Vattenfall won the latest zero-subsidy tender for a 760MW offshore wind farm off the Netherlands – and will pay a €2m ($2.25m) “ground rent” fee for the right, the Dutch government said on Thursday.

The Swedish group will build the project in the Hollandse Kust 3&4 zone by 2023 after coming out top in a tender that also included several other big European power groups and oil majors.

In a sign of the transforming economics of offshore wind, Vattenfall will not only build the wind farm with no support but will pay the €2m annual rent for the seabed rights.

Vattenfall triumphed in a 2018 tender, also subsidy-free, for the adjacent same-sized Hollandse Kust 1&2 project, and stressed before the bidding that it would leverage economies of scale between the two projects if successful in the latest round.

That will include the deployment of Siemens Gamesa SG 10.0-193 DDs wind turbines, which the Swedish group has already lined up for use at Hollandse Kust 1&2 and said in April it would use at the 3&4 project if successful in the new tender.

The Netherlands recently agreed a new climate deal that foresees 11.5GW in cumulative wind capacity in arrays in its part of the North Sea, which corresponds to a build-out of 1GW per year from 2024 onwards.

Magnus Hall, CEO of Vattenfall, said: “This is excellent news for Vattenfall, our partners and the Dutch energy transition. It means a significant step for Vattenfall in view of our ambition to make fossil-free living possible within one generation and to grow in renewable energy production.

“The Netherlands is an important market for us and this will be one of our biggest offshore projects. We are looking forward to contribute with this project to the transformation of the Dutch energy system.”

Announcing the result, the Netherlands Enterprise Agency said: “The wind power sector is growing and offshore wind farms are becoming increasingly cheaper to build. As recently as 2016, the developer of the Borssele Wind Farm Zone was still receiving subsidies for the electricity it generated.”

The economics of the project were further help by the offshore power link being built by TSO TenneT.

Gunnar Herzig, managing director of industry body World Forum for Offshore Wind, stated: “Seeing yet another zero-subsidy offshore wind project is excellent news and underlines the offshore wind industry's highly successful cost reduction path. It also shows the increasing need to think about offshore wind in a post-subsidy world.”

Giles Dickson, CEO of European wind advocacy body WindEurope, saidthe auction showed “yet again that offshore wind is very competitive – and ... now the cheapest form of new power in North Western Europe apart from onshore wind”.

“The Dutch are doing well on offshore wind. They’ve a good steady auction plan of 700MW every year. They provide clear visibility of what they’re auctioning and when which helps reduce costs,” said Dickson. “They’re taking a strategic approach to grid investments – and a healthy long-term view of marine spatial planning aiming at happy co-existence between offshore wind and, for example, fishing and biodiversity.”

He noted that the zero subsidy-system “seems to work in the Netherlands, because the Dutch share a lot of the project risk, and it’s not hard for wind farms to find corporate buyers for the power they produce”, adding that in the majority of European countries offshore wind auctions “need to offer stable revenues – and this reduces the financing and therefore the total societal costs”.

Dickson added that the Netherlands “could actually do more [than reach its 11.5GW 2030 offshore wind target] and should do once they factor in increased electrification in industry”.