More efficient contracting and greater use of “alliancing” practices have the potential to be transformative in lowering the cost of offshore wind energy, according to a group of wind energy sector professionals.
The UK’s Offshore Wind Cost Reduction Task Force, appointed by the government in 2011, says that the UK is on course to reduce the cost of electricity from offshore wind “substantially” over the next seven years and that supply chain, contracting strategies, innovation and finance will all play a part.
It has released a report outlining 28 specific recommendations on cost reduction in the offshore wind sector.
Offshore wind is set to play a key role in the future energy mix of several European countries, including Germany, France, the UK and the Netherlands. However offshore wind energy has a relatively high cost compared with conventional forms of electricity, plus some key projects have experienced logistical problems.
A recent analysis from consulting firm IHS Emerging Energy Research indicates that the offshore sector faces a “make or break” window until 2016 for cutting costs and overcoming the challenges of developing projects in deeper waters.
“The industry’s challenge in the longer term will be to increase capacity additions at lowered costs, but in even more difficult conditions,” said Eduard Sala de Vedruna, a research director at IHS. “Costs remain high at the moment and financial backing for capital-intensive projects is needed as the next generation of offshore projects heads for uncharted territory.”
According to IHS, costs have risen in recent years, driven by competition to secure turbines and the development of technically more complex projects.
The UK task force believes that costs could be cut by 30 per cent to around £100 per MWh by 2020. This could achieve a £3 billion saving on the UK’s plans to install 18 GW of offshore capacity.
Benj Sykes, Director of UK Wind Operations, DONG Energy, commented: “The report from the Task Force shows we are now seeing good progress in identifying ways to reduce the cost of offshore wind. As an active member of the group we believe it’s vital that industry and government have the chance to sit down together and devise these sorts of solutions to get us to the £100 per MWh target.
“The timeline is tough so the industry must now work on implementing the ideas in this report.”
IHS forecasts that global offshore wind investment, including transmission, is set to climb nine-fold between 2011 and 2025, rising from $6 billion to $52 billion.
The global offshore market is expected to reach nearly 95 GW of installed wind energy capacity by 2025, compared with 4.2 GW at present, which accounts for just two percent of wind energy worldwide.
Europe will continue to lead the offshore wind market, with the UK and Germany both installing more capacity than China over the forecast period. China leads the offshore charge in Asia, with more than 300 MW of installed capacity as well as aggressive targets and large projects in the pipeline.
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