Offshore Wind Power Cost-Cut Plan Gets Boost From Big Utilities

Source: By Jessica Shankleman, Bloomberg • Posted: Tuesday, July 12, 2016

Nine of the world’s biggest offshore wind farm developers joined with the Scottish government to fund a 7.9 million-pound ($10.3 million) study aimed at curbing the costs of the expensive renewable energy technology.

Companies including Dong Energy A/S, EON SE, Iberdrola SA and RWE AG, will together invest at least 6.4 million pounds over the next four years to fund the research and development of new technologies. The Scottish government will pitch in another 1.5 million pounds, according to a joint statement Monday.

The intention is to cut the cost of the technology below 100 pounds a megawatt-hour by 2020, putting it within striking distance of nuclear reactors. EnBW Energie Baden-Wuerttemberg AG, SSE Plc, Statkraft AS, Statoil ASA and Vattenfall AB are also funding the program, according to the statement.

The funds will deliver the next phase of the industry-led Offshore Wind Accelerator program, set up in 2008 by Carbon Trust, a former U.K. government agency. Since its launch, the OWA has delivered more than 125 projects, such as improved cable and turbine foundation designs, according to the statement.

“In the past we’ve looked at more radical innovations. Now we are fine-tuning and optimizing some of those,” Jan Matthiessen, director of offshore wind at Carbon Trust, said in a phone interview.

Even though Dong Energy last week won a contract to develop two wind farms off the coast of the Netherlands at 72.70 euros ($80.36) a megawatt-hour — the lowest ever price for the technology — no planned U.K. wind farm is expected to reach 100 pounds a megawatt-hour before 2020, according to Tom Harries, a Bloomberg New Energy Finance analyst.

This could be problematic for U.K. offshore wind developers that have been told by government that new subsidies are conditional on the industry reducing costs.

“The North Sea is the world’s leading offshore wind development area, and the collaboration between large international developers here is a welcome move towards securing and delivering affordable low carbon energy generation,” Jonathan Cole, Iberdrola offshore wind managing director, said in the statement.