Can Wind Energy Compete? Three Key Takeaways on Its Future

Wind turbines are hardly the buzziest of clean technologies. After all, rudimentary versions of these systems, which capture kinetic energy from airflows and convert a portion of it into electric energy, were the earliest competitive form of renewable electricity. Despite solar PV’s more recent price drops and rapid growth, wind still produces more electricity today. 

But to dismiss wind’s potential for exponential growth and cutting-edge evolution would be a costly mistake. 

The earth contains 424 TW of wind energy resource, and currently deployed wind turbines use less than 0.5% of it. New, fast-developing technologies—like floating turbines that can be positioned in water up to 200 meters deep—are unlocking this resource across a wider swath of the planet’s windiest places. All told, wind has the potential to abate 10% to 20% of CO2 emissions by 2050, through the clean electrification of power, heat, and road transport.  

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Despite its superlative cleanness and untapped potential, wind faces strong headwinds. Solar’s prices have fallen faster than wind’s, chilling the latter’s competitiveness in the power and renewables space. As of 2025, solar has become the cheapest and most-deployed renewable energy source globally. 

One result of this gradual power shift has been that investments in new wind energy projects have slowed significantly—from a 12% CAGR from 2013 to 2020 down to a 4% CAGR from 2021 to 2024. 

As the solar industry has moved down the learning curve and slashed electricity prices, the wind industry has found itself beset by problems. For one thing, permitting delays and interconnection queues have thrown up practical obstacles for a massive share of wind developments, with 40% of all projects in the United States held up in the permitting phase. Rising interest rates have also played a part in dampening the industry’s growth, since developers must borrow large sums to build wind farms. 

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Dominating the renewables headlines most recently has been the Trump administration’s aversion to the technology, which it derides as “windmills.” Executive orders issued in the administration’s first days are likely to effectively freeze the industry’s growth in the United States for the foreseeable future. At least 30 GW of planned offshore wind capacity in the country is likely to be halted indefinitely because of the Trump orders. 

While Trump’s influence on wind’s growth and development in the United States will be significant, it is not as make-or-break as some fear. After all, in many parts of the world, wind energy installations march on and exciting new technologies continue to develop. 

What will determine whether wind wins or loses? The most important factors are likely to be the direction of global policy shifts, the health of global supply chains stretched across tense geopolitical fault lines, and the uptake and economics of new and improved wind technologies, as detailed in the following three key points.

Key Point No. 1: The wind industry will rely on steady tailwinds from global policies as gusts shift in the United States. 

Ambitious policy moves have already shown how both supply- and demand-side forces can shift rapidly toward an embrace of wind. Consider the case of Ørsted, a Danish multinational energy company that transitioned from 80% coal- and gas-powered energy in 2006 to 70% wind by 2023, making it the world’s largest developer of offshore wind power.

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Ørsted’s pivot away from fossil fuels and toward clean energy was driven by both supply and demand. In short, Denmark ran out of oil and gas resources to develop. Instead of looking elsewhere, the company used the supply crunch as an opportunity.

Why offshore wind? One reason was Ørsted’s existing capabilities, given its offshore oil and gas developments. Another, of course, was policy: The European Union announced in 2007 that 20% of energy should be from renewable sources in 2020, precipitating a decision by Ørsted’s leaders to enforce a shift away from fossil fuels.

The EU continues to stand out as a global leader in policies favorable to clean energy. Its 2030 climate and energy targets, which include a goal to reach 42.5% renewable energy share by that year, will require European countries to build around 33 GW of wind capacity each year. Permitting improvements, including the digitalization of permitting, have had the intended effect of boosting permitting volumes for new wind farms. Both Germany and Spain, for example, permitted 70% more onshore wind in 2023 than they did in 2022. Today, the EU and United Kingdom have the world’s largest share of wind capacity (29%), with China close behind (28%), and the United States lagging (22%).

As wind turbine manufacturing matures—particularly in the EU, the United States, and China (which dominates the space)—regional collaboration and favorable trade policies will be necessary to maintain an attractive market environment for wind’s global expansion. However, each of these regions is angling to strengthen its own manufacturing in the space and reduce reliance on others. These crosswinds in trade and protectionism could come at a cost for the industry.

This may be especially true in light of the policy U-turn immediately effected by Trump 2.0. Under the Biden administration, the United States passed the Inflation Reduction Act, in large part to boost domestic manufacturing in response to China’s market dominance. The IRA introduced advanced manufacturing tax credits and slapped tariffs on imported wind turbines. When it was passed in 2022, the IRA was expected to increase land-based wind deployment by around 85 GW by 2030. In the final two years of the Biden administration, companies announced 42 new wind projects, comprising over 15,000 new jobs and $14.38 billion in new investments. 

During his first days in office, Trump ordered a temporary halt on offshore wind projects, paused approvals for onshore and offshore wind projects on federal land until an unspecified date, and called for a pause on IRA funding. The future of the IRA’s tax credits remains unclear—as does the United States’ burgeoning role in global wind-sector manufacturing. 

Key Point No. 2: Wind is hampered by scattered, cross-border supply chains that are increasingly vulnerable given geopolitical tensions.

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The wind turbine supply chain can be divided into five tiers:

• Tier 1: Finished products that are purchased by the developer, including turbines, foundations, and cables. 
• Tier 2: Subassemblies that have a specific function in a Tier 1 component. These are often smaller parts, like the pitch systems that adjust the angle of a turbine’s blades. 
• Tier 3: Subcomponents that are widely available (motors, bolts, gears) and necessary for Tier 2 parts.
• Tier 4: Primary processed materials like glass, fiberglass, and steel, which are processes for Tier 3 and 4 components. 
• Tier 5: Raw materials like iron, chromium, copper, oil, and acrylonitrile. 

This final tier wields a disproportionate importance over the entire wind supply chain.  Though steel composes 75% of a turbine’s weight, it represents only 25% of the total cost. On the other hand, the rare earth elements necessary for turbines’ magnets to function comprise only 1% of the total weight but 25% of the cost. 

What’s more, supplies of these rare earth materials are typically not present in the countries manufacturing the turbines, resulting in cross-border dependencies. The upshot: Wind’s levelized cost of energy (LCOE) is highly sensitive to commodity prices of rare earth materials. 

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China, for example, dominates the original equipment manufacturing (OEM) space in wind, with 60% market share (and up to 80% market share in some components). It is currently the only market with production expected to surpass domestic demand by 2028.

However, even China currently has a significant trade deficit for turbines, and it imports most of its ores from Southeast Asia. This is just one example of a trade deficit in wind manufacturing with major geopolitical implications. Japanese and Korean manufacturers also have weaknesses in ore supply, while the United States is particularly weak in refined nickel. 

China’s dominance in wind isn’t absolute, however. A significant demand gap remains for those who invest now. With 1,200 GW of supplied capacity that other OEMs can capture by 2030, manufacturers in the EU and the United States are well poised to close in on it if they choose to invest. 

Still, these manufacturers will need to devise improvements over current supply chain systems to secure their growth. Solutions at the forefront include:

1. Vertical integration: Developers could take more control of the supply of parts like turbine blades and nacelles (the “brain” of the turbine that converts wind energy to electricity), enabling direct customization for performance and durability.
2. Localization: Establishing local suppliers would reduce dependency on cross-border supply routes and drive down costs.
3. Price hedging: Establishing long-term agreements through future options and contracts would help stabilize costs and create predictability.

Key Point No. 3: As innovation pushes costs down—especially for offshore developments—policy factors may recede in importance. 

Wind technology can be broken down into onshore (land-based turbines) and offshore (water-based, where wind is typically higher). Within those two broad categories are the following six subcategories.

Onshore:

1. Residential, which requires small systems that can be mounted onto rooftops.
2. Commercial, which are midsize systems installed close to the source of demand. 
3. Mid- and large-size, installed in industrial parks and factories.
4. Utility-scale, which are massive ground-mounted arrays that deliver power to the grid.

Offshore:

1. Fixed-bottom turbines, which are even larger machines installed just off the coast in shallow water.
2. Floating turbines, which are attached to the seabed with chains, steel cables, or other flexible anchors and can therefore be sited in the deep ocean. 

As both onshore and offshore turbines have increased in size, there have been both benefits and challenges: The increased size has meant lower capital expenditures per MWh, but it has also kicked off logistical and manufacturing constraints in the transport of the massive parts. 

Turbine technology also needs to better contend with ongoing bird and bat killings, local warming caused by pulling warmer air down toward the ground, and noise—all of which spark community resistance to the presence of wind installations. 

Utility-scale onshore wind dominates the sector, with upwards of 90% of installed capacity. Fixed-bottom offshore represents most of the rest, with about 7% of installed capacity. 

It is precisely in offshore wind, though, where a lot of the opportunity lies, and it is not because it is cheap today. The most important driver for offshore wind is its proximity to population centers, which are often located along the coasts. Another advantage: higher capacity factors offshore than over land. Also, offshore installations are less likely to impact residential areas, avoiding most of the usual NIMBY—not in my backyard—concerns.

Floating offshore wind presents an area of particular excitement, given the wide-ranging location possibilities—like off the coast of California, where waters are too deep for fixed-bottom turbines. Hywind Scotland, the first floating turbine wind farm, is demonstrating the technical feasibility of floating wind, though, at eight times the cost of onshore wind, the economics are still far from competitive. Still, there’s no doubt this will be an area to watch, particularly as innovations drive down prices.

At the same time, offshore wind developments face formidable challenges. The structures have to be built for tough ocean climates and must be able to withstand erosion and corrosion. And while transmission lines do not face NIMBY concerns, connecting offshore farms to onshore power grids poses technical and, thus, cost challenges. 

Such challenges have driven up the costs of wind projects significantly. Onshore wind LCOE dropped to $50 per MWh in 2023 (significantly lower than fossil fuel costs, which stand at $75 to $120 per MWh). Offshore wind remains roughly on par with fossil fuels. 

Still, offshore wind shows more promise than might be expected, given its costs. For example, Ørsted’s Sunrise Wind project, off the coast of New York City, was greenlit last year despite project costs at nearly three times those of comparable onshore projects.

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