The North Sea ‘Investment Pact’: When mechanism matters more than volume

Yes, the headlines focus on the Investment Pact for the North Seas and the commitment to 15 GW of offshore wind per year from 2031. But for those of us watching the market closely, the mechanism matters far more than the volume.

Last summer, in my blog post, I described Germany’s offshore wind auction outcomes as a “loud and clear wake-up call.” Uncapped negative bidding and high merchant exposure had pushed the sector to its limit. The conclusion was simple: if political ambition is to translate into delivered projects, the offshore wind market needs to evolve beyond a pure “pay-to-play” model. System stability and efficiency will need to be ensured.

From that perspective, Hamburg felt like a moment of recognition. After years of Green Giraffe Advisory advocating for the stability of CfDs (Offshore wind – Auction designs and why PPAs are only second best), the industry’s core arguments have finally moved from the fringes to the centre of policy design.

Have all the industry voices finally been heard?

It seems that the key arguments have finally been heard. To achieve energy independence, we need to utilise the energy resources available to us and scale up production quickly. It can be done; China reached 50 GW within only a few years.  

Three takeaways

1. Revenue stability is officially back on the (German) agenda

The renewed political commitment to two-sided Contracts for Difference and support for bankable PPAs is the most important signal from Hamburg. Following the recent German auction experience, the appetite for pure merchant risk or heavy concession payments appears to have diminished. This pact suggests a shift toward delivery-driven market design.

2. Infrastructure is no longer optional

The focus on cross-border “hybrid” projects, shared TSO principles, and coordinated grid expansion reflects what is now unavoidable: system integration is a prerequisite for bankability. Managing volume risk, negative price hours and grid curtailment cannot be solved project-by-project. It requires coordinated infrastructure planning at scale.

3. The supply chain reality check

A 15 GW/year build-out and ambitions to reduce costs by 30% will only happen if the supply chain and investors believe the framework is credible. That means early-stage financial structuring that allows developers and suppliers to commit capital to vessels, steel, ports, factories and people to expand capacity. If this is not done, key bottlenecks remain, and prices remain high. The sector needs strong commitments and not just targets.

Why this matters

The North Sea is where offshore wind proved it could scale. Hamburg was an acknowledgement that the next phase of growth requires more sophisticated risk-sharing, stronger government involvement, long-term support and greater reliability in market frameworks.

For advisors, lenders and developers alike, the task now is to turn political momentum into bankable, investable projects – a mission Green Giraffe Advisory is proud to support: https://www.linkedin.com/feed/update/urn:li:activity:7393638401897500673

What matters next is implementation

• How quickly can the supply chain and TSOs ramp up?
• How will negative price hours be treated, and who ultimately bears that risk?
• How will increased build-out and wake effects impact yields?
• How can the lower cost of electricity from offshore wind be achieved while factoring in these structural challenges, and what does this mean for project business cases?

These are exactly the questions we are working through with clients, and we are more than happy to discuss them.

 One thing is clear: If Hamburg is followed by consistent policy delivery, this could mark the point where ambition and reality finally start moving in sync again.