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UK wind farms imports 80% of equipment and services

UK needs a home-grown supply chain to bring down high costs of offshore wind farms, says UK Energy Research Centre report.

The UK faces significant challenges in meeting its renewable energy targets for 2020. Offshore wind is widely expected to make a major contribution. However, rising costs have been associated with its deployment.

UKERC’s report states that while the UK has big ambitions to maintain its position as a world-leading player in offshore wind, it is today importing 80% of equipment and services from abroad. There is therefore a substantial opportunity to bolster the UK’s manufacturing industry while building a low carbon economy.

“The UK is not yet fully benefitting from being a world-leader in the field; in effect UK consumers are subsidising Danish and German wind energy companies,” said UKERC head of Technology and Policy Assessment and chief author of the report Dr Robert Gross. “This report suggests that policies could do more both to bear down on costs and support a UK based industry.”

Ten years ago, when offshore wind technology was first deployed in UK waters, capital and generation costs were expected to fall substantially over time. Since then, producing electricity has become generally more expensive, but the rise in offshore wind costs has been particularly dramatic. Costs went up in part because of currency and commodity price movements but also because of supply chain shortages and bottlenecks. Planning delays also added to developers’ budgets and undermined supply chain confidence.

However, UKERC’s report points out that UK offshore wind is a technology that is still at an early stage of its development. Offshore wind currently only generates about as much power as a small conventional power station; the report emphasises that many developing technologies go through a period where costs rise before they begin to decrease.

Looking forward, the report finds grounds for optimism. The deployment of offshore wind is more advanced than any other emerging low carbon option, and there is evidence to suggest that a plateau in costs may now have been reached. The report cautions that costs are likely to come down slowly at first, but that material reductions are available if the right incentives are in place.

The report - Great Expectations: the cost of offshore wind in UK waters – understanding the past and projecting the future” is published by government think tank UKERC. The report is concerned with recent cost escalations in offshore wind.

 

Readers' comments (2)

  • Do we really believe that costs will come down? If we persist in this folly and attempt to build much further offshore as is contemplated costs can only rise. The cost of foundations, installation and sevicing will rise significantly in more distant deeper waters.
    Derek Limbert (F)

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  • NCE Magazine, yet again, doesn't do any reality checks or investigations before publishing yet again what the Wind Turbine Industry salesmen and a few disorientated and ideologically driven politicians would like us to hear!

    Where is the I.C.E. in all of this? Why not a mature, intelligent and informed debate applying normal engineering and engineering investment techniques which are used day to day by all of us involved in investigating and determining which of the many options available, which satisfy the Client's functional specification requirements, will provide best value and best reliability and efficiency.

    Look at the studies of comparisons of all the available power generation system's unsubsidised unit power costs as delivered to the National Grid and including for all costs involved from using each particular system. Off-shore Wind Farm's unit power costs are 3 x or more than nuclear and other systems. You don't have to ponder about a few 10%'s here and there in some minor dispute and disagreement of the value of any element cost allocation for or against any options available! What would you normally do any day of the week on any other project if the total life cycle cost differential was even as low as 20% between two alternatives?

    Look, also, at the ongoing increases and uncertainty in installation, maintenance and foundation costs, as noted by DL above.

    Look at the massive inefficiencies of Wind Farms as an overall system.The vast majority of this inefficiency is due to the remoteness of Turbines from the National Grid and the unreliable, uncontrollable and capricious "fuel", namely the wind. These massive System inefficiencies can hardly be touched by any improvements possible in the Turbines' mechanical and electrical efficiencies that may be possible from better Turbine designs and more efficient manufacture in the UK or anywhere else.

    Look at the largely unforeseen outputs from 0-100% plated capacity, theoretically 20-40% of total plated output over a typical year's operation much of which , even when available at any time in low demand periods may not be usable due to Grid instability or if usable will reduce the outputs of base load plants running in parallel reducing their efficiencies and driving up their unit costs.

    Look at the need for parallel 0% -100% Wind Farm plated capacity Standby base load Power Generation needed, over and above the UK's normal Total Power System's Standby Provision, to maintain this UK % of Peak Demand Standby Provision within any overall UK Power System which includes Wind Farms which in themselves may have outputs of 100%-0% at any time and with little notice.

    Playing about with the relatively small cost savings that may be possible from UK manufacture of Turbines or Turbine components will give embarrassingly small deductions in the overall Wind Turbine Systems' unit power costs. Even R&D expenditure and effort providing any likely improvement in Turbine and Turbine component efficiencies will similarly have little relative impact on the overall Wind Farm Systems' unit power costs.

    It follows that Turbines themselves are a commodity product where any small increase in Turbine efficiency and decrease in Turbine cost is dwarfed by the overall Turbine Systems' inefficiencies and costs. Effectively there is no value added by any such UK involvement as there is no significant benefit to the Customer's overall system efficiency and cost which would be marketable, i.e. could provide a patent protected innotative product for UK and UK export sales with enhanced margins or at least a sustained ongoing "protected" market.

    The Turbines themselves are in a cost-leadership market where anyone who can produce the cheapest, and possibly even the most basic, product is the one who will get the Orders. That means such countries as China, who are building massive production capacities and generating potential export cross subsidies, and anywhere else where the unit production costs are so much lower than UK. Even the Europeans, protected by the EU regulations, who are currently selling us Turbines may temporarily be cheaper than us because they have probably already sold sufficient numbers of Turbines to pay off their Production Facility and Engineering costs - costs which we would have to include within our Turbine Prices. We could not be competitive.

    Wind Farm Systems are, for the UK, a grossly over-expensive and inefficient engineering solution for our Power demands, and in our present circumstances unaffordable. UK manufacture will not improve on this and neither will it provide any significant number of manufacturing jobs and even relatively few specialist installation and even basic operations jobs within the UK systems. There is also no significant export market in which we can compete!



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