Vattenfall plans more offshore wind energy as costs fall

Vattenfall plans to more than triple its offshore wind power by 2025 as costs fall, part of its transformation to a renewable energy company.

The company started producing power at its Sandbank German offshore wind farm in the North Sea on Wednesday, which takes its total installed offshore wind capacity up to 2.2 gigawatts (GW).

“We aim for at least 7 GW by 2025 and I would not rule out that we achieve more,” Gunnar Groebler, the company’s executive group management member in charge of wind, said.

Vattenfall will bid in the Kriegers Flak tender in Denmark in the autumn and will hire 150 more staff in wind power over the next 12 months, Groebler told Reuters in an interview.

The company is also one of three pre-qualified bidders for a 350 MW near shore tender in Denmark, after bidding this month.

Groebler said the industry’s learning curve and the low interest environment would allow for strong cost reductions in the long term.

This was borne out by rival Dong’s win of a Dutch offshore wind tender at record low prices in July.

Dong’s winning bid for the Borssele 1 and 2 projects said it could produce electricity at 72.2 euros per megawatt hour (MWh).

This compared with 103 euros/MWh achieved by Vattenfall’s win of the Horns Rev 3 tender in Denmark last year, then thought to be a breakthrough.

Critics say that offshore wind is still the most expensive renewable energy source in Europe, the world’s most advanced region for the technology, especially in Denmark, Britain, Denmark and the Netherlands.

Wholesale power generated from fossil fuels in Germany currently fetches 26 euros/MWh.

But Groebler said that even in higher-cost Germany, he now sees wind power producing electricity at below 100 euros/MWh by “significantly earlier” than Vattenfall’s previous target date of 2020.

Germany does not compare with the Netherlands one-to-one because of different auction rules and additional costs for offshore transformers.

Depending on how much power market prices rise up to 2025, offshore wind could become subsidy-free by that date, Groebler said.

Future turbines offering 8 megawatts (MW), double the current size, would provide better scale and also allow for operational savings over many years, he said.

Vattenfall has claimed it would be one of the greenest utilities in Europe after selling its loss-making lignite coal mines and power plants in Germany earlier this year.

It has said it wants to reach an installed offshore wind capacity of 4 GW by the end of this decade, at falling costs to consumers, and Groebler said it would seek to fill 150 more wind-related jobs to add to the existing 600 over the next 12 months.

“We are fully on course with our strategy and we will hire more people,” Groebler said.

With near full-time production out at sea, offshore developers and operators argue wind power is the most solid answer to the future requirement for reliable, round-the-clock, green power in a decarbonised world