Potential Delays in European Offshore Wind Projects Due to Iran Conflict
A series of significant offshore wind projects across Europe are at risk of delays as the ongoing conflict involving Iran threatens to disrupt the shipment of essential components manufactured in the Gulf region.
Industry insiders have expressed concerns that parts ordered from suppliers based in the United Arab Emirates (UAE) could become stranded if maritime traffic through the Strait of Hormuz remains effectively blocked.
Iran’s control over this vital trade passage has already caused substantial disruptions to oil and gas deliveries originating from the Middle East. There are apprehensions that contingency measures may need to be implemented to prevent setbacks in clean energy initiatives as well.
Among the affected projects are two large offshore wind farms planned in UK waters, as well as several developments intended to supply offshore wind power to Germany and the Netherlands.
The UK wind farms, located off the coast of Norfolk, received government approval just one month prior to Iran’s effective closure of the Strait of Hormuz.
The German renewable energy company RWE, which is developing these wind farms, has engaged a Dubai-based firm to supply over 180 components from its UAE fabrication facility during the construction phase.
These wind farms are projected to generate enough electricity to power approximately 4 million UK homes by the end of the decade, thereby playing a crucial role in supporting the UK’s goal to reach net zero emissions.
A spokesperson for RWE stated that the company has begun close coordination with its supply chain partners amid the escalating conflict, which has included airstrikes targeting key infrastructure.
“Our primary focus is the safety of those working in the area,”
“To date there has only been a limited effect on our supply chain partners’ activities, but we are monitoring the situation closely and putting mitigation plans in place should the situation continue for a prolonged period.”
Role of Gulf Fabrication Yards and Supply Chain Concerns
Fabrication yards in the Gulf currently constitute a minor segment of the global renewable energy supply chain, which is predominantly established in Europe and Asia. However, the Gulf region was anticipated to emerge as a significant hub for international renewable energy supply chains within the next 25 years, according to the Middle East Institute, a Washington DC-based think tank.
RenewableUK, a trade association for the sector, commented on the situation, stating:
“We’re aware that the conflict in the Middle East could have an impact on several supply chain contracts that UK offshore windfarm developers have with companies based in the UAE.”
“These include large steel fabrication work on key components such as turbine foundations and offshore substations. As with many other sectors, the implications of the disruption in the Strait of Hormuz on global supply chains does somewhat depend on whether it remains closed for an extended period of time.”
Impact on German Offshore Wind Transmission Projects
The closure of the Strait of Hormuz may also affect a major project by the transmission operator TenneT, which aims to connect offshore wind farms in the German North Sea to the mainland grid.
TenneT has contracted a UAE fabrication yard to supply structural steel components, including a 5,461-tonne jacket foundation constructed for the BorWin6 high-voltage transmission project. This component was successfully shipped from the UAE facility three weeks before the strait’s closure.
Additionally, three other offshore grid projects—LanWin2, BalWin3, and LanWin4—have contracts with suppliers based in the UAE.
A TenneT spokesperson indicated that the company’s supply chain is “geographically diversified” and noted that only components for the LanWin2 project are currently being manufactured in the UAE. The spokesperson declined to provide details regarding the construction and delivery schedules for components related to the other projects.
Calls for Increased Local Manufacturing
The current threat to supply chains is expected to renew discussions about the importance of prioritizing domestic manufacturing of key components necessary to meet renewable energy targets.
Ajai Ahluwalia, head of supply chains at RenewableUK, emphasized ongoing efforts with the government to expand the UK’s offshore wind supply chain, highlighting initiatives such as the clean industry bonus that incentivizes domestic component production.
“We’re working hard with the government to maximise the growth of the offshore wind supply chain here in the UK, with initiatives such as the clean industry bonus which incentivises the domestic production of components.”
