A new study published today by Ernst & Young has found that the European offshore wind market can compete with traditional gas and coal markets, if it sheds 26% of outlays by 2023, in an effort to reach cost-competitiveness.
Courtesy of the European Wind Energy Association, the European offshore wind industry “must significantly reduce costs over the next five years through a number of key actions, outlining where savings can be found.”
The authors of the Ernst & Young report state that “offshore wind should be considered as an important component to the power mix” if Europe is to secure its commitments to climate change. Specifically, “continued cost reduction and support from policy makers are necessary to maximise the potential of offshore wind resources and to realise the socio-economic benefits of a fully industrialised and emerging sector.”
“This study shows that offshore wind power in Europe will be a major contributor to the continent’s energy security now and over the course of the next decade,” said Thomas Becker, chief executive officer of the European Wind Energy Association.
Ernst & Young highlighted “several key priorities” that are necessary to meet offshore wind’s challenges:
- Ensure a stable regulatory framework and define long-term policy schemes
- Improve access to finance for the offshore wind sector
- Ensure cost-effective grid investment and connection
- Address planning system issues
- Face supply and logistics challenges
- Support innovation and training, and enhance synergies to reduce costs
Specifically, the authors of the report created an “Offshore Wind Scenario” in which the installed capacity of European offshore wind could reach almost 65 GW by 2030, allowing for the industry to make up more than 25% of Europe’s electricity generation.
Additionally, the “Offshore Wind Scenario” would also save Europe €18b each year on fuel imports in 2030, and would create a low carbon energy sector €4b cheaper than in a “Nuclear Scenario”.
The Industry Must Deliver
“As much as we need politicians to come on board, it is also up to the industry to deliver on our commitments,” Becker added. “It is no secret that cost reduction is a great challenge that we face in the offshore business; but as we continue to work together, innovate and compete, the sector will face down its trials in the years ahead. We must not forget the jobs, trade and growth that offshore wind is contributing to Europe.”
A number of people in Europe’s wind industry backed up Thomas Becker’s comments:
Michael Hannibal, CEO Offshore of Siemens Wind Power and Renewables, said: “Cost reduction remains a top priority of the offshore wind industry. We need to create profitable investments for offshore projects independent of subsidies. In a united industry, all stakeholders across the whole value chain are equally responsible to contribute and deliver. Siemens takes full ownership of this challenge. If we all do that, we will win.”
Claus Hviid Christensen, Vice President in DONG Energy Wind Power, said: “For offshore wind to realise its full and significant potential, we need to continuously reduce the cost of electricity. The good news is that we are indeed on the right track, and we are already seeing the industry taking important steps forward with an impressive pace. With a clear political framework for the development of offshore wind power after 2020, I am confident that we will meet our target of making offshore wind fully competitive with alternative energy technologies.”
Jens Tommerup, CEO of MHI Vestas Offshore Wind, said: “MHI Vestas Offshore Wind is committed to building powerful partnerships, leveraging on technical expertise and financial strength across the industry and driving down the cost of offshore wind. We have the markets’ most powerful product, we have added renewed competition to the offshore wind sector and our collaborative approach in optimising the supply chain represents three of the four pillars of cost reduction. ”