The average cost of generating electricity from offshore wind farms has dropped by one-fifth in the past six months, according to the latest figures from Bloomberg New Energy Finance (BNEF).

Auction programmes in Denmark and the Netherlands – in which developers bid for projects at the lowest electricity price they can offer – have helped to drive down the levelised cost of electricity (LCOE) by 22% from the first half of 2016 to $126/MWh in the second half of 2016.

Seb Henbest, head of Europe, Middle East and Africa at BNEF and in charge of the levelised cost modelling work, said: “For years, offshore wind has been regarded as a high-cost option compared to onshore wind, solar PV, coal and gas.

“This study shows that the economics of offshore wind are now improving fast, with the best sites getting closer to striking distance of more mature technologies.”

UK’s deep water projects more costly

In September, Vattenfall was awarded a contract to build a Danish wind farm at just €60/MWh ($67/MWh).

During the same month, Dong was contracted to build a Dutch project at €73/MWh.

Projects in deeper British waters are being awarded at higher prices, keeping the global average higher than the Danish and Dutch examples.

> Read BNEF's announcement