AbstractThe European Union has set ambitious CO2 reduction targets, stimulating renewable energy production and accelerating deployment of offshore wind energy in northern European waters, mainly the North Sea. With increasing size and clustering, offshore wind farms (OWFs) wake effects, which alter wind conditions and decrease the power generation efficiency of wind farms downwind become more important. We use a high-resolution regional climate model with implemented wind farm parameterizations to explore offshore wind energy production limits in the North Sea. We simulate near future wind farm scenarios considering existing and planned OWFs in the North Sea and assess power generation losses and wind variations due to wind farm wake. The annual mean wind speed deficit within a wind farm can reach 2–2.5 ms−1 depending on the wind farm geometry. The mean deficit, which decreases with distance, can extend 35–40 km downwind during prevailing southwesterly winds. Wind speed deficits are highest during spring (mainly March–April) and lowest during November–December. The large-size of wind farms and their proximity affect not only the performance of its downwind turbines but also that of neighboring downwind farms, reducing the capacity factor by 20% or more, which increases energy production costs and economic losses. We conclude that wind energy can be a limited resource in the North Sea. The limits and potentials for optimization need to be considered in climate mitigation strategies and cross-national optimization of offshore energy production plans are inevitable.