Published on May 1st, 2017 | by Joshua S Hill0
Record Low Offshore Wind Prices Not Yet Affecting European Policymakers
May 1st, 2017 by Joshua S Hill
The last 10 months of offshore wind development has seen prices plummet, with ever lower bids and the world’s first subsidy-free offshore wind farms, but policymakers do not yet appear to be taking note of this new offshore wind reality.
It has been a tremendous time for the offshore wind industry, as bid prices started falling back in July of 2016, when DONG Energy placed a record-low winning bid of €72.7/MWh in the Dutch tender for the Borssele I and II wind farms. In November, Vattenfall won the right to build the largest Nordic wind farm, the Danish 600 MW Kriegers Flak project, at the low price of €49.9/MWh. This was followed soon after in December by a Shell-led consortium which won the right to build the 700 MW Borssele III and IV Wind Farms for €54.5/MWh.
However, it was all overshadowed last month when the results of the first competitive auction for offshore wind in Germany revealed that EnBW and DONG Energy won the rights for wind farms on the world’s first subsidy-free auction wins.
|Project||Capacity||Strike Price/FiP*||Length of support||Grid costs included?||Auction date||FID (expected date)||Commissioning (expected date)|
|Horns Rev 3||400||103||11 years||No||2015||2016||2018|
|Borssele I +II||700||72.7||15 years||No||2016||2017||2021|
|Vesterhav N&S||350||63.8||11 years||No||2016||2017-2018**||2020|
|Kriegers Flak||600||49.9||12 years||No||2016||2016||2020|
|Borssele III +IV||700||54.5||15 years||No||2017||2017-2018**||2020|
|Borkum Riffgrund II||240||60*||20 years||No||2017||2021||2024-2025|
|He Dreiht||900||0*||20 years||No||2017||2021||2024-2025|
|Gode Wind III||110||0*||20 years||No||2017||2021||2024-2025|
|OWP West||240||0*||20 years||No||2017||2021||2024-2025|
Chart courtesy of WindEurope
“Price levels are dropping quicker than anyone thought,” said Giles Dickson, the CEO of the European wind energy trade body WindEurope. “These deals have completely changed the picture for offshore wind. Now they should also change the perception of policy makers. Offshore wind is no longer an expensive niche technology. It is a strategic industrial sector for Europe that can deliver competitive energy for its citizens and businesses.”
However, as WindEurope points out, this evolution in the maturity of the European offshore wind market has not yet been picked up by policymakers, who are still operating on an older paradigm. To be sure, the speed with which the offshore wind market in Europe saw its prices fall caught every one of us by surprise — we simply did not expect to see such low prices happen so quickly, and fall across such a short span of time. As a result, the impact assessment that is currently serving as the basis for the European Union’s Clean Energy Package is reliant upon outdated price figures, which is subsequently “impacting the level of policy ambition for offshore wind and renewables build-out after 2020.”
The reality is, just because I have reliably kept CleanTechnica readers updated on the plummeting prices of offshore wind does not mean policymakers in and throughout the European Union are aware of the same thing. European policymakers are reliant upon old figures, and believe that offshore wind is still an expensive option — when, as we have seen, this is no longer the case (at least in Europe).
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