A team led by Malte Jansen of Imperial College London has worked to compare 41 offshore wind projects in Europe since 2005. Researchers’ analysis suggests that offshore wind, at least in Europe, is on the verge of falling in below the price of more traditional power stations. .
Grants and auctions
Bids for the construction of these offshore wind farms were launched through national auctions, which included grants from different structures. They all offered guaranteed prices for the electricity produced. Some promise to pay the difference when the market rate drops below the guarantee while still allowing the wind farm operator to increase profits when the market rate exceeds the guarantee. Others require the utility to return excess profits when the market rate is high. And each country has a different limit on how long warranties last, whether it’s a number of years or how much electricity is sold.
Because of these differences, calculating the cost of offshore wind is not as straightforward as comparing bids for new projects with bids for, say, natural gas power plants. Additionally, detailed cost and revenue data is often not available, as the offer is the only issue made public.
To break this down, the researchers took each project’s public bid along with that country’s auction rules and calculated the revenues against monthly market prices for a 25-year lifespan. This requires the use of projections future price of electricity, but this is true for the traditional calculations of any power plant. In the end, they get an average cost of electricity for each offshore wind farm, along with the estimated total subsidy. Subsidies are calculated in two ways: one for the case where utilities are responsible for building the grid infrastructure, and the other for the case where countries largely fund the grid.
The electricity supply offers in the context of these auctions varied from € 0 to € 150 per megawatt hour, this value setting the minimum guaranteed price. The € 0 bids came in recent auctions in Germany and the Netherlands, and they represent utilities that were confident in their unsubsidized revenues by selling at wholesale market prices.
Researchers’ estimates for the actual revenues of these wind farms were between € 50 and € 150 per megawatt hour. But what’s interesting is the downward trend over time – down by around 6% per year over the entire period, and over 12% per year if you start with 2015. For wind farms which will only start operating after this year, the range drops to € 50-70 per megawatt hour. And € 50, according to researchers, is at the bottom of the scale [cost] estimates for fossil fuel generators. “
This means that the subsidies have also decreased over time. In fact, the average is on track to reach zero by 2025. What if electricity prices rise? at all in the years to come, some wind farms which have already been the subject of an offer will prove to be without subsidy in the final accounts. Researchers describe this as a success.
“Policymakers can take the rapid price cuts shown here as proof that offshore wind will provide low-cost, low-carbon technology in the future. Therefore, the initial spending on the support programs was successful in helping to create a new industry, ”they write. “Building on the success story, policymakers may want to turn their attention to less mature technologies such as offshore wind turbines, which would allow access to deeper waters with higher wind speeds. higher. These technologies are currently at an earlier stage, but could prove vital to harnessing the world’s best wind resources. ”
Nature Energy, 2020. DOI: 10.1038 / s41560-020-0661-2 (About DOIs).