From Soil to Sea: Credit Risk Dynamics in Wind Energy Projects

While onshore wind power projects are generally cheaper to build, offshore wind projects offer a criterial advantage: the ability to deploy much larger turbines at scale, generating significantly more energy. This is especially valuable for densely populated European countries with extensive coastlines, as it facilities their renewable energy transition plans. While onshore and offshore wind power projects rely on similar technology to convert mechanical power into electricity, they tend to exhibit some distinct risk characteristics during both construction and operating phases.

Key Highlights:
-- Compared with the onshore wind sector, offshore wind projects have higher complexity, requiring more experienced sponsors, contractors, and operators with specialized skill sets in order to minimize higher construction and operating risks.
-- The offshore wind sector is dominated by only a few major global players, because of its technical complexity, operational challenges, and substantial financial requirements. This dynamic naturally filters out less qualified players, providing lenders with higher confidence by a shortlist of "bankable" vendors.