Wind enters the subsidy-free zone

The argument that wind power can only compete with conventional forms of electricity generation by being heavily subsidised looks more threadbare every month.

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The commitment by Dong Energy and EnBW to build and operate three offshore projects in German waters relying on only the going market price for the energy generated, is just the latest example of the progress the wind industry is making in this regard.

These first subsidy-free offshore wind projects, totalling 1,380MW in capacity, are expected to go online in 2024. That is a similar timescale to the commissioning of the UK's Hinkley Point C nuclear power station, construction of which has just started in earnest. We might not know the level of wholesale electricity prices in seven years' time, but it is safe to assume that they will be a great deal lower than the inflation-linked strike price for Hinkley, fixed for 35 years.

Just for the record, that currently stands at £100.24/MWh, or €118.28/MWh at the current exchange rate. And with the UK's inflation rate rising, that will only go higher.

The fall in the projected costs of offshore wind has been dramatic over the past year, reflecting the confidence developers have in the rapid rate of technological progress. The pace may be steadier in onshore wind, but it is still significant.

Vestas provides a good example. Its 2MW platform was launched in 2000, and has been subject to a series of revisions and updates ever since, the range expanding to suit different mean wind speeds. That has kept it competitive with newer designs in the biggest markets. Vestas took a thousand orders for its V110 variant from one customer alone last year, when MidAmerican chose it over machines from usual suppliers GE and Siemens for its 2GW cluster in Iowa.

And Vestas hasn't finished the development work yet. The just-announced V120 has a swept-rotor area of 19% greater than the V110, translating into a 7% increase of annual energy production (AEP). Those are just the headline figures. Equally important is the detail work that Vestas' engineers have put into minimising the transport and installation challenges posed by the longer rotor blades, and reducing costs by greater standardisation, modularisation and industrialisation.

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