European producers of offshore wind monopile foundations are experiencing a shift from capacity constraints to underutilization as projects face delays and investment decisions slow. According to analysis from Rystad Energy, manufacturing capacity for XXL+ monopiles is projected to expand from approximately 1.2 million tonnes in 2024 to 2.7 million tonnes by 2027, yet factory utilization is anticipated to remain weak at roughly 32% during 2026 and 2027, before declining further to 19% in 2028. Utilization is not expected to recover to approximately 50% until 2031 under current project timelines.
The market dynamics have created significant pressure on manufacturing economics. Production costs in Europe have increased approximately 38% since March 2020, rising from $2.50 million to $3.46 million per kilotonne. Simultaneously, selling prices have declined from their 2022 peaks as suppliers compete for limited future orders. Profit margins have compressed substantially, with modeled margins for a representative 1.6-kilotonne monopile falling from approximately $0.93 million to roughly $0.20 million today, representing approximately 3% of selling price.
This represents a marked reversal from conditions in 2021 and 2022, when European manufacturing capacity was tightly constrained and Chinese competitors primarily filled gaps left by unavailable European suppliers. European manufacturers including Sif and EEW made substantial capacity investments during that period, with Sif more than doubling annual capacity to around 500 kilotonnes. Today, these producers now compete for orders in a market where surplus capacity exists among local manufacturers.
Chinese suppliers are navigating this changed environment with cost advantages. Manufacturing costs in China are estimated at approximately $2.03 million per kilotonne, roughly 41% below European levels. This differential allows Chinese suppliers to absorb freight and carbon costs while remaining competitive for European projects, with delivered pricing potentially reaching around $6.35 million compared to modeled European pricing near $6.69 million for comparable units.
Despite overcapacity trends, European producers maintain market dominance, with Sif controlling approximately 31% of contracted monopile tonnage and EEW around 22%, compared to Dajin’s roughly 12%. However, longer-term risks exist if utilization remains depressed for extended periods, as high fixed costs may prompt suppliers to defer investments, mothball facilities, or reduce capacity. Uncertainty in Germany exemplifies these challenges, with 17.8 GW of awarded offshore wind sites potentially affected by industry-proposed site-return mechanisms.
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