Dong Energy in offshore wind breakthrough

Dong Energy A/S Opens Their Gas-Fired Power Station...The Dong Energy A/S company logo stands next alongside an electricity pylon at the company's gas fired Severn power station in Newport, South Wales, U.K., on Thursday, Feb. 10, 2011. Dong Energy A/S, DenmarkÕs biggest utility, inaugurated its first power station in the U.K. today, a plant fueled by natural gas. Photographer: Chris Ratcliffe/Bloomberg©Bloomberg

Denmark’s Dong Energy has won a bid to build two offshore wind farms off the Dutch coast that industry experts claim will be the cheapest schemes of their kind.

The projects will be built for €72.70 a megawatt hour, well below the €103 MWh record set last year by Sweden’s Vattenfall for a scheme off the coast of Denmark.


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“This is the cheapest we’ve ever seen by a long way and it puts offshore wind on a par with what it costs to build a new coal or gas power station,” said Oliver Joy, a spokesman for the wind industry trade group, WindEurope.

The deal agreed by Dong, the world’s largest offshore wind developer, does not include the cost of transmission cables and equipment linking the project to onshore power networks.

But wind industry executives said that adding in such costs would still put Dong’s project at about €87 MWh.

Dong had set a cost target over the life of a project of €100 MWh by 2020 and said it was pleased to be meeting its goal already.

“We are reaching a critical industry milestone more than three years ahead of time. This demonstrates the great potential of offshore wind,” said Samuel Leupold, head of wind power at Dong.

A number of factors contributed to the low cost of the Dutch deal, which will see two wind farms built 22km off the coast of the province of Zeeland.

The relatively low cost of the steel used to build offshore wind turbines helped as did the cheaper cost of capital available in the Netherlands.

We are reaching a critical industry milestone more than three years ahead of time. This demonstrates the great potential of offshore wind

– Samuel Leupold

In addition, the tumbling cost of oil has led to a glut in offshore installation vessels used to transport the massive wind turbines out to sea.

News of Dong’s scheme comes a month after European energy companies, including Germany’s RWE and Eon, pledged to cut the cost of offshore wind farms closer to that of gas and coal power stations.

Along with several other companies, including wind turbine makers such as Germany’s Siemens, the group said they believed offshore wind farms could be “fully competitive” with new fossil fuel power stations under the right conditions.

Offshore wind farms are newer than their onshore equivalents and more popular in many countries because they have no impact on rural views.

The technology has boomed over the past decade, mostly in Europe, with generating capacity more than doubling in the past four years alone. But they have been so expensive that some energy experts have raised doubts about whether they could ever compete with conventional power stations.

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