How low can offshore wind go?
The cost of building offshore wind farms, and other renewable energy infrastructure, is dropping all the time. But how does it compete with other forms of generation?
Lower prices than nuclear
Last month, the Crown Estate took a dive into the murky waters then surrounding the Hinkley Point C debate, highlighting that offshore wind farms can be constructed at lower cost than the nuclear project.
An unpublished report by the Energy Department also forecast utility scale onshore wind and solar costs to be £50-£75 per megawatt hour (MWh) by 2025. Conversely, new nuclear energy is expected to cost anywhere from £85 to £125 per MWh.
Regardless, Hinkley has received the green light — just as offshore wind hits a new record low price outside of the UK.
Vattenfall raises the bar (by lowering costs)
Sweden’s Vattenfall power company announced this week that it was the winner of the Danish Onshore Wind Tender for two offshore wind projects in the Danish North Sea. The contracts will see the wind farms built at a record-low cost of £51 (€60) per MWh.
The previous record was held by another Scandinavian company, Denmark’s DONG Energy, which won a contract for a Dutch project in July with costs at €72.70 per MWh. The Vattenfall projects will be built off the west coast of Jutland and will have a combined capacity of 350MW.
“With our bid for DNS we have demonstrated that we are able to reduce the costs of offshore wind faster than had been expected, only a few years ago,” said Gunnar Groebler, Head of Vattenfall Wind.
“This again proves that renewable energy is going to be competitive and Denmark and Vattenfall is in the lead when it comes to renewable energy. We contribute to this growth and we will continue to do so for the next few decades.”
Drax advances biomass strategy with Pinnacle acquisition
The Group’s enlarged supply chain will have access to 4.9 million tonnes of operational capacity from 2022. Of this total, 2.9 million tonnes are available for Drax’s self-supply requirements in 2022, which will rise to 3.4 million tonnes in 2027.
The £424 million acquisition of the Canadian biomass pellet producer supports Drax' ambition to be carbon negative by 2030, using bioenergy with carbon capture and storage (BECCS) and will make a "significant contribution" in the UK cutting emissions by 78% by 2035 (click here).
This summer Drax will undertake maintenance on its CfD(2) biomass unit, including a high-pressure turbine upgrade to reduce maintenance costs and improve thermal efficiency, contributing to lower generation costs for Drax Power Station.
In March, Drax secured Capacity Market agreements for its hydro and pumped storage assets worth around £10 million for delivery October 2024-September 2025.
The limitations on BECCS are not technology but supply, with every gigatonne of CO2 stored per year requiring approximately 30-40 million hectares of BECCS feedstock, according to the Global CCS Institute. Nonetheless, BECCS should be seen as an essential complement to the required, wide-scale deployment of CCS to meet climate change targets, it concludes.