The catalogue includes projections of future trends up to 2050.
By that time, the central estimate of the installed costs for offshore wind is €1,780/kW, although the uncertainties associated with long-term projections are reflected in the €1,420-1,950/kW range of uncertainty.
The ministry also published a supplementary note on offshore-wind costs that includes data derived from recent projects in Denmark and the Netherlands.
This can be used to calibrate the data in the catalogue, as shown in the chart below, and suggests that the catalogue data may be slightly pessimistic.
Of the two wind farms to be commissioned this year, one (Borssele 1 and 2) is expected to cost around €2,000/kW — consistent with the projection in the catalogue — while the other (Horns Rev 3) was around 20% more expensive.
But Horns Rev 3 was in fact commissioned last year, earlier than forecast, and is located 25-40km from shore, which probably explains why it was more expensive.
The catalogue also shows operation and maintenance (O&M) costs for wind virtually halving between 2015 and 2050.
Offshore costs fall from €57/kW/yr in 2015 to €32/kW/yr by 2050, while onshore costs fall from €26/kW/yr to €11 in that period.
The catalogue does not quote any estimates for the cost of energy, but a separate briefing note collates projections from a number of sources, resulting in a wide range for offshore wind.
The highest estimate for 2025 is around €107/MWh, the lowest around €40/MWh. Most are in the range of €50-80/MWh.
The document acknowledges that the main reason for variations is likely to be differing views about the appropriate interest rate, which varies from 4% to 9%.
An interest rate of 6% and a depreciation period of 25 years has been used to derive the estimates shown in the chart below.
These suggest that the generation cost of offshore wind will fall to around €46/MWh by 2030, and onshore wind will drop to €28/MWh.
The Danish data suggest that the cost of electricity from solar PV will start to undercut onshore wind by the late 2020s.
A uniform interest rate has been used for these calculations, but it is likely that investors may be happy to use lower interest rates as the technology develops, and this will cut generation costs.
New data from the US
The US Energy Information Administration has just released its Annual Energy Outlook 2020, which contains a wealth of information on possible trends in the production and consumption of fuels, both fossil and renewable.
The estimate of near-term installed costs for onshore wind is $1,265/kW, which is very similar to the Danish estimate.
The figure for offshore wind is $4,375/kW, which is significantly higher than the Danish estimate, reflecting the fact that the American offshore wind industry is less mature than its Danish counterpart.
At a glance — This month’s report conclusions
Technology data: generation of electricity and district heating, Danish Energy Agency and Energinet
Technology data suggests installed costs of onshore and offshore wind will continue to fall. Generation costs derived from these data indiccate PV will undercut wind by 2030.