Dong Energy has set a new record low for the price of offshore wind energy in a tender to develop the Borssele I and II projects in the Dutch Zeeland zone.
The Netherlands' Minister of Economic Affairs awarded the concession to build the two 350 MW wind farms to Dong, which won with an average bid strike price, excluding transmission costs of €72.70 per MWh.
Dong will receive the strike price for the first 15 years of the contract, after which it will receive the market price for the energy generated by the schemes. The firm said that the contract meant that the firm had achieved "a critical industry milestone" in terms of reducing the levelised cost of electricity (LCOE) from offshore wind farms.
Dong will build the two wind farms within four years. They will be located 22 km from the Dutch province of Zeeland in water depths of 14-38 m. The Dutch grid operator, TenneT, will be responsible for the construction and operation of the offshore substations and export cables.
Including the cost of the grid connections, the price for the two projects is €87/MWh.
"This tender goes beyond even the most optimistic expectations in the market," said WindEurope CEO Giles Dickson. "The €87/MWh is significantly lower than anything we've previously seen. It now puts offshore wind in the same cost range as conventional power generation."
Four years ago, Dong set at target of reaching an LCOE of €100/MWh for offshore wind farms, a target that was later adopted by the industry as a whole. Prior to Dong's Borssele bid, only a bid for Horns Rev 3 had come close, with €103/MWh excluding the grid connection.
"With Borssele 1 and 2, we're crossing the levelized cost of electricity mark of €100 per MWh for the first time and are reaching a critical industry milestone more than three years ahead of time," said Samuel Leupold, Dong's Executive Vice President and Head of Wind Power. "This demonstrates the great potential of offshore wind."
According to Dong, cost reductions in the offshore wind sector have been achieved through cross-industry collaboration, innovation in wind turbine and blade technology, higher cable capacity, a growing and competitive supply chain and the synergies from building large-scale capacity sites.