Published on June 18th, 2012 | by Joshua S Hill1
Cost Reductions Could Make Offshore Wind Competitive
A new UK study has demonstrated that significant reductions in the cost of offshore wind energy can be achieved prior to the governmental 2020 target, delivering 18 GW of offshore wind capacity and meeting the target set by the government in the 2011 Renewables Roadmap.
The study, conducted by The Crown Estate and employing the involvement of over 100 companies and organisations over a 9 month period, has demonstrated that the cost reductions are possible. Delivery on the promises will require developers and the supply chain to work closely with the government, which must provide long-term certainty for offshore wind investors.
According to the study, meeting these goals will be a big prize indeed, providing a world-leading industry in the UK, jobs, and inward investment, not to mention the obvious achievement of reaching low-carbon, clean energy targets.
There were four separate pathways identified to achieve cost reduction for the offshore wind industry, through combinations of improvements in technology, growth of the supply chain, and reductions in the cost of finance.
Overall, the study shows that the cost of offshore wind energy could be cut to below £100 per megawatt hour or less through three of the identified pathways, provided at least 17-18 GW of capacity is built out by 2020.
The study highlights seven key opportunities for cost reduction:
- Introduction of larger turbines with higher reliability and energy capture and lower operating costs.
- Greater competition in key supply markets — turbines, foundations and installation — from within the UK, Europe and the Far East.
- Early involvement of suppliers and improved wind farm design.
- Economies of scale and standardisation.
- Optimisation of installation methods.
- Mass produced deeper water foundations.
- Attracting lower costs of capital through de-risking construction, and operations and maintenance.
Rob Hastings, Energy & Infrastructure Portfolio Director said: “We believe that there is no single solution to reduce the cost of offshore wind and all participants in the sector need to play their part. We’ve facilitated the production of this authoritative Pathways Study which identifies a highly credible way forward for industry and government to create a commercially sustainable offshore wind industry providing both environmental and social benefit. We welcome the industry-led Cost Reduction Task Force report, set up by DECC, who have applied the evidence of the study. The Crown Estate looks forward to working with the programme board, industry and Government on delivering the action plan as set out in the Task Force report.”
Andrew Jamieson, chair of the Cost Reduction Task Force said: “I welcome this in-depth Pathways Study as it confirms offshore wind can reduce its costs significantly down to £100/MWh by 2020. This study has been used by the Cost Reduction Taskforce, also reporting today, as critical evidence in exploring what needs to be done by industry and government to achieve cost reduction. The detailed work facilitated by The Crown Estate has been hugely valuable to creating a comprehensive view of the challenges ahead, and I congratulate them on taking such an important initiative as we all look to the continued success of this world leading industry.”
Maria McCaffery MBE, RenewableUK Chief Executive, said: “These ground-breaking reports from The Crown Estate and the Offshore Wind Cost Reduction Task Force work represent a crucial step forward. Both studies show that driving down costs is much more than a mere aspiration – the industry is working closely with key stakeholders such as The Crown Estate to chart the course ahead, laying out action plans which are credible and achievable. This will enable the sector to grow from strength to strength – not only generating low-carbon electricity and giving us a secure supply of energy, but also creating tens of thousands of jobs and revitalising manufacturing throughout the UK.”