The report suggests that costs currently lie in the region of EUR128-142/MWh in Germany and may fall to EUR82-100/MWh by 2023. The estimates are based on contract periods of 20 years.
These reductions, by between 32% and 39%, depend on the particular site and on the rate of growth of offshore wind in Europe. In a high-growth scenario (scenario 2), wind-turbine and installation costs are likely to fall more rapidly, and increased investor confidence will allow lower project rates of return to be used. The analysis was carried out for three offshore sites with progressively further distances from the shore, but also higher wind speeds.
The lowest generation costs were attached to site A, which has the lowest wind speed,the study shows. This suggests the higher wind speeds at the other sites did not deliver sufficient extra energy to offset the higher costs of building in deeper waters further from shore.
The breakdown of the cost reductions for wind farm B in scenario 1, the more cautious prediction (see chart, below right) shows the largest reduction comes from lower financing costs, as offshore wind becomes well established and the sources of finance show greater confidence in the industry by lowering the required rate of return. Costs for support structures and foundations are estimated to contribute a 5.5% reduction, and a similar figure is projected for operation and maintenance costs. Installation costs are expected to come down by 4%. Perhaps surprisingly, turbine costs are projected to come down by only 0.2% here. Yet in the higher-growth scenario 2, this figure is 2.4%. Most of the other components are forecast to come down by slightly larger amounts in scenario 2.
Offshore wind sites typical of those currently being developed (A);
those that will be developed between 2017 and 2020 (B) and after 2020
Site Water Distance Mean
depth to port wind
(metres) (km) speed
A 30 40 9.9
B 40 80 10
C 50 120 10.1
Consensus on forecast prices
In the US, the CEO of Deepwater Wind has suggested that its 1GW Deepwater Wind Energy Centre will sell electricity at $130-140/MWh (EUR96-104/MWh), which is very similar to the German projections for around 2020. Deepwater proposes to build a 30MW project, first, with the larger project likely to come into operation around 2018.
In Canada, a report by Greenpeace and the Pembina Institute for the Ontario Power Authority puts the cost of offshore wind at C$179/MWh (EUR129/MWh) for near-term installations, which is similar to the current value in the German report. This report suggests offshore wind is cheaper than solar photovoltaics but more expensive than nuclear.
Driving down costs
Another contribution to the discussion on future costs comes from Danish utility Dong Energy. The company, which is also a major offshore wind developer, aims to cut offshore wind energy costs by as much as 40% by the end of the decade.
Dong is working with other companies and UK and Irish universities to study ways of using less steel in wind-turbine foundations at sea to make the technology more affordable. It also wants to reduce the size of foundations and change the way turbines are installed.
Dong is aiming to bring the cost down to EUR100/MWh by 2020, lower than the cost projection from the UK's Crown Estate (EUR117/MWh), and similar to the German figure.