“Using offshore wind to produce green hydrogen from electrolysis is an enabler to decarbonize other sectors such as heavy industries and transport,” Henrik Poulsen, CEO, and President of Ørsted, said.
We believe this is great news and shows how willing the offshore wind farm developers are to find new ways to support the zero bid strategies with innovation. Only by thinking in an innovative way do you win a zero subsidy bid for a wind farm.
We have used the YOUWINd model to look further into the South Holland Cost 3+4 and see how the LCOE and the overall CAPEX have evolved over the last decade or so. We anticipate that this wind farm will use 12-15MW wind turbines which would mean that the wind farm of 700MW will cost around 1,1bn EUR. The same wind farm with 3,6-4MW wind turbines 10 years ago would have cost more than double.
The LCOE will come down to 66 EUR/MWh from 85,5 EUR/MWh. If the Market prices remain the same or even higher there is still business in the zero bids, and according to the YOUWINd model then well above 6% IRR.
European electricity prices compared
Incredible development in cost reduction over the years has opened doors for many other developers and now the cost has reached a point zero bids are considered normal. So normal and innovative thinking is necessary to get permission to build. Looking forward to seeing what the competitor, Vattenfall, will announce but they won the last bid in the Netherlands.