Europe’s Offshore Wind Slowdown Is Squeezing Manufacturers

Europe's offshore wind monopile market is transitioning from manufacturing capacity concerns to a period of weak factory utilization, as offshore projects are skewed towards later timelines. European producers have invested in larger facilities to meet the demand for XXL foundations for newer offshore wind turbines, but project delays and slower investments have led to underutilized capacity.

Rystad Energy predicts that European XXL monopile manufacturing capacity will grow from 1.2 million tonnes in 2024 to 2.7 million tonnes by 2027. However, factory utilization is forecast to be around 32% in 2026 and 2027, dropping to just 19% in 2028. Loading is expected to rise towards 50% in 2031 under the current project pipeline.

This shift is impacting contract economics, as manufacturing a representative monopile in Europe has become 38% more expensive since March 2020, with costs rising from $2.50 million to $3.46 million per kilotonne. Simultaneously, selling prices have decreased from their 2022 peak, as suppliers compete for future production slots.

The Chinese suppliers are currently more advantageous due to their lower manufacturing cost of $2.03 million per kilotonne, compared to the European reference cost of $2.50 million. However, this advantage may diminish if European utilization remains low for an extended period, causing suppliers to postpone further investments or retire capacity from the market.