This study decomposes the impacts of grid-connection regimes (Deep vs. Shallow) and lead times on the capital expenditure (CAPEX) of offshore wind projects. Using a dataset of operational European projects, we conducted regression analyses focusing on the United Kingdom (developer-led Deep regime; N=37) and Germany/Netherlands (TSO-led Shallow regime; N=40). We comprehensively evaluated CAPEX determinants across three categories: location factors (e.g., spatial capacity density and distance to shore), technology factors (CAPEX report year), and lead time factors (durations of permitting and construction). Results reveal that in the Deep regime, while technological benefits are often offset by market risks, developers exhibit optimizing behavior by increasing capacity density to dilute infrastructure costs. Additionally, permitting delays directly increase CAPEX. In contrast, in the Shallow regime, where infrastructure risks are shielded, technological progress directly drives substantial cost reductions. However, this regime exposes other risks, such as the physical costs of increasing distance from shore and delays from idle times associated with infrastructure development. Identical technological advancements or delays manifest entirely differently in costs depending on institutional design. The insights suggest a policy paradox: while the Shallow regime appears advantageous by shielding developers from infrastructure risks, relying on public entities for grid development can create bottlenecks, where infrastructure delays lead to idle times that ultimately drive up project costs.
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