The economics of offshore wind

This paper presents an overview of the main issues associated with the economics of offshore wind. Investment in offshore wind systems has been growing rapidly throughout Europe, and the technology will be essential in meeting EU targets for renewable energy in 2020. Offshore wind suffers from high installation and connection costs, however, making government support essential. We review various support policies used in Europe, concluding that tender-based feed-in tariff schemes, as used in Denmark, may be best for providing adequate support while minimising developers’ rents. It may prove economic to build an international offshore grid connecting wind farms belonging to different countries that are sited close to each other.