KIC InnoEnergy Issues Report on Future Offshore Wind Power Costs
- Business & Finance
As an innovation promoter, KIC InnoEnergy is interested in evaluating the impact of visible innovations on the cost of energy from various renewable energy technologies. For this purpose, KIC InnoEnergy is developing credible future technology cost models for four technologies using a consistent and robust methodology.
KIC InnoEnergy has released the first in a series of reports that attempt to answer how to measure the impact of visible innovations on the cost of offshore wind energy and the extent to achieve more competitive prices over the next 10 years. The report has been developed in collaboration with BVG Associates. This analysis is critical in understanding where the biggest opportunities and challenges are, from a technology point of view.
In publishing a set of consistent analyses of various technologies, KIC InnoEnergy seeks to help in the understanding and definition of innovation pathways that industry could follow to maintain the competitiveness of the European renewable energy sector worldwide. In addition, it seeks to help solve the existing challenges at the European level: reducing energy dependency, mitigating climate change effects, and facilitating the smooth evolution of the generation mix for the final consumers.
With temporal horizon out to 2025, this work includes a range of innovation that might be further from the market than normally expected from KIC InnoEnergy. This constitutes a longer term approach, complementary to the KIC InnoEnergy technology mapping focusing on innovations reaching the market in the short/mid-term (up to five years ahead).
The purpose of offshore wind report is to document the anticipated future offshore wind cost of energy to projects reaching financial investment decision (FID) in 2025, by reference to robust modelling of the impact of a range of technical innovations and other effects.
Almost 50 technology innovations were identified as having the potential to cause a substantive reduction in levelised cost of energy (LCOE) due to a change in the design of hardware, software or process. Technology innovations are distinguished from supply chain innovations that are addressed separately in a simplified manner. Many more technical innovations are in development and so some of those described in this report may well be superseded by others.
The main conclusion is that the impacts from wind farm technology innovations (excluding transmission, decommissioning, supply chain and finance effects) contribute an anticipated 27% reduction in the LCOE.
The analysis shows that over 60% of the total anticipated technology impact is achieved through eight areas of innovation, of which the largest is the increase in turbine size from 4MW to 8MW. By virtue of having fewer turbines for a given wind farm rated power, there are significant savings in the cost of foundations, installation, and operation, maintenance and service. All of the next generation turbines under development today have more optimum-sized rotors than used to date and therefore have higher gross energy production, even before taking into account increased reliability and maintainability. The combined impact of larger turbines with optimum-sized rotors, improved aerodynamics and control and next generation drive train designs on the LCOE is about 13%.
The innovations in balance of the plant and plant construction are anticipated to reduce the LCOE by approximately 7% in the period.
There are a range of innovations not discussed in detail in this report because their anticipated impact is still negligible on projects reaching FID in 2025. The unused potential at FID in 2025 of innovations modelled in the project, coupled with this further range of innovations not modelled, suggests there are significant further cost reduction opportunities when looking to 2030 and beyond.