Published on December 14th, 2016 | by Joshua S Hill0
Shell Consortium Sets New Lowest Offshore Wind Price For 700 Megawatt Borssele III & IV Wind Farms
December 14th, 2016 by Joshua S Hill
A consortium made up of Shell, Van Oord, Eneco, and Mitsubishi/DGE have been awarded the concession to build the Borssele III and IV Wind Farms, amounting to 700 megawatts (MW), at a new record low cost of €54.5/MWh.
The race for the lowest offshore wind bids has been fierce this year. DONG Energy was awarded the concession to build the 350 MW Borssele I and II Offshore Wind Farms in July, at what was at the time a record low price of €72.70/MWh. A few months later in September, Vattenfall placed the lowest bid on the Danish Near Shore Wind Tender for the 350 MW Vesterhav Syd and Vesterhav Nord wind farms, at €60/MWh.
European offshore wind prices are also not necessarily the norm worldwide. New figures from Bloomberg New Energy Finance in early November showed that the new benchmark estimate for offshore wind energy was €118/MWh ($126) — though this is itself down 22% on the first half of 2016, and 28% on the second half of 2015, thanks in part to the competitive bidding auctions taking place in the Netherlands and Denmark. However, high costs in deeper UK waters (which inherently require a higher cost to deal with the deeper waters) have kept the global average price where it is.
However, a new low price has been set this week, as the Netherlands’ Minister of Economic Affairs awarded the concession for the 350 MW Borssele III and IV Wind Farms to a consortium at €54.5/MWh. The second Borssele offshore wind farm (which is itself made up of III and IV) is expected to be constructed and operated with a subsidy of only €0.3 billion, well down on the originally anticipated €5 billion.
“If the electricity price develops as we expect, in 7.5 years’ time subsidies will no longer be required for the production of electricity from offshore wind farms,” explained Minister Kamp of Economic Affairs. “That brings the Government’s aim for renewables to compete with fossil fuels without subsidy within reach. The Netherlands is a front runner in the development of offshore wind energy, creating many opportunities for the Dutch industry. With these winners this becomes even more clearly visible.”
The Netherlands Government is working on building five wind farms — “the largest offshore wind projects worldwide.”
“The realisation of the offshore wind farms is a boost for the industry,” continued Minister Kamp. “We expect that by 2020 around 10,000 jobs will be created by these projects. Dutch industry is involved in the construction of almost all offshore wind farms in Europe. Last week the Government presented the Energy Agenda, which sets out our route towards a low carbon energy supply. The results of this latest tender demonstrates that the energy transition offers ample economic opportunities.”
Unsurprisingly, considering the new record low price, the news has been welcomed among the European industry.
“This is yet another indication of the accelerated trend towards cost reduction in offshore wind,” said WindEurope CEO Giles Dickson. “The winning bid reflects the industrialisation of the offshore wind supply chain. And it highlights the confidence of the industry in the Dutch offshore wind programme.”