For many years, the wind industry has been working to reduce the Levelized Cost of Energy (LCoE), with the aim of increasing profits and building strong balance sheets. However, it’s now becoming clear that some major economic headwinds are emerging for the sector, and the continuous downward trend of LCoE may be in jeopardy.
Rising costs have been observed across the entire value chain of the wind industry. Some issues are driven by global factors, such as higher prices of raw materials, production costs, skills shortages, and labour inflation. This has led to a major shift in forecast profits for many players, even to the point where some developers have cancelled projects entirely. We saw in July that the Swedish utility company Vattenfall stopped development of the 1.4 GW Norfolk Boreas wind farm, concluding that taking a $537 m loss was economically favourable compared to ploughing on with the project.