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Key reports highlight catch 22 situation over offshore wind costs

Efforts to slash the cost of generating offshore wind energy in the UK will not be realised unless there is a huge increase in the deployment of the technology, two key reports said last week.

The industry-led Offshore Wind Cost Reduction Task Force Report sets out plans to cut costs of wind generated power by a third by 2020.

It builds on detailed evidence in a parallel report published by site owner the Crown Estate entitled Offshore Wind Cost Reduction. This study also concludes that costs can be cut by a third and highlights seven key areas where this can be achieved (see box).

Both reports say costs can be slashed from £140/MWh today down to £100/MWh by 2020.

But the Crown Estate report concludes that this will only be achieved by dramatically increasing installed capacity or by the industry becoming much more competitive and efficient.
It says that if the industry fails to improve its efficiency, capacity must increase from less than 2GW today to at least 17GW.

Experts told NCE that the focus on increasing the number of turbines installed must remain.

“If we don’t have a growing market than we can forget about making the target,” said Crown Estate supply chain manager Adrian Fox, who contributed to both reports.

Atkins head of energy Martin Grant said that a properly functioning, efficient industry would only emerge if there was a sufficient volume of work.

“We’re of the view that what’s needed is to have an ‘industry’; that is a group of people, through the supply chain, all learning from experience,” he said.

“It is still to be demonstrated whether that industry can be created,” he said.

Others contributing to the industry-led report include developer Mainstream, energy firm Scottish & Southern Energy and trade body RenewableUK.

Mainstream chief operating officer for offshore Chris Hill admitted it was a “big challenge” to achieve the required efficiency and that industry needed government commitment on subsidies to drive the volume increase.

“To make the reduction [in costs] we need certainty of volume of work,” he said, adding that this would only be achieved when the government completes its renewable obligation certificate banding review and finalises the energy market review later this year.

The industry-led report’s recommendations focus on making contracting structures in the supply chain more collaborative with better risk allocation.

Arup director Gordon Jackson said too much risk in offshore wind farm construction is being passed down to the supply chain. “Often suppliers are taking on all the risk,” he said. “This needs to change to reduce costs,” he added, saying that suppliers currently inflate costs to cover these risks.

Seven opportunities to reduce costs

The industry-led report recommends setting up an offshore wind programme board to implement this and other changes.

  • Introduce larger turbines of at least 6MW capacity, against the 4MW class of today
  • Greater competition in turbines, foundations and installation from within the UK, Europe and the Far East
  • Early involvement of suppliers and improved windfarm design
  • Economies of scale and standardisation
  • Optimise installation methods
  • Mass produced deeper water foundations.

Attract lower capital costs by de-risking construction, and operations and maintenance.

  • An offshore wind programme board headed by RenewableUK chairman Andrew Jamieson will be established by autumn 2012 to implement the report’s recommendations

Readers' comments (1)

  • When will the NCE provide a balanced article on this subject, identifying the total works needed within Wind Farm Systems to replace equivalent capacity in Coal Fired Power Plants, the total unit price of electricity generated, the actual cost of reducing CO2 , and the actual reduction in CO2 provided by Wind Farms and their effect on global CO2 emissions - all in comparison with simply using Gas Turbines to replace CFPS's as base load units.

    Then, and only then, the NCE can publish a meaningful article on Wind Farm effectiveness, efficiency and costs. Continually printing articles about Wind Turbines alone, involving the pro-Wind Turbine lobbyists, suppliers and interested Consultants/Contractors is not balanced reporting and does not properly identify, let alone discuss the issues and full story involved.

    Unsuitable or offensive? Report this comment

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