Floating wind power for less than €100/MWh?

A few days ago, I came across a post on LinkedIn where Bruno Le Maire, Minister of Economy of the French government, mentioned that there is already a winner for the 250 MW floating wind auction recently held in France.

The original video is in French, but I’ve taken the liberty of translating it to English with an AI tool. And the result is amazing. We live in crazy times.

So far, so good. It’s great news. These 250 MW represent, if I’m not mistaken, the largest capacity ever awarded in Europe for floating wind. In fact, currently the installed capacity in operation doesn’t even reach 200 megawatts (176 MW with data from May 2023) throughout the old continent.

But what’s really surprising about the news is that, according to the minister, the awarded price is only two figures. That is, less than €100/MWh. At the moment, the name of the winner has not been revealed pending the deposit of the corresponding bank guarantees. The auction ceiling was set at €140/MWh.

The awarded tariff is a “2-sided Contract for Difference (CfD)” with a duration of 20 years. That is, the installation will receive compensation up to the awarded tariff when the electricity market is below, but will have to return the extra money received when the market is above.

A good practice introduced by the French government in this auction is that the tariff price is indexed to reflect changes in both CAPEX and OPEX.

In any case, a tariff below €100/MWh seems quite low for a wind farm with floating technology. Just to give an example, one of the closest precedents is the UK’s CfD AR 5 auction, in which no floating wind energy projects submitted bids because the maximum price was too low (€133.4/MWh).

Other references, although in this case pilot projects, are Provence Grand Large (3 wind turbines, 25 MW) also in France, which has a tariff of €240/MWh, and the Portuguese pilot project WindFloat Atlantic (3 wind turbines, 25 MW), which has a tariff of €168/MWh.

Regarding Spain, pending the holding of auctions, the price is unknown, but industry sources in Spanish Media El Periódico de la Energía commented that the price in Spain would be around €170-175/MWh.

So these prices below €100/MWh have raised some concerns in the supply chain, which fears that the promoter may not be able to carry out the project or may opt for cheaper or “low-cost” suppliers. This article gathers some statements.

The projects must be operational by 2031, which would imply placing orders in 2028-2029.

By the way, in addition to these 250 MW, it is expected that France will award two more floating parks of 250 MW each in the Mediterranean.

And all this considering that floating wind may not be as easy as it seems.

Sergio Fdez Munguía, https://windletteren.substack.com/