Offshore Wind Turns a Corner – The American Interest – The American Interest

Renewable energyor at least one form of ittook a big step forward this week when Denmarks Dong Energy, the largestoffshore wind company on the planet, announced its intention to construct a pair of wind projects off the coast of Germany without any government subsidies. TheFTreports:

In an advance for what has been one of the most heavily subsidised types of renewable power, Denmarks Dong Energy said it would rely on wholesale market prices instead of extra government support for the projects in the German North Sea. []

The zero subsidy bid is a breakthrough for the cost competitiveness of offshore wind and it demonstrates the technologys massive global growth potential as a cornerstone in the economically viable shift to green energy systems, said Dongs head of wind power, Samuel Leupold.

The cost of both solar and wind energy has been falling at a steady rate in recent years, but its not been something weve pinned our hopes on, for a few reasons. First, renewables have been on the cusp of breaking through for decades, always being sold as the energy source of the future but showing little progress in becoming the energy source of the present. Much of that has boiled down to cost: these energy sources struggle to compete with fossil fuels on price, and their success thus far has therefore relied on government support. Nowhere has this been more evident than in Germany, where clean energy has been propped up by subsidies called feed-in tariffs, whose costs have been passed along to consumers (German electricity prices are among the highest in Europe).

Renewables also face a number of challenges as their share of energy mixes grows. Lacking cost-effective and scalable power storage options, wind and solar cannot be consistently relied upon to supply a gridwhat happens when the sun doesnt shine and the wind doesnt blow? That intermittency isnt just a threat to reliability of supply, it also wreaks havoc on grids thatwere not constructed with this sort of variability in mind. This problemand the stress it places on power gridsbecomes more pressing the larger renewables share of an energy mix becomes, which limitshow far wind and solar can go, even if they were capable of competing on price.

Dongs announcement is an undeniable sign of progress for offshore wind power. If the company can successfully demonstrate that its possible to profitably construct and operate a wind farm without subsidies, the cost criticism of renewables will begin to weaken. That said, it should be noted that this is something of a special case. These new farms are in a particularly windy location (smart siting should always be a primary concern for new energy projects), and theyre close to existing projects, which will allow Dong to piggyback on existing infrastructure. Moreover, the projects Dong bid on wont begin operating until 2024, which allowed the company to project lower operating costs on the expectation that the turbines that will eventually be constructedwill be larger and more efficient than those currently available at present. In other words, this is a bet that offshore wind will be a moneymaker seven years from now.

This achievement also does little to address concerns about the security of supply or grid stability issues. Indeed, one of the big reasons why Dong thinks its able to snub subsidies is the fact that the company wont have to pay the cost of connecting its projects to the grida cushy deal Germany set up for the company, and one that is a departure from industry practice. There are clearlymany more wrinkles to iron out.

With all of those caveats still in mind, lets give credit where credit is due: given the right set of conditions, offshore wind isnt far from becoming a viable energy option. As researchers continue to make clean energy technologies cheaper and more efficient, renewables reliance on subsidies will wane. If and when that happens, the industry will still have a host of other hurdles to clear, but these energy sources are moving in the right direction, and thats excellent news for future global energy security.

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Offshore Wind Turns a Corner - The American Interest - The American Interest