Offshore wind costs fall

Offshore wind costs fall

June 01, 2017 | By Keith Martin in Washington, DC

Offshore wind costs continue to fall.

The projected costs of two wind farms that won long-term power contracts for projects off the Maryland coast suggest installed costs of US$5.5 to US$6 million a megawatt. 

The Maryland Public Service Commission awarded 20 years of offshore wind renewable energy credits, or “ORECs,” at a levelized price of US$131.93 a megawatt hour that the owners of the two projects can sell to Maryland utilities that will need the credits to comply with the state’s renewable portfolio standard. The state RPS requires utilities to deliver at least 25 percent of the electricity they supply from renewable sources by 2020. Up to 2.5 percent of the electricity must come from offshore wind.

US Wind plans to build a 248-megawatt project at a cost of US$1.375 billion using four-megawatt turbines. The company hopes to have completed the project by January 2020. Skipjack Offshore Energy, a Deepwater Wind affiliate, plans to build a 120-megawatt project at a cost of US$720 million using eight-megawatt turbines. The Skipjack project has a target completion date of November 2022.

German utility Energie Baden-Württemberg AG — called EnBW — won a bid for a 900-megawatt offshore wind project in the North Sea in April without any subsidy, and Danish wind developer DONG Energy won two German offshore wind projects with zero-subsidy bids. The EnBW project does not have to be on line until 2025. The two DONG projects have until 2024. Both companies expect the cost of offshore wind turbines to have fallen enough by the time they must start construction to make the projects economic. By then, 13- to 15-megawatt turbines may be available. An additional savings for DONG is it will not have to build new transmission lines to bring the electricity to shore. 

Meanwhile, citizens groups, called Bürger initiatives, won 93 percent of the 807 megawatts in contracts for new onshore wind farms that were put up for auction in Germany in May. The bids were 2 1/2 times oversubscribed. The average accepted bids were for the equivalent of US6.36¢ a KWh. The auctions are an effort by the German government to wean the renewable energy industry from subsidies. Bürger initiatives are groups of up to 10 private individuals.