Stage set for fresh round of European offshore wind auctions in 2025

Europe is set to host a raft of new offshore wind auctions in 2025 as the industry continues to navigate significant cost challenges, which market players said reinforces the need for offtake certainty.

This year's auction road map amounts to around 45 GW, according to analysis by S&P Global Commodity Insights, in what could be European countries' final opportunity to bring online new capacity in time for 2030.

France accounts for around one-third of the auction pipeline in 2025, with the country pushing to join the top table of European offshore wind nations. Those with seats already include the UK, Germany and the Netherlands, all of which are set to put multiple gigawatts of offshore wind to auction this year.

Norway and Ireland, which held inaugural offshore wind tenders in 2024, are poised to follow up with new processes in 2025, while countries like Belgium and Poland are set to embark on their first auctions for offshore wind.

The 45-GW road map tees up another banner year of offshore wind auctions in Europe, with awarded capacity in line to surpass the more than 20 GW awarded during a record 2024. At the same time, the sector continues to confront higher project costs and financing rates, as well as supply chain disruptions.

Governments and industry will also be keen to avoid repeating the high-profile auction flops from last year, most notably a 3-GW offshore wind tender in Denmark that failed to attract any bids.

Offtake certainty crucial

The Danish result did not come as a surprise to most market participants, given the auction did not include state support or a revenue stabilization mechanism. Instead, developers were faced with uncapped negative bidding, as well as having to pay for the grid connection at a time when project costs are already high.

"In this new environment, projects require higher revenues or government support to be feasible," said Andrei Utkin, associate director for clean energy technology at Commodity Insights. "Without financial viability, these projects cannot be successfully developed."

Danish officials acknowledged that the result does not bode well for another 3-GW offshore wind tender that the country is holding in 2025. Bids are due April 5.

Other parts of Europe have different auction frameworks than Denmark, and as such have been more successful in awarding capacity.

Tenders in Germany and the Netherlands, for instance, do not offer government support, but they do include a free grid connection. In contrast, Norway's inaugural auction provided the winner with a 15-year contract for difference (CFD) but not a grid connection.

Certainty on offtake, such as the presence of a CFD, makes it easier for developers to bring in long-term debt and reduce a project's overall cost of capital, according to Udo Schneider, managing director at financial advisory firm Green Giraffe.

"Markets where you have that will probably bring the lowest [levelized cost of electricity] overall to society," Schneider said during an interview.

'Turning point' for France

Europe's offshore wind auction pipeline in 2025 includes everything from early-stage seabed lease sales to centralized bidding rounds and competitions for offtake contracts. It covers auctions that will award capacity, kick off or hit key milestones during the year.

One of the headline events will be the UK's seventh CFD auction, Allocation Round 7, which is set to open to applicants in the summer. The sixth auction awarded nearly 5 GW of contracts in 2024.

The UK is doubling down on its offshore wind ambitions, with the government aiming to secure at least 12 GW of capacity across the next two to three CFD rounds and moving to allow projects to bid before they have received planning approval.

The largest auction in Europe's 2025 line-up is France's AO10 "mega tender," which is slated to launch in early 2025, offering more than 9 GW of fixed-bottom and floating wind capacity across multiple sites.

AO10 is part of France's ambition to scale up its offshore wind installations to 18 GW by 2035. In late December 2024, the country awarded two 250-MW floating wind projects as part of its long-running AO6 tender, which is likely to followed by 2.5 GW of awards across AO7 and AO8 this year.

"2025 can be the turning point for France," Alexandre Frémaux, offshore wind and renewable hydrogen analyst at lobby group WindEurope, said during an interview. "We're talking about thousands of megawatts that are due to be awarded and commissioning in the next decade."

Partners in high demand

In the same vein as the UK and France, offshore wind auctions in Europe's big markets now come at a regular cadence with the capacity of tendered sites typically stretching into the gigawatts.

While larger sites enable economies of scale, industry observers said the trend also risks limiting competition, given that only a few companies are big enough to shoulder the cost of developing gigawatt-scale projects on their own.

"This shift may lead to challenges in maintaining a diverse pool of bidders, ultimately impacting innovation and the overall health of the offshore wind sector," Utkin said.

In the Netherlands, the government already split its 2-GW IJmuiden Ver Gamma and Nederwiek I sites in two, making four 1-GW projects in an effort to "reduce the financial risks" for developers.

"Higher capacity means bigger projects, bigger lots and more capital to be deployed — reinforcing the need for developers to consider partnering," added Schneider of Green Giraffe.

Schneider said that even the biggest players are searching for partners, with financial investors and infrastructure funds "probably the most sought-after resource right now."

In 2024, German power giant RWE AG and French oil and gas major TotalEnergies SE struck two agreements to jointly develop nearly 5 GW of offshore wind capacity in Germany and the Netherlands. The two countries will offer up a combined 7.5 GW for auction this year.

TotalEnergies' tie-ups with RWE come as other oil and gas companies step back from offshore wind. Such players, including the likes of BP PLC, have been among the biggest victors in European auctions in recent years, with their deep pockets well-suited to uncapped bidding frameworks.

"It's not because they don't feel that they don't want to do [offshore wind] anymore; it's just so expensive, and oil is so lucrative," Utkin said. "These guys all moved in, and as quick as they moved in, they moved out."