Offshore wind in the Asia-Pacific region is no longer a hypothetical, it is a rising force gaining momentum as countries push towards net-zero commitments and ambitious renewable energy targets, according to a recent report.

Positioned as a promising and scalable solution, offshore wind has the potential to unlock vast clean energy capacity, deliver significant economic benefits and play a pivotal role in accelerating the global energy transition, finds the Global Wind Energy Council ( GWEC )’s Financing Offshore Wind in APAC: Assessing the Cost Competitiveness of Offshore Wind report – which examines the levelized cost of electricity ( LCOE ) for offshore wind and highlights the key influences that can enable the Asia-Pacific market to follow the successful cost-reduction trajectories already in place in Europe and China.

However, achieving cost competitiveness, the report argues, remains a core challenge in Asia-Pacific. To realize this potential, coordinated action between policymakers and investors is essential to overcome financial and regulatory barriers and ensure the sector scales efficiently and sustainably.

Scaling drives down costs

Market maturity, the report makes clear, is the most decisive factor in lowering costs. Data from mature markets like the UK, Germany and the Netherlands show that the LCOE falls dramatically after the first 2 to 3 gigawatts of installations, thanks to economies of scale, technological innovation and de-risked financing environments.

The UK, for example, slashed its offshore LCOE by nearly 62% from 2014 to 2021, propelled by scale, better auction design and the deployment of larger turbines.

Emerging Asia-Pacific markets, the report notes, are still in the early stages of offshore wind development, with higher upfront capital expenditures and limited supply-chain depth. However, as installations proceed and regulatory frameworks mature, these costs are expected to follow the same downward trajectory.

Headwinds

From 2021 to 2023, the offshore wind sector globally faced steep cost pressures due to inflation, rising interest rates and supply-chain shocks, particularly those triggered by the global pandemic and the Russia-Ukraine war. These macroeconomic factors pushed the LCOE up by as much as 50% in some markets.

However, there has been a stabilizing trend, the report shares, in 2024 and into 2025. Inflation has moderated, and key commodity prices, while still elevated, have declined from recent peaks. Central banks across Asia-Pacific are also easing monetary policy, creating a more favourable financing environment for large infrastructure projects.

Financing bottleneck

Unlike other renewable energy options, offshore wind remains highly capital intensive, with project debt commonly exceeding US$2 billion. The LCOE is acutely sensitive to financing terms, and every 1% increase in interest rates, the GWEC estimates, adds 8% to LCOE.

This is particularly daunting for developing markets, such as Vietnam or the Philippines, where risk premiums are high and access to low-cost debt is limited.

To address this, governments, the report urges, should provide policy certainty, simplify permitting and improve risk-sharing mechanisms; and some positive signals are emerging.

Japan’s 20-trillion-yen ( US$139 billion ) Climate Transition Bond Framework, Korea’s “One Stop Shop” permitting reform initiative and Vietnam’s power development plan are all cited in the report as encouraging steps.

Cautiously optimistic

To unlock the full potential of offshore wind in Asia-Pacific, the report recommends, a strategic policy approach focused on building momentum and reducing financial risk.

First, governments should prioritize the rapid deployment of early-stage projects to help markets gain the technical and financial maturity needed to drive down costs. Streamlining permitting processes and clarifying regulatory frameworks, the report points out, would also reduce investor uncertainty and accelerate development timelines.

At the same time, encouraging blended finance models, which combine public and private capital, can lower the cost of capital and make projects more bankable. As well, establishing well-designed auction frameworks will inject competitive pressure, pushing down the LCOE.

Finally, investing in local supply chains and workforce development will not only improve project economics, the report adds, but also anchor long-term industrial growth in the region.