Economics of Offshore Wind Energy

New Danish Reports on Offshore Wind Energy
In 1997 the Danish electrical power companies and the Danish Energy agency finalised plans for large scale investment in offshore wind energy in Danish waters.
The plans imply that some 4 100 MW of wind power are to be installed offshore before the year 2030. Wind would by then cover some 50 per cent of Danish electricity consumption (out of a total of 31 TWh/year).

Improving Economics of Offshore Wind Energy
On the previous page, the calculator already includes an example showing the expected average cost of offshore wind energy in Denmark, using presently available technology.
The most important reason why offshore wind energy is becoming economic is that the cost of foundations has decreased dramatically. The estimated total investment required to install 1 MW of wind power offshore in Denmark is around 12 million DKK today, (equivalent to 4 million DEM, or 1.7 million USD). This includes grid connection etc.
Since there is substantially more wind at sea than on land, however, we arrive at an average cost of electricity of some 0.36 DKK/kWh = 0.05 USD/kWh = 0.09 DEM/kWh. (5% real discount rate, 20 year project lifetime, 0.08 DKK/kWh = 0.01 USD/kWh = 0.02 DEM in operation and maintenance cost).

Accounting for Longer Project Lifetime
Cost by Lifetime It would appear, however that turbines at sea would have a longer technical lifetime, due to lower turbulence.
If we assume a project lifetime of, say, 25 years instead of 20, this makes costs 9 per cent lower, at some 0.325 DKK/kWh.
The cost sensitivity to project lifetime is plotted in the accompanying graph, which was made using the calculator on the previous page.
Danish power companies, however, seem to be optimising the projects with a view to a project lifetime of 50 years. This can be seen from the fact that they plan to require 50 year design lifetime for both foundations, towers, nacelle shells, and main shafts in the turbines.
If we assume that the turbines have a lifetime of 50 years, and add an overhaul (refurbishment) after 25 years, costing some 25 per cent of the initial investment (this figure is purely a numerical example), we get a cost of electricity of 0.283 DKK/kWh, which is similar to average onshore locations in Denmark.