Costs and competitive advantage of nearshore wind energy

Klinge Jacobsen, Henrik and Hevia-Koch, Pablo and Wolter, Christoph (2018): Costs and competitive advantage of nearshore wind energy.

Abstract

Nearshore wind development has been seen as the cost reducing option that could shrink the cost gap between onshore and offshore development. The cost advantage is linked to more shallow water and shorter connection to shore even avoiding an offshore substation. Public tendering for offshore wind in Denmark has opened up for near-shore wind turbine farms as an alternative for lowering the cost of new offshore wind development. Whether these proposed near-shore locations will manage to significantly lower costs is not clear. The tenders have resulted in bids that are at comparable levels for the nearshore and the further offshore wind farms. We compare the cost drivers and possible cost differentials with preferences for locating wind farms further away from the coast. The main cost driver is water depth and in the Danish case water depth is increasing slowly or is not even correlated with the distance from shore. Therefore the willingness to pay for moving turbines away from the coast may be sufficiently high to balance the increased cost. The actual comparison of costs and willingness to pay must be carried out for the specific case with cost characteristics and willingness to pay by the affected population.

• Item Type: MPRA Paper
• Language: English
• Keywords: offshore wind; cost curve; cost drivers; preferences; nearshore
• Subjects: Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy; Q - Agricultural and Natural Resource Economics ; Environmental and Ecological Economics > Q4 - Energy > Q42 - Alternative Energy Sources

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