Three narratives leap out when reading energy industry press headlines these days. Firstly, the competitiveness and scale-up achieved by offshore wind in recent years has astounded even the most sceptical of critics. Secondly, greater deployment of wind-at-sea and other renewables is essential to tackling energy security and reaching climate targets. And, thirdly – and crucially – returns in the industry are in many cases unsustainable with major manufacturers running significant losses.

Finding the right balance between competitive rates of returns for offshore wind developers, a sustainable margin for the supply chain, value for consumers and new investments in yards, ports and infrastructure is essential for the levels of deployment required to seriously drive the energy transition.

Making the business case for offshore wind is more important than ever because we are now at levels that can seriously scale and transform. But to do this, both government and industry need to review current policy mechanisms and business practices. In essence, a new deal for the offshore wind sector.

Regarding policy tools, the contract for difference (CfD) mechanism as developed in the UK, has successfully delivered gigawatts of renewables, price stability for the consumer, bankability, and industry support. Some governments are looking into ‘negative bidding’ for future auctions, making developers pay for the right to develop a wind farm. Others seek to set up bidding wars for offshore wind leases, filling treasury coffers in the short term, but with no mechanism to provide long-term local content. Such additional costs will likely be passed on to the consumer and should be avoided.

Despite the simplicity and success of the CfD in driving down costs, it also remains a blunt instrument for ensuring local content. The UK’s recent auction cleared at £37.35/MWh ($44.73), over £2/MWh lower than the previous auction, and incredibly even lower than onshore wind. It is, of course a free market, but at prices like this, many developers will struggle to make marginal projects fly.

I have been on both sides of the table as a developer and now on supplier and I have never seen such a clear need for a more collaborative model

Major local investments are required across the entire offshore wind value chain to reach the hundreds of gigawatts required in Europe and the US. A race to the bottom for prices will not facilitate the diversity of investments required across regions, let alone drive more radical sustainable supply chain innovation including green steel, zero carbon marine operations and substitutions for rare earth elements.

Other elements should be investigated, including non-price criteria, to drive investments in innovation and regional infrastructure. Qualitative criteria are often a standard feature of major public procurement scopes and nothing new for civil servants. The leasing process could also be improved, including capping lease fees as seen in Scotland, encouraging collaboration between developers and shoring up local investment and supply chain opportunities to build a more integrated ecosystem for offshore wind fabrication. Fiscal measures could also be incorporated, including smarter tax rebates that stimulate investment and better funding for infrastructure and innovation.

Industry also needs to step up and change the way it works. The current business model and relationship between developers, the finance sector and the supply chain are clearly unsustainable. Seasoned offshore wind executives like David Hardy at Orsted and Sven Utermöhlen at RWE have been very clear that they are concerned for the supply chain’s financial outlook.

I have been on both sides of the table as a developer, and now on the supplier side, and I have never seen such a clear need for a more collaborative model than we see today. The default contractual model in renewables has often seen lump-sum based pricing with a great deal of commodity and price risk left to the supply chain. Developers have often seen this as the only ‘bankable’ solution for project financing, but the picture is so much more nuanced than this, and here lenders need to take a more active role. In the current volatile price environment, this is not a sustainable contractual model.

A new deal in offshore wind is required. This implies smarter policy mechanisms, stronger local investments in infrastructure and jobs and a more collaborative, risk sharing industry environment. We have a chance to seriously scale this business, but if we don’t get this right, we will fail on the climate, energy security and a just transition.

· Stephen Bull is executive VP of renewables at Aker Solutions and chair of RenewableUK. He was previously Equinor’s senior vice president for the North Sea region.