ERBE 05 1 03
A Method for Calculating the Levelised Cost of Energy for Offshore Wind Farms
JUAN WALTERa,b, TERESA NOGUEIRA 
a,c, DANIEL TENFEN b
a School of Engineering, Polytechnic Institute of Porto, Porto, Portugal; b Federal Institute of Santa Catarina, Florianópolis, Santa Catarina, Brazil; c Center for Innovation in Engineering and Industrial Technology (CIETI), Porto, Portugal.
To cite this article:
Juan Walter, Nogueira, T., Tenfen, D. 2025. A Method for Calculating the Levelised Cost of Energy for Offshore Wind Farms, European Review of Business Economics V(1): 39-51.
DOI: https://doi.org/10.26619/ERBE-2025.5.1.3
Received: 22 October 2025. Accepted: 29 December 2025. Published: 31 December 2025.
Language: English
Abstract
The need to reduce greenhouse gas emissions and the search for cleaner energy sources are accelerating the development of offshore wind technology, which offers significant energy potential (Lakshmanan, 2021). This study describes a methodology for calculating the Levelised Cost of Energy (LCOE), which determines the average cost per megawatt-hour of producing energy in an offshore wind farm. This calculation considers initial investments, operation and maintenance costs, decommissioning expenses, and other economic factors. LCOE is a vital parameter for investment decisions in offshore wind farms, which typically require significant upfront capital. It provides a comprehensive perspective on the project’s financial performance throughout its life cycle. The proposed methodology allows for the individual assessment of each cost and revenue component, providing the flexibility to apply it to various scenarios and operational conditions. To facilitate this process, a MATLAB script was developed to automate calculations, generate reports, and perform sensitivity analyses. The script was validated through a simulation using data from the Walney Offshore Wind Farm project, yielding an LCOE of €107.63/MWh, which shows strong convergence with an established industry benchmark. This demonstrates the model’s effectiveness in assessing economic viability and identifying the key factors influencing LCOE. The results highlight the model’s potential to support strategic decision-making, optimise projects, and increase the competitiveness of offshore wind energy within the context of the global energy transition.
Keywords
Offshore wind energy, LCOE, Economic viability, Investment decisions, Energy transition, Renewable energy.
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