Offshore wind costs edge down, on par with coal, says BNEF

The costs of new-build offshore wind and storage projects have declined by 2% and 12% respectively, over the last six months, BloombergNEF (BNEF) said on Wednesday.

According to the research firm’s analysis, the global benchmark costs for onshore wind have decreased by 6% over the last 12 months, although they remain unchanged since the second half of 2022.

Solar, however, has seen increases. Over the last six months, the average fixed-axis solar project costs are estimated to be 2% higher, while costs for solar projects with trackers have risen 12%. BNEF explained that the latter projects are prevalent in the US, where developers have experienced rising labour, balance-of-plant (BOP), and financing costs.

Overall, the clean energy sector is seeing a continued decline in logistics prices and falls for some equipment costs on cooling commodity prices, although some of these gains are offset by increased financing costs.

Notably, BNEF said that the global benchmark levelised cost of electricity (LCOE) for offshore wind is now on par with coal, the cheapest since it started tracking project data in 2009. China was the country with the cheapest renewable power projects in the first half of 2023, with an LCOE of USD 50 (EUR 46.8) per MWh for offshore wind, USD 23/MWh for best-in-class onshore wind farms, and USD 31/MWh for fixed-axis photovoltaic (PV) farms. Costs for onshore and offshore wind have risen outside China, but domestically, prices have continued to decline due to a competitive wind turbine manufacturing market, BNEF said.

Globally, despite a 5% reduction in the cost of fossil fuel-fired projects over the last six months, onshore wind and PV remain the cheapest new-build power production technologies in countries accounting for 82% of global electricity generation.

BNEF expects that after the last few years of turmoil, the trend of clean energy project cost declines will continue in the long run.

(USD 1 = EUR 0.933)

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