Wind farm risks are like dominoes, and a new study finally shows what happens when they all fall at once
Wind energy is expanding fast — but the economics aren’t keeping pace. Across Europe, auctions have failed in Germany, France, the Netherlands, Denmark, and Lithuania. Projects that won bids just a few years ago are now struggling to secure financing. Offshore wind costs surged 10–50% between 2021 and 2023, triggering cancellations on both sides of the Atlantic.
The industry faces risks on multiple fronts: supply chain disruptions, component reliability, grid congestion, market volatility, and more. Each is studied. Each is managed, to a degree. But what happens when they don’t arrive one at a time — and what does that mean for a wind farm’s economic viability over a 25-year lifetime?
An industry under pressure
Wind energy runs on thin margins. Projects are financed over decades, with revenues tied to electricity prices and costs exposed to global commodity markets. When either side shifts unexpectedly, the consequences compound quickly.
Four moderate-risk scenarios were activated simultaneously: supply chain uncertainty, grid curtailment, reliability uncertainty, and O&M process uncertainty.
Recent years have delivered shocks on both sides at once. Supply chain disruptions drove up the cost of steel, copper, and carbon fiber. Financing costs rose as project risk grew harder to predict. Negative electricity prices became more frequent across Germany, Denmark, and the Netherlands. Each development was manageable in isolation — together, they’ve pushed multiple projects past viability, producing failed auctions across five European countries and a growing list of projects that won bids but can’t clear investment approval.
Six risks, four sector challenges
A new study combined expert input with a structured survey of 59 wind energy professionals from industry and academia to identify and categorize the dominant risks across a wind project’s full life cycle.
The single largest concern for currently operating wind farms was component reliability. In total, 49% of survey responses pointed to reliability as the primary economic risk driver — covering major non-redundant components, replaceable parts, and premature degradation.
For future projects, reliability stays important (34% of responses), but external factors gain ground: curtailment, market uncertainty, regulatory changes, and supply chain constraints all grow in weight. The study organized findings into four overarching sector challenges — long-term asset viability, component reliability gaps, O&M inefficiencies, and risks from rapid technology upscaling.
When supply chains and financing collide
Supply chain risk propagates through material costs, construction schedules, and ultimately through the cost of capital itself. The study modeled this using stochastic commodity price simulations for steel, copper, and carbon fiber, run through capital expenditure calculations. It also varied the weighted average cost of capital (WACC) to reflect different levels of perceived project risk. Under stable conditions, WACC sat around 5.2%.
Under a moderate-risk scenario, the mean levelized cost of energy (LCOE) stayed near the baseline of €67.3/MWh. The high-risk scenario pushed the mean to €77.5/MWh — roughly a 12% increase, consistent with observed sector cost trends. Under those conditions, the entire cost distribution shifted above the baseline. Supply chain risk doesn’t just raise average costs; it can push a project’s full range of outcomes into unviable territory.
Curtailment, reliability, and the hidden cost of uncertainty
Curtailment — from grid constraints, negative electricity prices, or wildlife protection rules — shifts project NPV downward by hundreds of millions of euros. The study modeled this without assuming any compensation mechanism, so losses fall entirely on the project owner.
Even under low reliability uncertainty — a mature turbine fleet with well-characterized failure rates — the spread of NPV outcomes spanned roughly €400 million. As epistemic uncertainty grows, the distribution develops long, heavy tails. O&M process uncertainty adds further asymmetric downside risk, with rare events like extended weather lock-ins or vessel unavailability dominating cumulative downtime. These carry large economic impact that shorter-than-average interventions don’t offset.
Risks don’t add up — they multiply
This is the study’s most consequential finding. Four moderate-risk scenarios were activated simultaneously: supply chain uncertainty, grid curtailment, reliability uncertainty, and O&M process uncertainty. None was set to a worst-case level.
At the level of expected values, losses were roughly additive — a combined mean NPV loss of approximately €381 million, close to the sum of individual contributions (around €356 million). Tail risk told a different story. The P10–P90 outcome band widened 24% beyond what an independence assumption would predict, and the probability of negative NPV tripled, from 2.3% to 7.0%. That tripling came from interactions between risks that each looked manageable in isolation. Siloed risk assessment, however detailed, systematically misses this.
What the industry needs next
The study draws a useful distinction between two risk types. Mean-shifting risks — curtailment, supply chain costs — primarily drag down expected outcomes and can be addressed through contracts, hedging, and policy instruments. Tail-widening risks — reliability uncertainty, O&M process variability — reflect insufficient knowledge, and their spread narrows only as better fleet data, consistent taxonomies, and improved monitoring reduce underlying uncertainty. The management response differs: invest in information, not just insurance.
Eight specific integration gaps in current risk frameworks are identified. Closing them will require shared data infrastructure, physics-informed reliability models, and tools connecting project-level and system-level assessments. Lifetime extension of aging wind assets — if supported by proper structural monitoring and regulatory frameworks — may also become one of the sector’s most significant value opportunities in the coming decade.
You can learn more information here: Gräfe, M., Ludot, A., Shields, M., Kolios, A., Pulikollu, R., and Dimitrov, N.: Review and quantification of major risks in wind farm development and operation, Wind Energ. Sci., 11, 3475–3507, https://doi.org/10.5194/wes-11-3475-2026, 2026.
Daniel García is an Editor-in-Chief with strong expertise in structural work and engineering principles. He combines this technical foundation with deep knowledge of energy, spatial design, and emerging technologies, bringing a forward-thinking and analytical approach to editorial leadership.
