By Celeste Perri
(Bloomberg) — The Danish utility Dong Energy A/S won a contract to develop two wind farms off the coast of the Netherlands that the Dutch government deemed the cheapest in the world.
Dong, the world largest offshore wind developer, offered to develop the projects for 7.27 euro cents a kilowatt-hour (8 U.S. cents), excluding connection fees for TenneT of 1.4 cents a kilowatt-hour, the Dutch economic affairs ministry said in a statement on its website Tuesday. The government said the move will allow it to spend 2.7 billion euros less than it had anticipated over the 15 years it will subsidize the project.
If completed, the projects will accomplish a goal Dong set four years ago to bring wind farm development costs under 100 euros per megawatt by 2020, the company said in a statement.
“This demonstrates the great potential of offshore wind,” Samuel Leupold, executive vice president and head of wind power for Dong, said in the statement. Dutch economic affairs minister Henk Kamp said Dong’s bid represents a “major breakthrough in the transition to sustainable energy.”
Dong will build the Borssele 1 and 2 wind farms about 22 kilometers (13.7 miles) off the Dutch province of Zeeland. The company plans to complete the projects by July 2020. They will have a combined capacity of 700 megawatts, enough to power about one million Dutch households, Dong said.
Offshore wind remains one of the most expensive ways to generate power. Dong, along with other developers, has cut costs dramatically in recent years with techniques that include making more efficient wind turbines and blades, improving foundation designs and boosting transmission-cable capacity.
The Netherlands is planing five new wind farms in the coming years to produce energy for more than 5 million households, the government said.
–With assistance from Joe Ryan.
© 2016 Bloomberg L.P