Offshore Wind Cost 11% Lower, Report Says

A report issued today by Offshore Renewable Energy (ORE) Catapult reveals that the cost of energy from offshore wind farms has fallen by almost 11% over the past three years, ahead of schedule on its path to delivering the UK Government’s target of £100/MWh by 2020, and providing clear evidence that offshore wind can play a significant role in the UK’s sustainable energy mix in the coming decades.

The report charts progress between 2011 and 2014 on cost reduction and is measured in lifetime costs. The results closely mirror the competitive result achieved in the Contracts for Difference (CfD) auction results announced today by DECC, which set 15-year strike prices for offshore projects commissioning from 2017 onwards.

The Cost Reduction Monitoring Framework (CRMF) was commissioned in 2014 by the Offshore Wind Programme Board at the request of industry leaders and government.

It shows that:

• The lifetime cost of energy from offshore wind has come down from £136/MWh in 2011 to £121/MWh for projects moving to construction between 2012 and 2014 (this is as measured across the longer whole life of a project, not just the 15 years covered by Government strike prices)
• the biggest single contribution to cost reduction has been industry’s early adoption of larger turbines. 6MW machines are now being rolled out, compared to the 3MW turbines that were standard until recently

The report shows that continued innovation and cost reduction depends on the scale of growth planned for the sector. It states that “whilst progress has been made in the face of a reduced deployment outlook, it is not safe to assume that the supply chain will continue to invest in the required technology innovations if the size of the market is not sufficient.”

The report provides analysis of how and why savings have been realised, and identifies the on-going opportunities and challenges to further cost reduction.

Andrew Jamieson, CEO of the ORE Catapult, said: “Our CRMF report not only demonstrates excellent progress made in just a few years in making offshore wind a more cost-competitive, sustainable secure source of energy, but also illustrates the technology innovations and efficiencies required to deliver the targeted £100/MWh. Significant challenges lie ahead for the entire industry, and continued progress will require ever greater collaboration between industry, government and academia.”

The report has been delivered by the ORE Catapult in collaboration with The Crown Estate, providing analysis of data gathered by Deloitte and DNV GL from offshore wind farms in UK waters.

Image: ECN (Illustration)