Taxpayers in the UK and France appear to be supporting offshore wind development at a higher rate than their neighbours in Denmark, Germany and Belgium.
Research commissioned by a group of companies active in the Belgian offshore wind sector has concluded that support schemes currently in force in European countries where offshore wind projects are being built – or are in active development – collectively result in an average ‘net support cost’ to society of €72.1/MWh.
This conclusion by consultancy 3E is based on a hypothetical 300MW offshore wind farm operating at 3,500 full load hours and with a capital expenditure of €3,800/kW. The calculation includes the cost of grid connection.
Financial support from taxpayers for offshore wind appears to be higher than average in two countries – France and the UK – with France’s first four project concessions resulting in a ‘net support ‘ of €87.7/MWh. The UK’s net support costs are more modest than France’s, but still higher than average, at €74.2/MWh.
Danish offshore wind appears to cost its taxpayers the least of the five European nations included in the study, with a net support cost of just €57.1/MWh. This may be due, in part, to lower construction costs, thanks to shorter distances to shore and shallow water depths, notes the study.
Germany’s offshore wind farms also appear to be reasonably priced, resulting in a below-average net support cost of €69.0/MWh. Belgian offshore wind is also below average, at €70.7/MWh.
Interestingly, the two countries where the cost of grid connection is fully shouldered by taxpayers are also the countries with the lowest net support costs.
Gross project income
The study also compares gross project income by country. Here, average gross project income across Europe emerges at €64.7/MWh, with the hypothetical French 300MW offshore wind farm forecast to generate the greatest gross income, at €79.9/MWh. The German project is also expected to generate above-average gross income, at €78/3/MWh.
Worryingly, the UK project is projected to generate the lowest gross income, at €55.8/MWh, despite receiving above-average taxpayer support.
Belgian offshore wind has the second-lowest gross income projection, at €60.6/MWh, while Denmark is just below average, at €64.0/MWh.
The aim of the study, Benchmarking Study on Offshore Wind Incentives, is to assist Belgian policymakers in assessing value-for-money for its existing offshore wind support system and any changes that may be being contemplated. It was commissioned by Belgian Offshore Platform.