Small Near-shore Wind May be Cheaper Than Far Offshore Wind Says Danish Study

By Paul Gipe

Opens Up New Possibility for Community Ownership


Danish researchers have uncovered surprising results in a study of offshore wind energy. Contrary to expectations, research at the University of Aalborg in Denmark suggest that small wind energy projects developed near shore may generate lower-cost electricity than large wind projects far offshore.

The study, Evaluation of offshore wind resources by scale of development, in the peer-reviewed journal Energy examined the costs of wind-generated electricity from offshore wind projects and found that offshore wind “has shown ever-increasing costs of installation, and an inverse economy-of-scale.”

Current projects, says the study, cost about €3,500/kW ($4,900 USD/kW) and future projects may cost as much as €5,000/kW ($7,000 USD/kW).

At these costs, the installed cost of offshore wind is more than twice that of wind on land. This is confirmed by typical payments for offshore wind today. A recent contract was awarded in Denmark for 1.051 DKK ($0.018 USD/kWh) per kWh for the Anholt offshore project. Similarly, Germany will pay €0.19/kWh ($0.24 USD/kWh) for an offshore project built today in contrast to what it pays for electricity from wind turbines on land: €0.09/kWh ($0.11 USD/kWh).

Through the 1960 and 1970s, conventional power plants gained “economies-of-scale” as they grew ever larger. This resulted in steadily lower costs of electricity. Thus, engineers and bankers have expected similar results for wind power plants today.

However, beginning in the mid to late 1970s, new power plants, particularly new nuclear power plants encountered rising per unit costs attributed to “diseconomies-of-scale”. As the plants grew bigger they produced more expensive electricity than the smaller plants that proceeded them.

The proponents of distributed generation have argued that very large wind power plants may face the same problems as other large power plants. Proponents suggest that smaller projects can often generate electricity at lower cost than large projects because they can be built to the optimum size for the existing infrastructure. The Danish study is the first to make this case for offshore wind energy.

The “study reopens for development of offshore at a minor scale, with smaller turbines installed in smaller parks [wind power plants] near shore, where turbines may produce less, but at lower generation costs.” Further, the researchers found “that near shore wind energy can be produced at lower costs even if reducing [individual] turbine capacity and park [wind power plant] size and utilizing the often poorer wind resources [found] near the coast.”

Though the near-shore projects may generate electricity at lower cost than those far offshore, there is less wind resources near the shore. The study found that the near shore resource “is limited to about 15 TWh per year,” which may only cover 40% of Danish electricity demand in the year 2020.

Denmark currently generates more than 25% of its electricity with wind energy, mostly on land. Altogether, renewables today generate 43% of Denmark’s electricity.

Near-shore wind projects may also produce additional benefits relative to far offshore wind:


  • “local income generation in rural areas, particularly harbours and condemned industrial sites, but also as a “warm shower” of income generation in rural populations;
  • lower costs of expanding the national grid as fewer 400 kV cables may be needed in a system with more grid access points on 132/150 kV levels;
  • and a more secure electricity supply from a diversified and distributed generation capacity.”

One of the disadvantages of near-shore projects is that they would be highly visible to people onshore. The Danish researchers suggests that this obviates for an alternative form of offshore project development than that currently practiced. “The high visibility of these installations may be offset by local ownership . . . and higher public involvement,” they concluded.

Evaluation of offshore wind resources by scale of development. / Möller, Bernd; Hong, Lixuan; Lonsing, Reinhard; Hvelplund, Frede. In: Energy, Vol. 48, No. 1, 2012, p. 314-322.