top of page

Wind Energy Overview: Onshore vs Offshore farm costs

Updated: Aug 5, 2022

Introduction to Wind Energy

Wind energy is one of the fastest-growing renewable technologies globally due to falling costs and engineering innovations introduced. Global wind generation capacity has increased around 75% in the past 20 years with onshore wind farms leading the way with an installed capacity of 698GW in 2020 with offshore following with 34GW and offering tremendous potential in the future (IRENA, 2020).

Wind energy uses the kinetic energy created by air in motion to produce electricity through the various turbines offered on the market. The amount of energy produced majorly depends on the size of the turbine and the lengths of its blades which is directly associated with the wind speed (IRENA, 2020).


Are you following the COP26?

The UK will host the 26th UN Climate Change Conference of the Parties (COP26) in Glasgow on 31 October – 12 November 2021.

The COP26 summit will bring parties together to accelerate action towards the goals of the Paris Agreement and the UN Framework Convention on Climate Change.

The UK is committed to working with all countries and joining forces with civil society, companies, and people on the frontline of climate change to inspire climate action ahead of COP26.



Turbine efficiency and manufacturing costs improved immensely over the last decade with the current offshore turbine MIH Vestas having a specific power of 450 W/m2, the most powerful wind turbine of the present (Deutsche WindGuard, 2018). Nevertheless, the choice of turbine suitability depends on the project specifics. For example, high specific power turbines are more suitable for regions with high average wind speeds.

Therefore, to reach the same capacity factor (yearly average power production/rated power production) the appropriate turbine-specific power should be chosen by giving the most focus on average wind speeds (Deutsche WindGuard, 2018). Studies predict that the capacity density of offshore turbines will reach values of 5.36 MW/km2, with a capacity factor of 47%, further improving the efficiency of wind farms (Deutsche WindGuard, 2018).

A variation of foundation types is present mainly depending on the water depth, soil conditions, and the size of the turbine. As shown in Figure 1, 77% of offshore wind farms completed in 2016 suggest steel monopiles as the option of choice. The latest technology of floating foundations has the potential to decrease CAPEX cost by 65% in scenarios simulated in 2027 to 2040 (McKinsey, 2016). Moreover, floating substructures have the prospect to explore locations with deep waters that offer a great opportunity on capitalising on wind energy.

Offshore foundation types based on 78 wind farms completed in 2016 (MacKinsey, 2016)
Figure 1 - Offshore foundation types based on 78 wind farms completed in 2016 (MacKinsey, 2016)


When developing wind farm projects, the overall project costs are mostly accumulated at the construction phase due to the very expensive turbines, foundations, and transmission assets compared to the relative pre-financial close costs of environmental impact assessment, wind studies, and others (Deloitte, 2014).

As shown in Figure 2 and Figure 3, onshore projects have higher variability in cost per installed MW due to factors such as soil conditions, local costs, and current infrastructure which influence the total cost. On the other hand, offshore projects tend to be generally more complex and around 2-3 times more expensive than onshore with higher percentages of other key infrastructure costs other than the turbine (Deloitte, 2014).

Current 2020 data suggest that the price of electricity from wind has fallen by 44-78% from 2010, reaching a global weighted-average cost of USD 0.051-0.099/kWh for onshore and USD 0.087-0.115/kWh for offshore (IRENA, 2019).

Total project costs offshore (Deloitte, 2014)
Figure 2 - Total project costs offshore (Deloitte, 2014)

Total project costs onshore (Deloitte, 2014)
Figure 3 - Total project costs onshore (Deloitte, 2014)
Figures from Deloitte -

As illustrated in Figure 4, increased site depth of offshore projects shows a correlation with increased project cost. It is expected that innovation and standardization of the offshore industry, such as the introduction of floating turbines and overall larger turbines will decrease total project costs.

Effects of turbine capacity and site depth on total offshore project costs (Deloitte, 2014)
Figure 4 - Effects of turbine capacity and site depth on total offshore project costs (Deloitte, 2014)

Wind energy has a low Energy Return on Investment (EROI) of around 3.9 due to the required storage and backup capacity as well as that wind speeds vary making it harder to estimate accurate energy outputs. Current 2020 data provided by the International Renewable Energy Agency (IRENA) has found that global average total cost of onshore had decreased by 74% in the past 47 years and offshore has increased by 22% in the past 20 years due to projects moving into deeper waters (IRENA, 2020).

As shown in Table 1, the cost of both offshore and onshore is around 1355–3185/kW globally with capacity factors around 33-44%. The generation of electricity over the project lifespan (LCOE) is twice the amount for offshore compared to onshore. Lastly, IRR is estimated at around 7-7.5% for both onshore and offshore with future innovations and supply chain improvements the return of an investment will potentially increase in the upcoming years (Deloitte, 2014).

Table 1 with supporting data from (Deloitte, 2014) shows that the operational cost of offshore wind farms is higher than for onshore farms due to the greater costs accumulated for accessing and maintaining the turbines. Due to harsh marine environments in the open sea, a higher level of failure to some components is evident as well as the requirement of vessels to access the site. In general, OPEX could vary significantly in projects depending on the location, service contract, and land lease deals made as can be seen in Figure 5 and Figure 6, with the cost of parts/equipment being the highest for both onshore and offshore.

Data from IRENA 2020
Data from IRENA 2020

Total OPEX and OPEX breakdown of offshore (Deloitte, 2014)
Figure 5 - Total OPEX and OPEX breakdown of offshore (Deloitte, 2014)

Total OPEX and OPEX breakdown of onshore (Deloitte, 2014)
Figure 6 - Total OPEX and OPEX breakdown of onshore (Deloitte, 2014)



bottom of page