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As nations strive to reduce carbon emissions, renewable energy (RE) has emerged as a key priority in global efforts. Yet one technology, offshore wind (OSW), is grappling with mounting setbacks. Around the world, projects face rising costs and uncertain waters.
In Australia, hopes for a landmark OSW project have been dashed after developer Blue Float Energy scrapped its $10-billion Gippsland Dawn venture, citing poor commercial prospects. The withdrawal, which also affects a planned Illawarra project, raises fresh doubts about the nation’s ability to hit its RE targets.
Additionally, BlueFloat told Australian media that owner Quantum Capital is negotiating sales of stakes across its OSW portfolio, including assets in the UK, Italy, Spain, the Philippines, and Taiwan. The Spain-based developer, which co-owns several Scottish and Italian projects with partners such as Nadara and Orsted, said that “continuing to fund offshore wind developments is no longer commercially viable in the short and medium term.”
Meanwhile, US President Donald Trump’s decision to halt work on the Empire Wind project off New York rattled the global OSW industry, as his executive order froze new developments and reviewed earlier approvals. The project’s developer, Equinor, eventually resumed construction but suffered heavy losses, and months later the company abandoned plans for a Bass Strait wind farm off Tasmania in Australia.
In the Netherlands, the government has dropped its 50-gigawatt (GW) OSW target for 2040, citing rising costs and weak hydrogen demand. Climate and Green Growth Minister Sophie Hermans said the country will instead aim for 30GW to 40GW, warning that “realism is needed” in offshore planning. The shift, part of the North Sea Wind Energy Infrastructure Plan, has raised concerns from wind association NedZero, which noted the rollback threatens investment security and Europe’s wider climate goals.
According to the International Energy Agency (IEA), OSW projects worldwide are under mounting strain from inflation, rising interest rates, and supply chain bottlenecks. The agency said these pressures are eroding investment, with maintenance now accounting for nearly a quarter of total project costs.
(Also read: 10 Reasons Why the PH Trails in Renewable Energy)
OSW push in PH
By the end of July 2025, the Department of Energy (DOE) had awarded 87 OSW service contracts with a combined capacity of about 68,000 megawatts (MW), including major projects in Mindoro, CALABARZON, Ilocos Norte, Cagayan, and several Visayan provinces.
The agency is targeting 3,300 MW from fixed-bed OSW as part of a broader plan to lift RE’s share of power generation from 22% to 35% by 2030 and 50% by 2040.
The Philippines’ OSW drive faces a key test as the DOE readies its fifth Green Energy Auction (GEA-5), which is focused on this technology. Global Wind Energy Council’s (GWEC)-Philippines called the auction a “defining moment,” stressing that “strong political will, private sector dynamism, strong public-private partnerships, community engagement, and innovative technology can align to transform this vast resource into clean, reliable power for generations.”
But amid global headwinds for OSW, the Philippines is pressing forward while grappling with its own challenges.
- Unclear auction terms
The launch of GEA-5, initially slated for the third quarter, was delayed to the fourth quarter as the DOE revises its terms of reference (TOR). This is to address stakeholder concerns about the proposed use of non-price criteria in evaluating bids.
These criteria, adopted for OSW projects, include factors such as port access, transmission readiness, and environmental compliance—standards already being used by other countries to ensure project viability and sustainability.
If contracts do not allow adjustments for delays in permitting, port infrastructure, or other factors, investors may have to absorb the full losses, reducing project bankability and discouraging serious bidders. Investors are requesting the inclusion of force majeure provisions in the TOR so that delays will not automatically trigger penalties or “performance bond” forfeitures.
- Inadequate port facilities
At a clean energy forum hosted by the British Chamber of Commerce Philippines, British economic and climate counselor Lloyd Cameron underscored that port facilities must be improved to handle OSW materials. “I cannot stress this enough to get ported parts in and off the ships, so these things have to be worked on as well in tandem, ahead of time,” he said.
Manila Times columnist Ben Kritz pointed out that most Philippine ports are not built to handle the enormous components required for OSW projects. “The blades of an offshore turbine are typically about 80 meters in length, with the biggest ones topping 100 meters, and can weigh between 5 and 12 metric tons,” he wrote, noting that nacelles and foundations add further bulk and that only a handful of ports can accommodate such cargo, many of them distant from project sites.
The Philippine Ports Authority (PPA) plans to redevelop Sta. Clara in Batangas and Mercedes in Camarines Norte as OSW hubs by 2026. Sta. Clara, a public-private partnership project, will be auctioned later this year, while Mercedes will undergo a two-phase P4.8-billion upgrade to replace the unsuitable Jose Panganiban port.
Currimao port in Ilocos Norte, once a priority site, has been dropped from the list due to its hefty P26-billion redevelopment cost. PPA officials stressed that OSW projects need 23 to 25 hectares of terminal space, far beyond the two to five hectares available at most ports, making major expansion crucial.
- Lack of reliable funding mechanisms
Manila Bulletin’s Myrna Velasco pointed to the steep hurdles facing OSW, highlighting that beyond supply chains and port capacity, projects must also ensure fair pricing. With DOE drafting tender rules, the Energy Regulatory Commission (ERC) must weigh investor interest against the risk of burdening consumers with higher tariffs.
“Even now, potential lenders for offshore wind projects in the Philippines are struggling to find a viable financing model,” she wrote. “Some banks are proposing longer contracts, beyond the standard 20-year power supply agreements (PSAs), as a way to offset high upfront costs and prevent ‘rate shock’ for consumers.”
Meanwhile, GWEC noted that while the Asia-Pacific is poised for major wind energy growth, “securing investment and effectively managing financial risks are key to driving the sector’s growth.” It added that despite policy shifts, bankability issues, and high costs, opportunities remain for investors and developers willing to navigate the hurdles.
- Policy gaps & corruption
Developers warn that OSW projects remain mired in red tape, with some requiring approvals from more than 20 local governments before breaking ground. A 2024 DOE-Department of Environment and Natural Resources (DENR) deal scrapped separate foreshore leases to ease permitting, but industry players argue that major uncertainties persist. Without a clear legal framework or defined “no-go zones,” projects risk being located in unsuitable or protected waters, a gap that has already discouraged potential investors.
Velasco mentioned that the absence of marine spatial planning leaves developers “sailing blind through waves of uncertainty,” as critical restrictions remain unclear. She added that OSW ventures must also balance environmental safeguards and the livelihoods of fishing communities—another layer of complexity in pushing the sector forward.
Additionally, the country’s sector continues to struggle against entrenched corruption, especially at the local level. Developers report that permits are often stalled unless “facilitation payments” are made, while land transactions and procurement are sometimes steered toward politically connected suppliers.
For foreign investors, the risks are even sharper. Bound by strict anti-bribery laws, many firms find these practices both legally and reputationally untenable. The result is a steady withdrawal from projects, stalling momentum in the country’s clean energy transition.
- Potential inflation
According to PhilStar columnist Bienvenido Oplas, the DOE has yet to disclose the levelized cost of electricity (LCOE) for renewables, or the full cost (LFCOE) that would factor in backup systems such as batteries, pumped storage, and diesel plants. Without this, he warned, the real impact of higher RE shares on consumer power bills remains uncertain.
Drawing from the Energy Institute’s Statistical Review of World Energy 2025, Oplas compared wind generation and inflation trends between 2014 and 2024. He noted that European nations with wind shares of 11 to 58%, as well as the United States and Australia, all experienced higher inflation. In contrast, Asian countries with little wind reliance, including China, Indonesia, and Malaysia, recorded either stable or falling inflation.
The columnist wrote that rising reliance on wind power drives up costs for three main reasons: expensive construction and upkeep of wind farms alongside backup systems, high transmission expenses from remote sites to major demand centers, and disruptions to fisheries and tourism in coastal communities near large turbine projects.
“Currently, there is a feed-in tariff allowance (FIT-All) for intermittents like solar and wind that are charged to all on-grid electricity consumers nationwide,” he wrote. “Soon we will see GEA allowance (GEA-All) in our electricity bill.”
He also stated that no official price for OSW under GEA-5 has been released. Rumors suggest a rate of P10 to 12 per kilowatt per hour (kWh), far above the current WESM average of P4 to 5, potentially raising future GEA-All prices and burdening Filipino consumers.
Additionally, An Asian Development Bank (ADB) study estimates that fixed-bottom offshore wind in Luzon could cost about P12 to P15/kWh. In comparison, solar photovoltaic (PV) power, which converts sunlight into electricity, averages only ₱2.50 to ₱3.50/kWh, making offshore wind around three to six times more expensive.
(Also read: Electric Cooperatives & the Energy Transition: Help or Hindrance?)
Is smooth sailing possible for OSW?
Velasco said that the Philippines is still drawing lessons from global experiences to navigate the complexities of OSW development and determine what can be adapted locally. “Meanwhile, for the most crucial stakeholders—the consumers—it’s a waiting game, hoping that both investors and the government will make the right calls,” she wrote.
The promise of OSW in the Philippines is immense, but so are the risks. As the country charts unfamiliar waters, decisions made today on pricing, investment, and policy will directly affect electricity costs and the economic burden on consumers.
Some argue that the high upfront cost of offshore wind is justified because, like solar, prices will eventually decline. Yet locking into such an expensive technology too early could burden households unnecessarily, especially when postponing investments until costs fall—just as they did for solar PV—might deliver the same benefits at a fraction of the price. Pragmatism is essential to balance ambition with affordability.
Careful evaluation of global practices, coupled with local realities, can help avoid costly missteps. Policymakers and investors must weigh potential gains against long-term impacts, ensuring that the pursuit of clean energy does not translate into higher bills for households.
Ultimately, the success of OSW will depend not just on technical feasibility but on disciplined, realistic planning. Strategic, cautious steps now can secure a future where RE strengthens the economy without straining the people it aims to serve.
https://www.abc.net.au/news/2025-07-15/offshore-wind-industry-hit-by-global-headwinds/105520316
https://renews.biz/101876/bluefloat-owner-to-sell-off-uk-italy-projects
https://renews.biz/101878/netherlands-to-ditch-50gw-offshore-wind-target
https://www.iea.org/energy-system/renewables/wind
https://www.manilatimes.net/2025/06/22/opinion/columns/tilting-at-windmills/2137401
https://mb.com.ph/2025/09/15/tackling-offshore-winds-toughest-development-challenges
https://mb.com.ph/2025/06/18/european-offshore-wind-investors-fleeing-philippines
https://www.rappler.com/voices/thought-leaders/vantage-point-why-green-energy-failing
https://mb.com.ph/2025/09/22/making-offshore-wind-work-without-drowning-in-high-rates