The Netherlands’ Minister of Economic Affairs has awarded DONG Energy the concession to build the Netherlands’ offshore wind farms Borssele 1 and 2. DONG Energy won the concessions with an average bid strike price, excluding transmission costs of 72.70 EUR per megawatt-hours (MWh) during the first 15 years of the contract. After that, the wind farms will receive the market price.
Only four years ago, DONG Energy set an ambitious 2020 cost target of reaching EUR 100 per MWh over the life-time of a wind farm – the so-called levelized cost of electricity – including transmission costs. This target, which was later adopted by the offshore wind industry, has now been reached. The company is also building the world’s largest offshore wind farm.
“Winning this tender in a highly competitive field of bidders is another proof of our market-leading position and our business model which builds on continued innovation, industrialization and scale,” saidExecutive Vice President and Head of Wind Power in DONG Energy, Samuel Leupold. “With Borssele 1 and 2, we’re crossing the levelized cost of electricity mark of EUR 100 per MWh for the first time and are reaching a critical industry milestone more than three years ahead of time. This demonstrates the great potential of offshore wind.”
DONG Energy will, in accordance with the Dutch tender regulation, build Borssele 1 and 2 within four years from today with a flexibility of one year. The wind farms’ capacity of two times 350 MW will translate into supply of CO2-free electricity covering the annual power consumption of approximately one million Dutch households.
Country Manager for DONG Energy Netherlands, Jasper Vis, said: “The Dutch government has introduced an ambitious, long-term development plan for offshore wind. The Borssele concessions mark a milestone in the Netherlands’ shift towards green energy, and we look forward to bringing our more than 20 years’ experience with offshore wind into these projects.”
Innovation and scale reduce the cost of electricity
The reduction of cost of electricity is driven by cross-industry collaboration, ongoing innovation of wind turbines and blades, continuous improvements of foundation design and installation methods, higher cable capacity, a growing and competitive supply chain, and the synergies from building large-scale capacity sites (such as Borssele 1 and 2).
In addition, the Dutch sites offer good seabed conditions, as well as good and stable wind speeds that contribute to high output from each turbine. The information provided in this announcement does not change DONG Energy’s previous financial guidance for the financial year of 2016, or the announced expected investment level for 2016-2017.
Facts about Borssele 1 and 2
• Borssele 1 and 2 will be owned by DONG Energy and have a capacity of 2 x 350MW.
• Subsidy period of 15 years. The bid strike price will not be adjusted to inflation.
• Monopile foundations will be used.
• The wind farms will be located 22 km from the coast of the Dutch province of Zeeland with a water depth of 14-38 m.
• The wind farms will cover an area of 128.3 km2 and benefit from an annual average wind speed of 9.5 m/s.
• DONG Energy will, in accordance with the Dutch tender regulation, build Borssele 1 and 2 within four years from today with a flexibility of 1 year.
• The Dutch offshore grid operator, TenneT, is responsible for construction, operation and ownership of the substations and the export cable.
In the United States, DONG Energy recently completed acquisition of offshore wind development project in New Jersey. The area has the potential to accommodate more than 1,000 MW of offshore wind.