This week, the Netherlands authorities will start the bidding for the construction of two 350 MW offshore wind farms with estimated total costs exceeding 2.7 billion U.S. dollars.
The Netherlands authorities said they hope at least some of the bids will not depend on any subsidy at all.
How to build offshore wind power without subsidies? According to Bloomberg, two factors are at work. First, wind turbine manufacturers are building new wind turbines that are larger and more efficient than older turbines, reducing construction costs. Second, the forthcoming implementation of the carbon tariff system in Europe is expected to result in higher electricity costs for coal-fired power plants. The price of carbon will be set at 18 euros per metric ton of carbon dioxide from 2020 and 35 euros per metric ton by 2030.
Currently, the wholesale cost of electricity is about $ 45.92 per megawatt. Carbon charges are expected to reduce the competitiveness of coal-fired power plants, resulting in the closure of many power plants. This will raise the average price of electricity enough for developers to build subsidized wind farms and still be profitable.