Separate moves by European energy companies and member states have announced a common goal to cut the cost offshore wind power to the most ambitious extent yet.

A group of Europe’s largest energy companies has pledged to cut the cost of offshore wind farms closer to that of gas and coal power stations and is applying pressure on governments to facilitate that ambition by committing to long term targets for the sector.
Offshore wind
The group which includes RWE and Eon, Siemens, GE, Vattenfall and Norwegian oil and gas group Statoil declare they can drive down costs to €80 per megawatt hour by 2025, close to half today’s average levels.

“This commitment is only possible with a stable, long-term market for renewables in Europe,” the 11 companies say in a joint statement to EU policymakers, which goes on to warn of a “serious question mark” over how much support governments will offer the industry after 2020, when existing EU renewable energy targets are to be replaced by less stringent goals for 2030.

Offshore wind farms cost an average of $160/MWh, or €141/MWh at current prices, according to the Bloomberg New Energy Finance research group. The cheapest offshore wind farm so far is one Vattenfall plans to build off the coast of Denmark costing €103/MWh.

There is still a way to go before matching the new coal and gas power stations, which can cost as little as $51/MWh.

The offshore wind industry says the larger the volume of wind farms built, the faster costs will fall as developers spot supply chain efficiencies and take advantage of bigger turbines coming on to the market. In addition swapping today’s turbines for newer ones with up to four times the generating capacity can shave costs by more than 8 per cent, according to the WindEurope, the industry trade body.

Meanwhile WindEurope welcomed the agreement signed by 10 EU countries on Monday to cooperate on offshore energy in Northern Europe.

Energy Ministers from 10 EU Member States signed a Memorandum of Understanding (MoU) and Work Programme to enhance their cooperation on renewable energy, particularly offshore wind. The Ministers of Germany, Netherlands, Luxembourg, Norway, Sweden, France, Denmark, Ireland, Belgium and the U.K. signed the agreement, which aims to reduce the costs and accelerate the deployment of wind power at sea.

The agreement outlines a number of actions to help reduce costs in offshore wind, including cooperation on spatial planning, grids, finance, technical standards and regulation such as health and safety rules.

The MoU also highlights the need to coordinate the timing of offshore wind tenders and explore options for joint support schemes.

Giles Dickson said, “Costs can continue to come down quickly, but the volumes must be right. The main challenge facing offshore wind today is the visibility of market size and regulation after 2020. Clear targets for deployment and tendering will unlock new investments, reduce the cost of capital and allow us to meet the cost reduction target.”

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