Making green energy affordable

What we can learn from the offshore wind energy cost out journey

Less than 30 years after Vindeby started to deliver energy to 2,200 Danish households in 1991, offshore wind power has become a competitive, scalable and powerful source of renewable energy. Today, offshore wind power, together with onshore wind and solar power, is becoming the cornerstone in the quest to create a world that runs entirely on green energy.

 
With costs decreasing, renewable power production makes electrification an increasingly attractive option, enabling large scale phase out of fossil fuels in transport, heating and industry. And as electrification becomes increasingly feasible in more sectors, the energy system will also be able to utilise even more energy from renewable power sources.

In a fully renewable energy system, other technologies will play a role alongside solar and wind power. On the supply side, renewable energy sources such as biogas and advanced biofuels must be utilised. Energy storage solutions such as batteries or hydrogen must be developed and deployed. And on the demand side, large-scale heat pumps and electric cars can make use of growing renewable power generation. These technologies are at different stages of their development, however, with none of them being as mature as solar and wind energy are today.

All have the potential to become competitive and scalable green solutions that can contribute significantly to a world fully powered by green energy. But it requires a well-orchestrated collaboration between governments and industry. And to this end, the offshore wind energy experience is instructive.

The positive loop
By creating clear and credible market volumes for offshore wind energy, and by sticking to ambitions in times of economic hardship, policymakers allowed for scale. The stable framework conditions made it possible for the industry to invest, build, learn and thereby innovate across the value chain, which in turn lowered costs.

And every cost reduction by industry in term enabled the increase of political ambitions for offshore wind development, creating even more market volume, and stronger incentives to invest. Moreover, economies of scale allowed for even further technological and industrial developments, locally and regionally and further cost reductions.

For offshore wind energy, the concerted effort between public and private actors spurred a self-reinforcing loop, leading to an accelerated roll-out of a new green technology. That is how innovation happens and how new energy technologies are brought to life.

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