Offshore wind's offer to Europe: 30% price drop for a secure 100GW

Industry heavyweights today launched a 'New Offshore Wind Deal for Europe', calling for immediate action and a new industry regime across policymakers, developers and the supply chain to remove risks, lessen stop-and-go policies, and provide more certainty and a steady, secure capacity pipeline.

European governments are being asked to tender off at least 100GW of wind at sea capacity over ten years via indexed, two-sided contract for difference (CfD) auctions, linked to a plan for the consistent commissioning of 10GW annually in the 2031-40 period.

In exchange, the sector will deliver the capital for investments to ensure the industry can scale to meet the de-risked volumes. This is supposed to bring offshore wind to a better financing position and onto an accelerated cost reduction learning curve, which will reduce the levelised cost of electricity (LCOE) by 30% towards 2040, the companies said in a joint proposal.

Signatories include Orsted, Vattenfall, Iberdrola, Siemens Gamesa, Vestas, RWE, GE Vernova, Equinor, CIP, EnBW, Ocean Winds, DEME, WindEurope and many others.

Orsted CEO Rasmus Errboe at a WindEurope panel in Copenhagen, where the plan was launched, stressed that predictability is key for a revival of the industry that currently faces a myriad of challenges in energy security, dependence on weaponised energy imports, competitiveness, affordability, and decarbonisation.

The backdrop for the call for a New Offshore Wind Deal is that “the world is completely changing,” Errboe said. “So the call for predictability is not a small ask, I’m very aware of that.

“But we simply need a stable build-out of offshore wind that last over a decade. We need 10GW every year. The supply chain needs that. As the CEO of Vestas said this morning, he doesn’t build a factory because of a target, he builds a factory because of an order.

“And you won’t get the orders unless we have the predictability”, which the offshore wind industry currently doesn’t have, he added.

“Typically, when you ask for something, it is also good that you bring something. What we and the industry are saying is that, if we get what we ask, which is basically a proposed new deal for Europe – 10GW of CfDs coming once every year … then the reply from the industry will be that we will be able to bring down costs again.

“With this predictability, with two-sided CfDs, we are able to commit to towards 2040 to bring down the cost again by 30%.”

Half of this will come through the revenue stabilisation from CfDs, and the other half from the learning curve, the CEO said.

To competitively deliver offshore wind to meet Europe’s growing electricity demand, annual capacity installations must reach 15GW by the 2030s, the new deal declaration also stated, probably as not all additions will come from the steady flow of CfD projects.