Floating offshore wind sector faces critical year amid grid and policy uncertainty

The United Kingdom’s floating offshore wind industry is entering a pivotal twelve-month period as it awaits decisive government signals while grappling with the slow progression of key development projects. Industry leaders have warned that the window for the UK and Scotland to maintain a leading position in the global development of this sector is rapidly closing. This assessment comes as the industry faces a complex array of uncertainties, including transmission charging structures, grid connection timelines, and protracted approval processes. These factors are collectively creating significant headwinds for a technology that is still in its early commercial stages.

Speaking at the Floating Offshore Wind Conference 2026, Clare Lavelle, co-chairwoman of the Scottish Offshore Wind Energy Council, highlighted the severity of these challenges. She noted that any single risk, if left unaddressed, could be sufficient to halt a project or the industry entirely. However, the cumulative effect of these issues is sending negative signals to investors. Lavelle observed that many of these underlying problems have not improved over the past year. Her comments were echoed by Angela Hepworth, CEO of Scottish Renewables, who described the current situation as critical. Hepworth emphasised that the sector is facing a time-limited opportunity to be at the forefront of global development, a position that is currently under threat due to the lack of clarity and progress in key regulatory and infrastructure areas.

As the first wave of projects moves through the development pipeline, the sector is under increasing pressure to reduce costs. While the industry acknowledges that progress has been slower than anticipated, there has been measurable advancement in recent years. In the 2024 allocation round six, projects from Vårgrønn and Flotation Energy’s Green Volt secured contracts for difference at a price of £139.93 per megawatt hour. In the subsequent allocation round seven, Blue Gem’s Erebus and Copenhagen Infrastructure Partners’ Pentland both received deals at £155.37 per megawatt hour. Despite these developments, floating wind prices remain more than double those of fixed-bottom wind, a disparity that has increased between the two allocation rounds.

The focus now shifts to the upcoming allocation round eight, where there is significant pressure to bring prices down and approach parity with fixed-bottom technology. Hugh Kelly, CEO of Simply Blue, stated that cost reductions are a certainty, drawing a comparison with the solar industry, which has seen costs fall dramatically since 1972. However, Kelly cautioned that a small number of projects cannot deliver unrealistic cost reductions before the turbines are even operational. He argued that the UK government must adopt a long-term perspective, referencing the concept of delayed gratification. Kelly urged policymakers to play the long game rather than succumbing to short-term political pressures, asserting that those who take a strategic, long-term view tend to achieve the best outcomes.

The ScotWind cohort, originally envisioned to be fully constructed by 2030, has experienced significant delays. Lavelle lamented that projects are still waiting on grid connection dates, while transmission charging is preventing consented projects from bidding for contracts for difference. Additionally, consent processes are taking longer than expected. A major source of uncertainty is the Strategic Spatial Energy Plan, which is currently under review by the UK government. Rumours suggest that some proposed options could exclude Scottish offshore wind altogether, leading to warnings from the Scottish government that such pathways could create significant challenges. Lavelle described the Strategic Spatial Energy Plan as one of a small number of critical decisions needed to fundamentally change the landscape. She expressed confidence that a strong signal of government backing would enable the delivery of a policy framework that supports project development, reindustrialisation, and cost reduction.