the Creative Commons Attribution 4.0 License.
the Creative Commons Attribution 4.0 License.
| 10 Dec 2025
Economic Viability of Floating Offshore Wind in Portugal with Varying Market Conditions and Financial Support Mechanisms
Abstract. This study assesses the economic viability of commercial scale floating offshore wind farms in Portugal, under a range of CfD mechanisms. A techno-economic model was created to create synthetic range of time series wind and spot price data that creates financial revenue under varying CfD types, water depths, and distances to shore. Results are split into levelized cost of energy, net present value, and internal rate of return and are influenced by a range of sensitivity analyses that help define the financial setting for successful floating offshore wind projects, including CfD mechanisms varying in type, value and duration. Results show promise for the development of floating offshore wind but only under strong financial support and are heavily influenced by site, wind regime and economic conditions.
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Status: final response (author comments only)
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RC1: 'Comment on wes-2025-227', Anonymous Referee #1, 01 Jan 2026
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AC1: 'Reply on RC1', Craig White, 13 Feb 2026
Dear reviewer, thank you for the comment. Regarding the scalability, the model inputs allow for any size and number of turbines as the majority of costs are per unit of installed power. As such, different farm capacities can be replicated and studied, with economy of scale effects also applicable for larger farms. Each scenario was fixed at 1GW in this study for consistency. For reproducibility, the model uses metocean conditions from different sites, and ERA5 data can be applied to any maritime area covered by its grid. relying solely on new site-specific metocean data.
Regarding uncertainties and limitations, specific spacing and layout of the WTGs are not considered in the modelling. We felt this is not the focus of the study, for either farm layout for O&M or energy production. Standard spacing of around 1km per WTG was used. Energy yield does not consider layout and complex effects like blockage and wake effects. Although each case is taken as a separate entity, it should not be assumed that it is the only operational zone in the total available area, especially considering the 2GW currently available for auction. Bathymetry is considered as the depth changes significantly along the Portuguese coast, but seabed conditions are not considered for complex foundation costs or an optimised export cable route. Onshore cable route, substation and grid connection location are not considered in the model again due to added complexity, with simplified grid connection costs only up to the onshore substation. There are many reasons for omitting these costs, such as the variability of connections depending on farm, offshore layout and connections, shared connections, and existing onshore grid infrastructure.
For O&M and installation limitations, costs are top-down costs and do not consider the specifics regarding vessels, weather windows, logistics strategy and contractual arrangements. They do however consider the site severity and are distance-based cost functions. Port distances were measured using straight-line distances to port which may be slightly different in practice. Cable routes were also simplified and are mainly straight-line cost functions from site to shore. A summary of these limitations for both CAPEX and OPEX will be included within the “future work section, or as a specific limitations section to the model section.
Regarding previous work in this field, parts have been modelled, for example LCoE mapping in Portugal (Martinez, A., & Iglesias, G. (2022)). This study examined all of the European coastline, and as such the detail to the Portuguese area was less granular than our study due to the scale of the study. The economic feasibility (Castro-Santos, Laura, et al., 2020) examined LCoE in bands rather than specific development areas, with influence from wind and bathymetries. Also, tariffs were based on two fixed feed-in-tariffs and did not consider the range of CfD support mechanisms we analyse. All metrics considered in this work were considered in theirs, such as LCoE, NPV, and IRR. The wording in the literature review will be tidied up to make these aspects more clear.
One assumption is that the cost data on the wind farm CAPEX the reference farm used in the literature for this study, and is linked in terms of scale economies and construction methods. The majority of costs come from two sources: BVG’s Guide to a Floating , and a report on floating wind site-based and metocean influenced O&M, “A Spatial-Economic Cost Reduction Pathway Analysis for U.S. Offshore Wind Energy Development from 2015–2030” by (Beiter et al, 2016). On costs, the BVG report is widely referenced and is useful due to being recently updated and based on a large-scale wind farm. The assumptions are therefore that scale effects for the report-based 500MW farm scale well to 1GW, and that the costs for a UK floating farm are transferable to the Portuguese cases used in this study. To these assumptions, Portugal has been used as construction sites for past floating farms and has good capabilities here.
On O&M, an assumption is that sites fit into the reported division of “mild, moderate, severe” sites which can make edge cases difficult, as stated in the previous response using the report by (Beiter et al, 2016). For simplicity in modelling, we kept these three and most sites were grouped into the severe category due to the exposed and often strong metocean conditions that Western Portugal experiences. Also, costs were retrieved from (Beiter et al, 2016) and all floating sites were off the coast of California, so these costs assume similar OPEX between North America and Portugal.
Other notable assumptions were the discount rate set at a base 8%, which is a broad value for financing costs but is well documented for early-stage floating wind. Another assumption relates to the depth profile, assumed to correspond to the bathymetry at the central point of each of the 36 grid squares representing the sites.
For the CfDs, modelling was based on reference availability for capability-based CfD schemes. To estimate future values, synthetic datasets for prices and wind speeds were generated, avoiding simple replication of historical data. Uncertainty was constrained by statistically matching the synthetic data tohistorical distributions as closely as possible. These CfD methods are experimental but well documented, and are expected to feature in future offshore wind support mechanisms. These assumptions alongside references to all cost sources will be stated in revised version of the paper.
I agree with this comment on the conclusion and the need to link the conclusions to a broader context. An additional benefit of floating offshore wind is its higher economic value in terms of GDP generated per unit of CAPEX, a ratio that has been shown to be particularly high in other European markets. This potential is further strengthened by the possibility of floater fabrication in Portugal, which has already produced large-scale units for the WindFloat Atlantic project. Floating offshore wind may also create added value for aquaculture and, in the medium to long term, for the fishing industry, due to the creation of protected areas around the installations. These aspects will be further developed in the revised manuscript.
Regarding comparisons with other studies, limited comparisons can be made with fixed-bottom offshore wind due to the deep water off the coast of Portugal being generally unsuitable in almost all cases,
For comparisons with other geographies, this is a very interesting point and is not covered in great detail. (Myhr et al, 2014) look into LCoE of floating offshore wind also compared the main platform types with fixed monopile and jacket foundations. One of many interesting points from that paper is the dramatic rise in costs as water depth increases. At the time of study, the limit for fixed foundation was 50m which is not being challenged, so reference to this and future options for the Portuguese market (could fixed ever be possible?) should be considered.
A study on wave energy (Castro-Santos, 2015) reported LCoE values of approximately 95-180€/MWh at a discount rate of 7.5%. Applying similar discount-rate sensitivities to current conditions yields an estimated range of 126-239€/MWh today. This would place wave energy in a more favourable position than floating offshore wind in Portugal; however, this comparison does not account for changes in CAPEX since the time of the study.
A forecast of energy and subsequent LCoE for all of the European coastline (Thomas, 2026) found that floating offshore wind LCoE in Portugal was around 100-180€/MWh, lower on average but showing good agreement with the best performing sites analysed in the current study. (Thomas, 2025) examined floating wind in Spain, with 120€/MWh for the site just above the Portuguese border on the Western Coast. (Castro-Santos, 2020) in the “Economic feasibility of floating offshore wind farms in Portugal” had higher values, including 304€/MWh for the most relevant semi-submersible platform. The broader European coastline study by (Martinez and Iglesias, 2022) found a range of LCoE which showed detailed mapping and distinction off the Portuguese coast, 160€/MWh closer to shore and 140€/MWh in the far shore areas, with the cost effect of deeper locations on mooring costs unknown. These LCoE results frame the outcomes of our study well, ranging from 146-319€/MWh with bathymetry extremely impactful site performance. The UK AR7 floating wind LCoE is also approximately 249€/MWh, which again agrees well with the outcome of this study, albeit for a much smaller pilot farm of around 200MW.
The goal of this paper is to highlight under what conditions floating wind is viable in Portugal, in particular in terms of financial support mechanisms. It is hoped that this could strengthen the case for increased governmental support for floating offshore wind by first outlining the challenges and then highlighting the associated environmental, economic, socio-economic and marine-economy benefits.
Specific areas that need clarification:
Lines 39-41: “Notwithstanding the lower costs of onshore wind and solar, (Silva & Sareen, 2021) argue that public attitudes vary, with community opinions and engagement often overlooked or bypassed, which presents an opportunity for floating wind development.” I’m not sure what this means; how does it present an opportunity for floating wind development?
This could certainly be clearer: The paper argues that onshore renewable projects often face stronger public opposition due to land-use and environmental constraints, and because community concerns, particularly in areas close to proposed developments, may be insufficiently addressed. In contrast, floating offshore wind offers additional space for renewable deployment with fewer perceived land-use conflicts, no nearby human habitation, and potentially lower environmental impacts, particularly in terms of biodiversity. Moreover, following construction, these installations may even deliver net positive effects for marine ecosystems. This will be worded more clearly in the revised manuscript.
Lines 161-162: “This method was applied to twelve locations, each at three distances to shore, to provide a comprehensive feasibility study for the whole of Portugal.” This was a bit confusing; I would clarify that the method was applied to twelve regions, each at three distances to shore, for a total of thirty-six distinct locations.
I agree this could be worded more clearly sense and will be changed in the next version.
Lines 298-299: “Geographical features including Sintra peninsular off Lisbon and also in the Southwest, Sagres zones also benefit from improved but local windspeeds.” Confusing text.
This is indeed confusing. This section highlights the geographical features that enhance wind speeds in the area and, in turn, improve the site’s overall suitability and viability for development. This will be reworded.
Figure 4: Why is the LCoE so much higher in the further sites in Sagres West compared to Sagres South? It seems like they are following the same windspeed/depth patterns, but there could be some variation in the data that I'm not seeing in this figure.
The two sites lie at the edge of the continental shelf. The southern site has a water depth of 245 m, whilst the western site reaches 2811m, which largely explains the significant difference in LCoE between the two sites. This will be more clearly pointed out in the text.
Lines 353-354: Name the “selected few sites” viable under current economic conditions.
The sites viable under current economic conditions are shown in Fig. 9: Viana (near), Porto (near, mid), Aveiro (near, mid), Figueira (near, mid), Peniche (near, mid), Lisboa (near, mid), Setubal (near), Sines (near), Sagres W (near), Sagres S (near, mid), Lagos (near), Faro (near). These sites will be more clearly listed in the text. The majority of edge-case areas fall into the marginally feasible category (corresponding to the 8-10% range, where 8% is the assumed discount rate). This sentence will be reworded for clarity.
Line 375: Was a sensitivity analysis shown for IRR?
Yes. This aspect was considered but omitted due to similar results with NPV sensitivity. This will be re-examined in the next iteration as IRR is an often-preferred metric due to the fact that it can be compared with to the discount rate. It is perhaps easier to understand to a wider audience which could improve the readability of this paper, and convey the message better.
The technical corrections will be addressed and the comments are appreciated.
Citation: https://doi.org/10.5194/wes-2025-227-AC1
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AC1: 'Reply on RC1', Craig White, 13 Feb 2026
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RC2: 'Comment on wes-2025-227', Anonymous Referee #2, 25 Feb 2026
First off, thank you for the opportunity to review the manuscript.
General Comments
The study evaluates the economic viability of commercial-scale FOW in Portugal using a TEA model that simulates wind generation, electricity prices, and financial performance under various CfD mechanisms, site conditions, and project characteristics. Results show that floating offshore wind has potential in Portugal, but its financial success depends heavily on strong policy support, favorable site conditions, and economic factors such as CfD structure.
The report does a nice job addressing high-level economic mechanisms and cost dynamics of FOW, with a particular focus on project finance structures through CfD options and consideration of LCOE, NPV, IRR, and site-specific considerations. The topic is timely and relevant, especially given increasing interest in floating offshore wind deployment in regions such as Iberia.
The analysis appears technically grounded and supported by modeling; however, several areas would benefit from clarification, additional detail, and improved explanation to enhance readability, transparency, and robustness. Clearer definitions of key economic and technical concepts for FOW, additions to methodological description, and improved contextual framing of economic viability would strengthen the report.
Specific Comments
The manuscript would benefit from a clearer explanation of what constitutes “economic viability” for FOW. Specific economic thresholds or benchmarks used to define viability would be of value. Also, providing guidance on reasonable ranges for financial metrics such as internal rate of return (IRR) and net present value (NPV) would help contextualize the economic analysis and improve interpretability for readers.
A few aspects of the modeling framework would benefit additional clarification. First, a clearer explanation of the parameter sweep, and scenario structure would improve reproducibility and reader understanding, Referencing Table 1 explicitly in this context may be helpful. Second, the extrapolation methodology used to scale project capacity for the OPEX analysis could be described in greater detail to better understand how this was done. Third, assumptions around underlying the learning rate discount should be explicitly stated and justified. Forth, it would be helpful to include representative CAPEX values from the referenced BVG report directly in the manuscript for ease of reference. Lastly, specific assumption for the system losses may be important to report explicitly since the energy generation of the projects are such as significant drive of LCOE reductions.
Given that different floating platform technologies may exhibit differences in material costs and impact variances in operational and maintenance costs, these distinctions seem important and should be addressed explicitly. Similarly, it would be useful to clarify whether site selection considers the three different types of FOW substructures.
A few technical and economic terms would benefit clearer definition or expanded explanation, a few including strike price, spot price, reference volume, reference generator, windfall event, restrictive phases, learning rate discounts. Also, acronyms such as “TLP” may be better spelled out to ensure accessibility to a broader audience.
Initial presentation of the LCOE equation with the time index term “t-3” could use an explanation when describing the equation. Another review of the authors to ensure accompanying explanation for all equations and variable are defined would be worth the time. Additional context for how financial inputs, including IRR targets, discount rates, and cost escalation assumptions are selected would also strengthen transparency and understanding.
Addition clarify around a couple of interpretive points would strengthen the manuscript. Statements around hydro-battery investments, community engagement imply negative sentiment toward onshore wind and solar, and whether observed variability in design parameters reflects a lack of industry standardization or is primarily driven by site-specific engineering requirements.
A couple of minor comments for consideration. First, additional comparison between competitive sites and what parameters are driving the appeal. Second, mention of specific cost reduction strategies. Third, expand descriptions where key technical or economic assumptions are introduced. Forth, strengthen explanatory text for clarity on equations. Finally, consider integrating key data points from referenced reports directly into the text to improve readability and reduce reliance on external sources.
Summary
This manuscript addresses an important and timely topic and has the potential to make a meaningful contribution to the literature on floating offshore wind economics. Considering the comments may improve the manuscript’s clarity, rigor, and accessibility to both technical and policy audiences. A list of unedited comments made while reviewing the manuscript are listed below for reference. Please touch base if any additional clarification is needed. Great work and thanks again for the opportunity to review!
Technical Corrections / Questions
- 25: Reductions in LCOE only through cost reductions? What is economically viable in this case? Does FOW have to compete with other RE technologies? Can there be other values that it might add for Iberia?
- 27: Site selection and resource optimisation seem to be different activities than cost reduction as mentioned as crucial in the prior sentence.
- 37: Is this saying that FOW may not be possible with hydro-battery investments?
- 40: Is this trying to say community opinions and engagements are negative towards onshore wind and solar?
- 56: Note, if CfD, strike price level, and spot price are not defined in detail in other sections, this should be added to help the reader better understand these terms.
- 60: Further defining what is meant by change in volume would be useful.
- 62: Recommend further description on the reference generator concept if not mention later in the paper.
- 75: Recommend further defining what is meant by windfall events.
- 95: It was a bit difficult to read the t term in the summation part of the LCOE equation. If possible, make this clearer of further expand explanation in the text.
- 117: May want to spell out TLP for new readers.
- 121: Is this a lack of standardisation or more of an artifact of site-specific designs?
- 121: At what point is FOW considered to be competitive with fixed offshore wind? What is considered to be economically viable?
- 141: It might be useful to give the reader a sense of what a good target IRR may be, or at least a baseline for initial guesses to use for the equation.
- 141: Similar comment here, providing guidance on reasonable range of NPV values may be useful.
- 146: Consider expanding on what is meant by restrictive phases.
- 147: Does this mean the OPEX was not considered for the LCOE calculation or maybe it was assumed to be constant? Seems as though different floating technologies may vary in OPEX and should be considered.
- 161: Was each of the twelve locations assessed at three distances to shore? It was difficult to follow the suite of sites considered and the parameter sweep for the modeling based on this description. This might be a good opportunity to mention Table 1.
- 162: Does the model also consider each of the 3 different floating technologies?
- 173: Would be beneficial to pull some of the assumed CAPEX values from the BVG report into the text for a quicker reference.
- 191: The extrapolation of the project capacity should be described in more detail.
- 192: What were the assumption for the learning rate discount?
- 286: Would be valuable to mention the assumed losses for the analysis, especially since the energy generation is one of the most important levers that drive the LCOE results.
- 301: Might be of value to further dive into reasons behind some of the site results; especially those that are not an expected outcome. E.g., Faro site, the furthest from shore site is lower LCOE than the mid distance from shore.
- 303: Surprised to see that lifetime has the lowest effect on LCOE. How is the lifetime calculated in the LCOE? Does it change project amortization?
- 304: Recommend further definition of the base case for the sensitivity analysis.
- 307: Is the longer export cables driving the costs up or are there other significant cost drivers at play here such as installation costs?
- 311: Where did the estimated 50% of total CAPEX needs reduction come from? Is this a rough estimate of some percentage of total system cost?
- 312: Similar comment for the 150% of CAPEX, where did this estimate come from and how does it tie to potential risk?
- 313: The ranges of LCOE mentioned in the text do not seem line up with the chart in Figure 5. Clarity on the range of values would be useful.
- 317: Efficiencies in only the fabrication of the components? This is only considering fabrication of the foundation?
- 317: What are the specific project phases leading up to FID?
- 371: What financial condition is the one to choose for FOW in Portugal?
- 374: What is the criteria for viable to generate the spot price range of Euro100-250/MWh?
- 375: The conclusions would be more useful if specific areas of CAPEX, ways to increase energy yield, and improving discount rates were mentioned.
- 377: Typo on row 377, 'o' instead of 'to.'
Citation: https://doi.org/10.5194/wes-2025-227-RC2
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- 1
General Comments
This paper describes the techno-economic potential of floating offshore wind in Portugal under various financial scenarios. Overall, the authors do a great job of describing the variables that were measured, the inputs, assumptions, and sensitivities for the model, and the three distinct Contracts for Difference (CfD) scenarios. The authors also clearly describe the results and the interpretation of the individual results (although many of the figures could be updated for readability). However, the conclusion/discussion is underdeveloped and can benefit from re-iterating the broader significance of the findings as well as the study’s limitations.
Specific Comments
The paper does a great job of what is being modeled and where, but I am curious of how the modeling was performed. How scalable is the model? Is it reproducible? What are the uncertainties and limitations? Has something like this ever been modeled before for this technology and location, or is this a novel analysis?
Also, the authors should make sure that every data source is listed, especially for the cost data. What are the assumptions for the base case (for CAPEX, OPEX, etc.)?
Lastly, the conclusion needs to be enhanced to include the broader significance of the findings, or at least the broader significance of the technology. Who benefits from this technology over others? Are there comparable studies for other technologies such as fixed offshore wind, and if so, how do the results compare? How can the results inform specific decisions (regarding siting or leasing, for example) moving forward?
Specific areas that need clarification:
Lines 39-41: “Notwithstanding the lower costs of onshore wind and solar, (Silva & Sareen, 2021) argue that public attitudes vary, with community opinions and engagement often overlooked or bypassed, which presents an opportunity for floating wind development.” I’m not sure what this means; how does it present an opportunity for floating wind development?
Lines 161-162: “This method was applied to twelve locations, each at three distances to shore, to provide a comprehensive feasibility study for the whole of Portugal.” This was a bit confusing; I would clarify that the method was applied to twelve regions, each at three distances to shore, for a total of thirty-six distinct locations.
Lines 298-299: “Geographical features including Sintra peninsular off Lisbon and also in the Southwest, Sagres zones also benefit from improved but local windspeeds.” Confusing text.
Figure 4: Why is the LCoE so much higher in the further sites in Sagres West compared to Sagres South? It seems like they are following the same windspeed/depth patterns, but there could be some variation in the data that I'm not seeing in this figure.
Lines 353-354: Name the “selected few sites” viable under current economic conditions.
Line 375: Was a sensitivity analysis shown for IRR?
Technical Corrections
Line 88: “The main function of LCoE is as an evaluation metric…” Simplify text to something like "LCoE is an evaluation metric...”
Line 190: Define FID.
Lines 229 -230: “The model also contains a timeseries generator, which creates random timeseries for both windspeed and spot price data, and respects the statistical properties of the original.” Reword sentence to fix grammar.
Figure 2: Reference figure in the text and identify the unit of measurement for "time step" on the x-axes.
Line 242: Typing error (“nes”).
Figure 3 and Figure 4: Increase resolution of images.
Figure 6: It would be helpful to have this figure next to Figure 5 since they are showing the same information just in a different format. Maybe also order the Sites from North to South as opposed to alphabetically so they are easy to compare side-by-side.
Figure 8: Although the overall trend is clear, it's hard to decipher the individual lines.
Figure 10: Move PAER Zones layer so that it's underneath the sites and labels in the maps for better readability.
Line 377: Typing error (“o”).