| ESSEN, Germany
ESSEN, Germany Swedish utility Vattenfall [VATN.UL] will have 3 gigawatt (GW) of installed wind-powered generation capacity by the end of this year as it continues to move away from coal-fired and nuclear power toward renewable energy, it said on Wednesday.
Despite being relatively new to windpower, the company has managed to compete successfully in Europe for big offshore projects, where auction prices have halved in the past 18 months, said Vattenfall's board member in charge of wind, Gunnar Groebler.
"We are fully on course with the strategy that we described in 2015, of a doubling of our capacity up to 2020, reaching 3 GW this year," he said in an interview during the E-World trade fair in Germany.
"We will see technological developments that will help us reduce costs even further," he added.
Vattenfall has earmarked 2 billion euros ($2.14 billion) for wind projects in 2017 and 2018, out of a total investment volume of 5 billion euros between 2015 and 2020.
It will focus on new onshore wind projects in the Netherlands this year, he said.
Last November Vattenfall won an offshore project called Kriegers Flak in the Danish Baltic Sea with a bid to produce electricity for 49.9 euros a megawatt hour (MWh).
This was half the 103 euros/MWh agreed for the Danish North Sea Horns Rev 3 tender which Vattenfall won two years ago, a price which at the time was regarded as remarkably low.
Close but narrowly higher was newcomer Shell which in December won a contract to build Dutch offshore capacity in the next decade at a strike price of 54.50 euros.
Groebler, an engineer, said much had been learned since the early days of the industry, when projects were much more expensive.
Now, bigger turbines meant fewer foundations and cables were necessary, installation times were falling and operating and maintenance costs were decreasing.
"This way, our bids are economically feasible," he said.
Offshore wind power is moving closer to thermal power prices, which are currently 30 euros/MWh for wholesale delivery in Germany next year.
This year Vattenfall will construct the Horns Rev 3 and Aberdeen Offshore North Sea farms, and will also add two onshore UK farms, Ray and Pen y Cymoedd (PYC).
Vattenfall will also bid in Germany's auction-based system this year for future projects, Groebler said.
Germany now requires that companies bid for new power generation projects in a move to bring costs down, replacing a previous system based on fixed subsidies.
(Additional reporting by Christoph Steitz; Editing by Greg Mahlich)