Brazil.

It found that the internal rate of return (IRR) for projects in the Irish Sea and Princess Elizabeth Zone could decline from the 2040's onward, while Fortaleza showed neutral to positive outcomes.

These findings were presented at the TORQUE 2024 wind energy conference in Florence, emphasising the necessity of incorporating long-term climate models into project planning. Such models can help developers anticipate changes in wind patterns over the 30-year lifespan of offshore wind projects, thereby safeguarding profitability and sustainability.

“Providing developers with the tools to account for the impact of climate change on offshore wind projects is essential,” said Pieter Gebraad, Chief Development Engineer at Youwind. He highlighted that collaboration with climate change experts enhances understanding of potential risks and opportunities, ensuring resilient and economically viable wind farms.

Following this collaboration, Youwind is developing new solutions to address climate change impacts, aiming to secure a sustainable future for offshore wind development.

For more information about offshore wind farm projects across the globe, click here.

About the Author

4C Offshore | Chloe Emanuel
Chloe Emanuel

Press Coordinator

01502 307037