The landscapes of Rembrandt glow with the great painter’s rendering of light. And they are distinctive for another reason: windmills are everywhere. As far back as the 13th century, the Dutch used windmills to drain their land and power their economy. And now, 800 years later, the Netherlands is again in the vanguard of what could be the next big thing, not only in wind power but also in the global energy system as a whole: offshore wind.
In December, the Netherlands approved a bid for its cheapest offshore project yet—€54.50 per megawatt-hour, for a site about 15 miles off the coast. Just five months before, the winning bid for the same site was €72.70. Denmark has gone even further, with an auction in November 2016 seeing a then record-winning bid of €49.90 per megawatt-hour, half the level of 2014.
Europe, which has provided considerable economic and regulatory support, accounts for more than 90 percent of global capacity. As a result, Europe now has a maturing supply chain, a high level of expertise, and strong competition; it is possible that offshore wind could be competitive with other sources within a decade. By 2026, the Dutch government expects that its offshore auctions will feature no subsidies at all. But it might be even sooner: in the April 2017 German auction, the average winning bid for the projects was far below expectations, and even less than the Danish record set only six months before. Some of the bids were won at the wholesale electricity price, meaning no subsidy is required.