Record-low bid in Danish offshore tender

Vattenfall has won rights to build 350MW worth of projects for €63 per MWh as prices continue to tumble in the renewables sub-sector.

Vattenfall, Sweden's state-owned utility, has won a Danish tender to build two offshore wind farms for a record-low bid of DKr475 ($72; €64) per MWh.

Vattenfall's bid in the Danish nearshore wind tender (DNS) is the lowest offer ever submitted for an offshore wind project in Europe. The Vesterhav Syd and the Vesterhav Nord wind farms, the two projects awarded to the utility by the Danish government, will generate a combined 350MW off the coast west of Jutland.

The bid is 20 percent lower than the previous record of €72.7 per MWh, submitted by DONG Energy in July.

“With our bid for DNS, we have demonstrated that we are able to reduce the costs of offshore wind faster than had been expected only a few years ago,” Gunnar Groebler, head of Vattenfall Wind, said in a statement.

The cost to build offshore wind projects has been falling as technology improves and developers gain experience. A report produced last month by advisory group Lincoln International shows the average unlevered costs of capital for offshore wind farms in the UK and Germany, Europe's largest markets, were falling as well.

Cheaper projects have convinced more investors to enter the sector. Trade association WindEurope reported in July that €14 billion had been committed to the offshore wind industry in the first half of 2016, which will finance 3.7GW of new capacity.

Vattenfall also announced in July a SKr3 billion ($349 million; €316 million) investment in a 92.4MW offshore wind project off the coast of Scotland. The Swedish company has a combined 2.3GW of wind capacity in Europe, with 904MW generated from onshore projects and 1.3GW generated offshore.