Offshore wind costs continue to tumble as developers fine-tune technology

The company will build a pair of wind farms off the Netherlands coast, each with a capacity of 350 megawatts. PHOTO: Dong Energy

AMSTERDAM—Developers are continuing to drive down costs in the fast-expanding offshore wind energy industry.

Last week, Dong Energy won concessions to build a pair of wind farms off the Netherlands coast by offering a record price of 72.70 euro (approximately US$80) per megawatt—a significant reduction from the previous record and the first time the levelized cost of offshore wind power, excluding transmission costs, has dropped below the 100 Euro/MW threshold.

“With Borssele 1 and 2, we’re crossing the levelized cost of electricity mark of 100 [Euro] per MWh for the first time and are reaching a critical industry milestone more than three years ahead of time,” Samuel Leupold, executive vice-president and Head of Wind Power at Dong Energy, said.

The Denmark-based company had previously aimed to decrease costs to below the 100 Euro/MW benchmark by 2020, but continuing developments in turbine and blade technologies, as well as improvements to foundation design and installation methods have allowed Dong to reach that goal four years ahead of schedule.

Leupold said the deal demonstrates the “great potential” of offshore wind energy.

Particularly in land-starved Europe, the marine technology has begun contributing a significant amount of energy to the grid. In 2015, developers installed three gigawatts of offshore wind capacity throughout the 28-country EU block, representing about 15 per cent of all new electricity capacity.

The two new wind farms are expected to have a combined capacity of 700 MW, or enough to power the equivalent of approximately one million Dutch homes.

The company plans to build the projects within the next five years.