After today’s news that Vattenfall was chosen to build the Horns Rev 3 offshore wind farm, Danish Ministry of Climate, Energy and Building issued some details about the winning tender, revealing that the company was selected because it had agreed a price of 10.31 Eurocent per kWh, which will provide power much cheaper than other recently established offshore wind farms in Denmark and abroad.
In comparison with previous price assumptions, this means that Danish consumers will experience a saving of approximately 295 million Euros. over the next 11-12 years, which is the period during which the offshore wind farm will be in receipt of subsidies. Thereafter, the Horns Rev 3 facility will produce electricity at the market price and will no longer receive any form of subsidy.
The winning bid is well below the 14.07 Eurocent (15.15 Eurocent in fixed 2015-prices) which is the price being charged by Anholt Offshore Wind Farm. Horns Rev 3 is thus 32 percent cheaper than the last time Denmark built an offshore wind farm. This makes it the cheapest offshore wind park in Europe at the moment.
Compared to other wind farms abroad, this represents a very low price. Though a direct comparison is not possible, in the UK – the largest market for wind turbines – the cheapest parks currently being built cost 15.33 Eurocent / kWh in 2015. In addition to this the subsidies are adjusted for inflation and, in contrast to Denmark, the subsidy period is 15 years instead if the 11-12 years afforded in Denmark.
The low price is due in large part to technological developments throughout the wind turbine industry combined with a very successful tendering process. Through extensive dialogue and subsequent negotiations with the bidders, the Danish Energy Agency (DEA) have managed to lower the price considerably. At the same time, a good, competitive environment was fostered around the windmill tendering process in which four companies were pre-qualified to participate.
The successful bid has already been approved by the signatories of the Energy Agreement 2012 and must now be adopted by parliament and signed into law. The government will present the bill on March 18 and the proposal is expected to be adopted during April with the backing of a large political majority in parliament.
Image: Vattenfall (Illustration)