Claims of £100/MWh Pose Threat to Industry, Warns Enventi (UK)

The recent announcement by the UK Government of itʼs proposed plans for Electricity Market Reform (EMR) included a major boost for the offshore wind industry, with proposed legislation which the Government believes will support the deployment of up to 18GW of offshore wind by 2020, providing the cost falls to £100/MWh.

But offshore wind technology and consultancy firm Enventi is warning of the danger to the industry of such a £100/MWh figure becoming embedded in the expectation of Government and is advocating an alternative approach based on the promotion of offshore wind energy as a premium product worth paying for.

Scott Macknocher, Enventiʼs General Manager believes it is a matter of concern that the Government has focussed on a £100/MWh target despite projected costs being in the range £102 – £176/MWh by 2020. “Our analysis, which can be viewed on our website, shows that the cost of energy from offshore wind today stands somewhere between £180 – 205/MWh. Going forward, our view is that a cost of energy much below £150/MWh will be a real achievement, even with the anticipated gains from higher wind resource in far-shore locations. Consequently, the dangers to the industry of £100/MWh becoming a firm expectation are very real, particularly when Government has yet to set the exact detail of future support mechanisms.”

“At Enventi, we think that the industry should aggressively promote offshore wind as a premium energy product rather than have to deal with potentially unachievable cost reduction targets. Offshore wind is the only technology that combines the huge benefits of low-carbon energy with the large-scale public acceptance required to make a meaningful contribution towards future UK energy needs. We believe that with the right message, the benefits of electricity from offshore wind can become expected by the consumers who ultimately pay. And in terms of the forthcoming EMR-linked financial support mechanism, only a contract price guaranteed for 20 years of at least £175/MWh will create the right climate for investment and drive the industry to deliver the minimum 11GW of installed capacity by 2020 set out in the EMR.”

To help the industry quickly analyse these factors, we have made available a limited access portal into our highly compressive data analysis system and we would encourage people to try out the facility using their own  inputs.

Enventi is a new player in the offshore wind industry but its key personnel have over 30 years experience of construction operations in deeper water and understand the challenges involved. Paul Lavelle, Enventiʼs Technical  Director who started leading engineering company Tekmar over 25 years ago before selling in 2007 reckons that maintaining capital costs at present levels will be a huge challenge as water depths increase.

Whilst we believe that cost reduction is essential, installing major infrastructure offshore is not, and never will be cheap. We are presently evaluating deployment methodologies for deep water and early indications show that  the only cost effective solution for large-scale developments will be a floating solution. We have also carried out what is probably the most comprehensive review into cable installation and will be releasing the findings to the industry shortly.

Enventiʼs online data portal also provides live electricity generating data from selected offshore wind farms in addition to overall UK wind generation information and a restricted investment analysis and resulting wind deployment tool.

Source: Enventi, July 27, 2011;