Dutch offshore wind farm to be built at record low cost

Two wind farms that will go ahead off the coast of the Netherlands are to be built under an electricity sales contract for €72.7 per MWh – significantly below the offshore wind industry’s aim to reach a cost of €100 per MWh by 2020, and more on a par with ‘conventional’ methods of generating electricity.

Denmark’s DONG Energy won the bid to construct the projects Borssele 1 and 2, each with a capacity of 350 MW. The price, set for 15 years, after which the farms will receive the market price, does not include the cost of transmission cables and associated equipment, which is being picked up by the Dutch transmission system operator TenneT. However, it is thought that these extra costs would amount to around €14 per MWh, giving a total cost of around €87 per MWh – well below the previous record set for Vattenfall’s Horns Rev 3 off the coast of Denmark at €103 per MWh.

The low cost is partly the result of competition levels present in the Dutch bidding system for offshore wind projects, through which there were 38 bids for the Borssele sites. In addition, the sites have natural advantages – they are close to shore with good wind conditions and shallow water suited to monopile foundations. The scale of the project and DONG’s access to finance combined with a relatively low cost of capital in the Netherlands will also play a role.

Borssele 1 and 2 are planned to be completed in 2020. Three additional wind farms are potentially planned for the Borssele site, with the Dutch government opening the bidding round for Borssele 3 and 4 later this month.