Cost reduction is vital for offshore wind to continue its growth and compete ‘subsidy free’ in the energy market.
We have seen some big leaps forward this year, with large LCOE savings coming through new competitive auctions. It’s important not to be dazzled by these one-off (mainly) market-driven effects – industry margins can only be squeezed so far. Technology innovation is needed for continued, long-term cost reduction: it’s how you get sustained progress over a long period of time.
One innovation that requires progress in several other areas of supply is the introduction of larger turbines. We are seeing this happen earlier than expected by many in the industry. This has a big effect on the LCOE, but only if larger installation vessels and efficiently manufactured foundations are available and reliability is not lost when new platforms are introduced. All this takes significant investment by a range of players other than the turbine suppliers.
For cost of energy reduction, the industry faces trade-off between upfront costs, operating costs and energy production. It’s great to see the industry maturing its decision making in this area. Looking over the long-term, there are lots of innovations coming up in all areas of wind farm supply, so we are confident in strong downward trends in cost of energy, even if not all of the innovations come to market as fast as expected. A range of possible revolutionary technologies could reduce costs still further.
At the WindEurope Summit in Hamburg I was pleased to support KIC InnoEnergy in its presentation on offshore wind innovation for cost reduction, highlighting the work that I have been leading over the last few months. KIC published an update of the 2014 offshore wind report, with extended time-frames (now to 2030) and turbine sizes (now to 10MW) and also signalled upcoming updates to its Delphos cost modelling tool, which is underpinned by our data and methodology. If you’d like to discuss innovation, cost modelling and market analysis, please get in touch.