Europe's offshore wind expansion ambition are running up against turbine supply constraints as well as rising prices in a market increasingly reliant on a concentrated group of manufacturers, Rystad Energy said on Wednesday.
Siemens Gamesa and Vestas products are basically the only product options available to European developers since GE Vernova (GEV) paused new order intake due to operational setbacks, Rystad said.
Rystad has found that turbine selling prices have risen between 40% and 45% since 2020, well in excess of manufacturing cost increases of 20% to 25% since then.
The manufacturing cost increases come down to the turbines' most technically complex components such as the nacelle that contained the generator, gearbox and power electronics. There are also growing pressures within blade manufacturing, Rystad's research notes.
Rystad said the result of the equipment supply bottleneck is that progress on deployment of this form of renewable power is now at least as much decided by equipment availability as it is down to political ambition.
The research said that high demand, a limited supplier base and the growing complexity of turbines means that manufacturers have "real pricing power and the ability to be selective about which projects get built."
Rystad concluded that Europe needed to expand manufacturing capacity or find workarounds to this set of problems otherwise it will face missing its 2030 targets for renewable energy and pay more for capacity it does install.
The note says that larger 14 megawatt to 15 MW turbines have been dominant among recent deliveries to offshore projects, eclipsing those of 9-10 MW capacity.
Rystad's research shone a light on a less evident trend beyond component costs, highlighting that some of their price hikes are reactionary, after manufacturers got somewhat burned by fixed-price supply contracts entered into immediately before a period of higher inflation.
In a seller's market, manufacturers no longer feel pressure to assume such risks through that contract model and are passing more of future cost increases on to developers, Rystad said.