Sweden’s Vattenfall expects to be able to build offshore wind power projects, one of the most expensive sources of renewable energy, without subsidies by the middle of the next decade, a senior company official said on Thursday.
The state-owned utility plans to boost its wind power portfolio in Europe to 4 gigawatts (GW), equivalent to four nuclear reactors, by 2020 from the current installed 1.8 GW, and further to 7 GW by 2025. While focusing more on renewable energy, Vattenfall is trying to sell its polluting lignite or brown coal mines and power plants in eastern Germany.
Wind power is expected to generate 9 billion Swedish crowns ($1.1 billion) in Vattenfall’s core profit by 2020, and 16b crowns by 2025, from 5b crowns in 2015, slides presented by Michael Simmelsgaard showed.
Last year, Vattenfall won a tender to build the 400-megawatt Horns Rev 3 wind park off Denmark, which is expected to produce the world’s cheapest offshore wind energy at an agreed price of 0.77 Danish crown ($0.11) per kilowatt-hour.Britain announced last year that it would end onshore wind subsidies – known as the renewables obligation – from April 2016, but subsidies for offshore wind are to remain.
Offshore wind is one of the most expensive renewable energy technologies in Britain, because manufacturing and maintaining turbines strong enough to withstand marine environments is costly. The sector still relies heavily on government subsidies. Danish Dong Energy, the world’s biggest offshore wind power operator, aims to cut wind costs to 100 Euros per megawatt-hour for investments from 2020, and said last year it saw offshore wind becoming competitive in the next decade.