WindLogix Offshore Wind Podcast – Episode 1: AR7 Wins, APAC Shifts & Europe’s Subsidy Reset

Bahzad Ayoub  

Welcome to the first episode of Westwood Global Energy Group’s Wind Logix Offshore Wind Podcast. I’m your host, Bahzad Ayoub, Offshore Wind Manager at Westwood, and I’m joined by our two offshore wind senior analysts, Peter Lloyd Williams and Hui Min Foong. Hello to you both.  

Peter Lloyd Williams  

Hi, Baz. 

Hui Min Foong   
Hey everyone, looking forward to this first episode. 

Bahzad Ayoub   
Thank you both for being here. Now, the aim of this podcast is to help our audience navigate around the big offshore wind topics of the month. We’ll be delving into the news and sharing our views on some of these subjects. Now, the topics that we’ll be covering in this episode includes the results of the UK’s Contracts for Difference Allocation round 7, as well as a look ahead at what we expect to come from Allocation Round 8. We’ll also be discussing the Australian offshore wind market, as well as what came about at the North Sea Summit. Finally, we’ll be taking a deep dive into upcoming auctions, as well as looking at the return of subsidies in certain markets.

Now before we jump into the first topic, it’s worth mentioning that some of us have been out and about in the first two months of this year. I, myself was at the WFO Annual Summit in Barcelona, whilst Peter was at the OSJ event in London. Now at the WFO event, there was an acknowledgement of just how tough 2025 has been. But what really stood out was the optimism in the room. Despite the challenges of last year, there’s a genuine sense that things are turning a corner, and Allocation Round 7 in the UK played a big part in that. 

So starting with, speaking of Allocation Round 7, Peter, you wrote a great insight analysing the results. Now, what are some of the main things about the results that stood out to you?  

Peter Lloyd Williams  

Okay, so first things first to remind, we’re talking about the UK’s Contract for Difference Allocation Rounds for offshore wind, which wrapped up in January. And this scheme basically provides financial support for renewables projects, both offshore wind, onshore wind, solar, whatever technology the government includes in the particular round for the year, and the offshore wind component finished up in January of this year. So the major headline is the amount of capacity that was awarded, 8.4GW across 8 projects, which compares pretty favourably to the 3.8GW we saw awarded in AR6 of fresh capacity, and is actually a record for an offshore wind allocation round in the UK. Fixed bottom wind was awarded at a weighted average price of £90.91/MWh, while the two floating wind projects closed at £216.49/MWh hour. RWE, the German developer, was the biggest of
was the biggest winner overall, having a stake in four of the eight projects awarded. And as you mentioned, industry reaction to the results has been pretty positive. And you can find more details from our insight on the Westwood Energy website. 

Bahzad Ayoub   
Thank you for that Peter. And yeah, just to let everyone know, our website is just westwoodenergy.com, where you can learn more about Wind Logix, about our insights, as well as what else is on offer over there. Now, moving on to Allocation Round 8, what are your views on this round, Peter? 

Peter Lloyd Williams 
So I think it’s unlikely that we’ll see a similar amount of capacity awarded to what we got in AR7, which is being pretty heavily leaned on by the UK government to meet its 2030 and subsequent offshore wind targets. Now, whether those targets will actually be met in reality, I think is a different question, but the idea was that a lot of emphasis was being put on AR7 to sort of get the capacity through the door at least and on paper. So what we saw actually in AR7 was the government using its new powers to double the budget on offer to offshore wind while the round was ongoing. So you can really see the effort that was put in there to boost the amount of capacity that was getting approved.

But for AR8, what I think will be more the focus is maintaining the viability of the uncontracted pipeline. We’ve seen a few developers already announce since the results of AR7 came out in January, that they’d be discontinuing projects that they had bid in AR7, but which were unsuccessful because they no longer considered them viable, with AR7 no longer being an opportunity to get funded. So I think, yeah, the key question will be keeping developers interested in their projects running the run up to AR8. And I think that will be one of the key themes over the next year. 

Bahzad Ayoub   
Thank you for that, Peter. So yes, definitely one to watch over the course of 2026, see what happens with AR8 and if there’s any new additions or developments there from the UK government.  

Now, I guess moving away from the UK and into a, what we would consider a newer or emerging market, we’re going to dive into Australia. Now, Hui Min, as our APAC analyst, you’re keeping a close eye on this market. So what are the latest updates from this country? 

Hui Min Foong   
Yeah, Australia, it’s an interesting market. We do get a lot of questions around Australia, and the reason is really it’s a potentially large market, and it does have the wind resource availability. Australia also has the onshore wind manufacturing experience and capability, and they’ve got offshore energy and offshore construction experience as well.

However, the offshore wind industry has not taken off quite yet and just recently we’ve seen things stall in the Illawarra as well as the Bay Strait renewable energy areas. Feasibility licences were not given out because of a lack of bidder interest.

Now what we’re seeing in Australia is that initial financial support from the government is missing for offshore wind. And what we’ve seen in other markets is that usually some form of support mechanism is needed to kick off an industry like offshore wind in this initial stage. In addition, the geographical distance from other offshore wind markets adds further to the challenge in terms of supply chain as well as logistics. What there needs to be is a development pipeline for projects in order to give investors more certainty to enter a market like Australia. But we’re not really seeing that at the moment. For example, currently only the state of Victoria actually has an offshore wind target. 

Bahzad Ayoub   
Thank you for that great overview, Hui Min. Now Peter, sticking with Australia, you are currently writing a briefing about the Australian market and this will be available to our Wind Logix subscribers. So do you have anything to add that you found whilst writing this briefing? 

Peter Lloyd Williams
Yeah, so I think the key thing, as always, is that context is key. And it’s tempting to think that your own industry is always the solution to sort of the problems that you’re seeing and always the one that you want to push forward, but that’s not always the case. Australia has significant onshore wind and solar capacity, particularly residential solar capacity, and offshore wind has to have something to add to the energy mix, whether that’s lower cost power, as is the case in some countries, or a complementarity to other forms of generation. For example, winds tend to blow stronger at night than they do during the day, and it’s obviously at night that solar doesn’t produce power. So I think, yeah, in general, the context is that building the sea is more expensive than building on land and there has to be some driving factor, be that constraints for land use onshore or a need for power with a different availability profile or something like that. 

Bahzad Ayoub   
Thank you, Peter. Now, we’ll be moving on to our next topic, which is having a look at what happened at the North Sea Summit, which was held at the end of January this year. There was a lot of key declarations and agreements that were signed by several European nations. Peter, why don’t you take us through some of these and the significance of them? 

Peter Lloyd Williams
Yeah, thanks, Bahzad. So this is a series of ongoing summits between Belgium, Denmark, France, Germany, Ireland, Luxembourg, the Netherlands, Norway and the UK. And the basic aim of the summit series is to enhance cooperation around various matters in the North Sea, especially energy.  

The second North Sea Summit, for instance, which was the one before this one, saw the parties agree an ambition of 300GW of offshore wind capacity by 2050, which was also reiterated during this meeting. New in Hamburg, where this third summit took place, was a commitment by the parties to develop 100GW of that 300GW as so-called cooperation projects. And as well, Germany and Denmark agreed a cost sharing framework around the proposed Bornholm Energy Island in the Baltic Sea. I don’t think these agreements fundamentally change anything about where the industry is or where it’s going, but I think industry players will no doubt be interested to see commitments being reaffirmed and re-articulated by major players and governments. 

Bahzad Ayoub   
Thank you for that. Great summary there. Now it’s time to move on to our final subject, where Hui Min and Peter will be discussing upcoming auctions over the course of the year and also looking at a return of subsidies and particular markets. So Hui Min, let’s start with APAC market and what’s happening there. 

Hui Min Foong   
Quite a bit is happening in the APAC region that is worth taking note of. We are anticipating auctions coming up this year in the major APAC markets, namely Taiwan, Japan, and South Korea. And while it’s not quite direct subsidies that are being introduced, we are seeing those auction frameworks being refined by the respective governments in order to try to increase the success rates of those auctions. 

In Japan, the major news last year was Mitsubishi’s withdrawal from the round one projects. This year, we are anticipating the re-tender of those round one projects early in the year before Japan then continues on with the round four auction.
After examining the reasons behind the cancellation of those round one projects, Japan is now planning to introduce a price floor as well as a price ceiling for bids and also revamp the bid scoring framework to place more emphasis on project feasibility rather than things such as the project delivery speed. 

Similarly, in South Korea and Taiwan, we are anticipating auctions coming up this year. Taiwan’s auction framework for round 3.3 is under discussion, and a new ESG component has been introduced to the scoring framework. While local content requirements have been removed in the current draft framework, the details on the ESG component are still being finalised and there is some concern over whether the use of the domestic resources may play a part in the ESG scores. And Taiwan’s draft framework also aims to avoid $0 bids and is introducing a minimum purchase price as a supplementary measure for any surplus electricity that is generated that goes beyond the contracted volumes for corporate offtake, or in other words, your corporate power purchase agreement volumes. So these are all examples of structural changes that the APAC markets are making to their offshore wind auctions.  In pursuit of their national offshore wind targets. 

Bahzad Ayoub   
Thank you for that, Hui Min. Yeah, it’s great to see that there is going to, there is potentially a lot of activity upcoming in that region this year and that governments there are recognising how to ensure, you know, there is interest and continued growth within their markets. Speaking of a similar thing that’s happening elsewhere,
when it comes to subsidies. Peter, it looks like they are starting to return in countries that were previously awarding projects on a zero-subsidy basis. What has happened and what has motivated this reverse course? 

Peter Lloyd Williams
Yeah, so over the past 18 months or so, we’ve seen a number of relatively high profile auction failures in a number of countries, among them Germany, Denmark, and the Netherlands, some of the key offshore wind markets. And it’s these countries in particular which had been shifting in recent years from providing direct financial support to offshore wind developers, to requiring developers to build projects without direct subsidy or sometimes forms of payment to the state, whether that be in the form of negative bidding or option fee payments or those sorts of mechanisms. Now, offshore wind is a strategic priority for these countries and others like them, and its large flagship projects, which bidders have not been turning out for. And so ultimately, given the choice between slower development, well, maybe no development at all, depending on how things go, or bringing back the subsidies that were in use a few years ago, countries are generally opting to bring back the subsidies, at least in those key offshore wind markets. 

Bahzad Ayoub   
Thank you, Peter. And yes, we will be keeping a close eye on those European markets, as well as the APAC markets, as well as anything else that’s happening in the offshore wind sector worldwide within WindLogix, as well as our insights and outputs as well.  

Now, looking at the clock, that’s all the time we have for this episode.
Thank you both for your great insights. And if any of our listeners want to discuss any of these topics with us or any subjects regarding the global offshore wind market, please do reach out to us. You can do so directly from our website, going to westwoodenergy.com. And we hope that this has been insightful and hope to catch you on the next episode. Thank you all for listening.
 

 

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