This week, the Dutch authorities will launch a bid to build two 35mw offshore wind farm projects that are expected to cost more than $2.7 billion.
The Dutch authorities say they hope that at least some bids will not be dependent on any subsidy at all.If that happens, it would be the second time that a subsidy free wind project bid has been awarded.
In Germany, a recent bidding meeting Ø rsted (energy) east and Energie Baden - Wuerttemberg submitted a tender, construction will be exempt from offshore wind farm subsidies.
How to build offshore wind power without subsidy?According to bloomberg, two factors are at work.First, wind turbine makers are building new wind turbines that are bigger and more efficient than old ones, lowering the cost of construction.Second, Europe is about to start implementing a carbon pricing system, which is expected to make coal-fired power plants more expensive.The price of carbon will be 18 euros per metric ton from 2020, rising to 35 euros per metric ton by 2030.
At present, the wholesale cost of electricity is about $45.92 per megawatt.Carbon charges are expected to reduce the competitiveness of coal-fired power plants, leading to the closure of many power plants.
That would raise the average price of electricity, enough to allow developers to build unsubsidised wind farms and remain profitable.
The Dutch authorities acknowledge that their unsubsidised model may mean that there is no corporate tender, in which case the subsequent traditional subsidy tender will be held in January.
"We are curious about whether there is a credible zero-subsidy bid," said Sandor Gaastra, energy director at the Dutch ministry of economic affairs.We may not have been quoted at all.The market must calculate risk."
At a recent German auction, the proposed wind farm would not need to be connected to the Internet by 2024.Industry experts predict that by then the fan will be bigger and more efficient than it is now.But the Dutch proposal requires that these projects be completed two years ago, before installing the next generation of turbines.Dutch NWEA wind energy association, President of Hans Timmers said, "in the long term, wind almost certainly would never get subsidies, there is a feeling, but the market may have appeared in the bidding zero subsidies."
Vattenfall, a Swedish power company, called the bid a "big bet" but said it would take part in the bid.Eneco, a Dutch energy company, says that because the cost of offshore wind farms has not fallen enough, it is too soon to subsidise it.But it doesn't rule out bidding, and several other companies are jumping on the board.