Breakthrough for offshore wind

Breakthrough for offshore wind

Borssele & Vesterhav tenders prove it

At the 5th of July DONG surprised the energy world by winning the Dutch Borssele offshore wind tender with 7.27 Eurocent / kWh. At the 12th of September Vattenfall overtopped that by winning the Danish Vesterhav offshore wind tender with 6.38 Eurocent / kWh. Now the dust has settled, the question is what this means for the future of renewable energy in general and especially for offshore wind.

Twenty years ago I finished my thesis on efficient design of foundations for offshore wind turbines. At that time I could not imagine that the developments of offshore wind would speed up like this. Long-time offshore wind was dismissed as ‘too expensive’, but those days are over. The production of electricity by offshore wind is now cheaper than that of a gas plant and it will stay like this. If we take all environmental costs of a coal fired power plant into account, investments in those plants are over.  

What do I further see as trends?

Large solar fields and offshore wind farms will dominate the European energy supply. Each year one large wind farm will be constructed on the Dutch continental shelf. In 2030 Europe will have around 70 GW of offshore wind power (roughly 70 wind farms) and in 2050 that will be around 250 GW. All around the world where there is a demand for electricity at the coast, and where the sea is not deeper than 50 meter, offshore wind farms will be constructed. Asia is the largest growth market. The Dutch and Danish tender system will be copied. The English and German Governments showed specific interest.

There is already consolidation in the supply chain. I expect 4 to 5 world players. Siemens, GE, Vestas-Mitsubishi and one or two others. For Borssele and Vesterhav wind turbines of more than 8 MW will be used, with rotor diameters of 150-180 meter. But 10 and 12 MW turbines will follow quickly. The upscaling of the wind farms is made possible by smart tendering of large concessions by Governments. Upscaling leads to lower costs of maintenance and the infrastructure of foundations, cabling, substations and vessels. The risks for investors will continue to decrease. The margin that banks get on top of the Euribor will permanently fall below 200 basis points (2%). Unless the Euribor will significantly rise, the financing costs will remain low. There will be an effect if the steal prices go up, but in the Borssele 3&4 consortium, where BLIX is working in at the moment, we see that the engineering is getting more advanced and the costs of foundations will remain competitive, despite the growing turbines. The newest generation turbines make floating constructions feasible and these will be necessary in deeper waters. Off the coasts of, for example, Scotland, Norway and Japan, the first large floating wind farms will be realised. Maybe already within 5 or 10 years.

Flexible kilowatt hours

Solar will generate the largest amount of electricity during the day and in summer, wind especially at night and in early spring, late autumn and winter. The differences in supply and demand between different countries in Europe and North Africa can be covered by realising various inter-connectors. The need for storage of electricity will grow and the development of systems for this will move quickly. Because in the near future there is no longer a demand for kilowatt hours, but for flexible kilowatt hours. Kilowatt hours that are produced when there is demand. Our electrical cars can buffer, but the industry as well, by producing when there is plenty of electricity and by reducing production when electricity is scarce. Other promising possibilities lie in wind farms that offshore produce energy carriers which are transported to shore via existing oil and gas infrastructure.

And what about onshore wind?

Don’t eliminate onshore wind yet. With the currently low interest rates, further technical improvements, upscaling to 5 and 6 MW, higher hub heights and lower concession fees, the cost price of onshore wind will decrease too. BLIX calculated that an onshore wind farm in the province of North-Brabant, which recently needed 9 Eurocent / kWh to be profitable, with a low interest rate and the newest turbine types can be profitable for 6.5 Eurocent / kWh.