[Correction: An earlier version of this post included a map that was labeled incorrectly. It indicated that the countries with transmission links bringing offshore wind power ashore includes Sweden. The wind projects do not, at this time, have a Swedish arm. We apologize for the error.]
Europe’s offshore wind power industry recently achieved a major milestone: three projects to be built without government subsidy. Bent Christensen, who is responsible for energy-cost projections for Siemens’s wind power division, credits industry-wide cost cutting that has outstripped expectations. “We’re three to four years ahead of schedule,” says Christensen.
Projects taking shape in European waters this summer, meanwhile, will demonstrate the ongoing innovation required to deliver on those bids—innovations that could make offshore wind farms more attractive to both financiers and grid operators.
Detractors have long derided offshore wind power as a niche segment. In spite of fantastically strong wind gusts, building offshore-ready equipment and installing it in the punishing marine environment has been pricey.
In 2013, when new projects were delivering electricity for about €160 (US $179) per megawatt-hour, the industry collectively set what Christensen calls a “realistic stretch goal” to squeeze that to €100/MWh by 2020. Christensen, who is also senior vice president of Siemens’s wind turbine business, Siemens Gamesa Renewable Energy, says that by his math the industry is already there.
Christensen’s estimate is echoed by the financial advisory firm Lazard, which projects the unsubsidized cost of newly commenced projects at €105/MWh ($118/MWh)—a 27 percent reduction since 2014. Lazard’s December 2016 analysis finds that offshore wind is cheaper or on par with coal-fired generators, rooftop solar arrays, and nuclear reactors.
Recent bids for near-shore projects, meanwhile, rival the cost of onshore wind and utility-scale solar energy. Several projects in Denmark and the Netherlands promise offshore wind power for less than €75/MWh, and then there are the subsidy-free German bids this April by Copenhagen-based Dong Energy and the German utility Energie Baden-Württemberg. Ulrik Stridbaek, Dong’s senior director for regulatory affairs, estimates its projects’ power cost at €62/MWh.
According to Stridbaek, competition, innovation, and scale all contribute to the rapid cost declines that have been achieved throughout the industry’s supply chain—from turbine manufacturing to installation to power transmission. But Stridbaek says that “the decisive factor is scale.”
Dong’s 1.2-gigawatt Hornsea Project One wind park, which it will begin installing next year at a spot 120 kilometers off the United Kingdom’s Yorkshire coast, is nearly twice the output of the current record holder. The turbines populating offshore farms are also beefing up. Offshore turbines topped out at 3.9 MW each in 2013, whereas today’s biggest deliver 8 MW. Dong installed the first of those mass-produced giants at another U.K. wind farm in December.
Zero-subsidy projections for those German projects, meanwhile, rely on 13- to 15-MW turbines that don’t yet exist. Dong is betting, says Stridbaek, that suppliers such as Siemens Gamesa and MHI Vestas Offshore Wind will have such giants ready for the North Sea projects’ completion, in either 2024 or 2025.
New tech is also needed for the transmission systems that bring wind power ashore. Several novel approaches are now being tested in the Baltic Sea, where a 30-km patch cord between German and Danish wind farms will create an extra interconnector between the Nordic and European grids. The cable’s seabed route across the shallow Baltic sandbar known as Kriegers Flak is being cleared of unexploded World War II ordnance this month, and the link is expected to be completed next year.
When the Baltic wind farms are idle—about 50 percent of the time—Europe’s software-integrated power markets will use their cables to exchange electricity between northern Europe and Scandinavia. Peter Jørgensen, vice president for the Danish grid operator Energinet.dk, expects the link to deepen the region’s existing pattern of power swaps, in which European wind power and Nordic hydropower balance each other.
What made the project feasible, says Jørgensen, is a low-cost arrangement of the high-voltage direct-current (HVDC) converters needed to exchange 400 MW between the two grids, which are not in sync with each other. Early designs would have placed one converter offshore at Kriegers Flak. Instead, the project will place both converters back-to-back in Germany onshore, thus avoiding the roughly 50 percent premium for an offshore platform.
A supersize version of this dual-use cable design hatched last year by the Dutch-owned grid operator TenneT calls for offshore transmission hubs for the North Sea. The proposal, recently joined by Energinet, calls for one or more artificial islands whose power systems would gather up to 100,000 MW of offshore wind generation and parcel it out to the North Sea countries.
These “power link islands” would—like the Kriegers Flak link—minimize transmission costs by keeping HVDC converters on dry land and maximize their value by trading power between grids. They would also host technicians, spare parts, service vessels, and an airport offshore, thus reducing the cost of wind farm maintenance.
The North Sea proposal is in prefeasibility studies, according to Jørgensen, and may not work out. But industry participants say it is the kind of creative thinking needed to keep costs falling—especially given the massive scale of renewable energy deployment required to meet Europe’s ambitious decarbonization goals.
This article appears in the July 2017 print issue as “Wind Power to Be Profitable Without Subsidies.”