Wind Energy FAQs: Offshore and Onshore Cost Trends

In this post we show the staggering decline in the cost wind energy for on- and off-shore wind in the last few years,

ONSHORE WIND 1980-2018. The information from 1980 to 2012 is taken from a White House blog during the Obama administration. For the period from 2013 to 2018, the data is from Lazard’s Levelized Cost of Energy Analysis and the US Energy Information Administration.

The graph speaks for itself: the cost of onshore wind is down more than 92% in the 40 years since 1980.

Very good – but is wind competitive with other forms of generation today? Absolutely! Details in this post.

OFFSHORE WIND. Winning auction prices for offshore wind bids were sharply reduced between 2010 and 2016. In the United Kingdom, the market with the largest operating offshore wind capacity, the Levelized Cost of Energy dropped by 32% from GBP 142/MWh in 2010/2011 to GBP 97/MWh in 2015/2016.  This trend continued in 2017 with, in September, Ørsted (then called DONG Energy) being awarded a contract to build the world’s largest wind farm – of 1,386 MW – at a price of GBP 57.50/MWh or $77.34 at current exchange rates. It is expected to be operational in 2022.

Also of note: in 2017 zero-subsidy offshore wind contracts were awarded in Germany (Ørsted) and companies – including Shell, Statoil and Vattenfall, have bid on such contracts in Holland.

These reductions in European procurement prices for offshore wind-produced electricity were made possible by a combination of favorable siting characteristics and increased project size; continued optimization of technology and installation processes; improved market, regulatory, and auction design structures; increased competition within the supply chain; favorable macroeconomic trends; and strategic market behavior. These are all things which are coming to the American market and which will reduce prices here just as they have done in Europe.

For a look at how offshore wind prices compete with other forms of generation – such as coal and nuclear – check out this post.