Offshore wind hits cost target four years ahead of schedule

A target to reduce the levelised cost of energy (LCOE) for offshore wind to £100/MWh has been met four years ahead of the 2020 deadline, a report by the Offshore Renewable Energy Catapult has found.

Offshore wind projects in the UK which reached a final investment decision in 2015/16 achieved a LCOE of £97/MWh – a 32 per cent reduction when compared to the figure of £142/MWh in 2010/11.

The research and innovation organisation attributed the sharp decline to the adoption of larger turbines, increased competition and lower financing costs.  

“Offshore wind is a big success story at the very heart of the UK’s industrial strategy,” said Offshore Wind Industry Council co-chair Benj Sykes. “The industry is cutting costs much faster than predicted, while creating thousands of jobs and stimulating investment nationwide.”

“But this is a story that is just beginning. We remain committed to delivering further significant cost reduction, while working in partnership with government to put in place a sector deal and build a sustainable industry that will benefit the UK for decades to come.”

The third “cost reduction monitoring framework” report was produced by the Offshore Renewable Energy Catapult on behalf of the Offshore Wind Programme Board. The target of £100/MWh was set in a 2011 roadmap for the development of renewable energy produced by Department of Energy and Climate Change.

The report called for costs to be further reduced though “an agreed set of cost reduction priorities, timescales and monitoring processes”, and said there should be a co-ordinated approach to the government’s new industrial strategy which maximises “supply chain synergies between fabrication, assembly, port infrastructure, operations and maintenance”.

There should also be improved coordination between departments in the implementation of government policy, the report added, and successful policies and regulations should be copied from other European countries. Finally, the government should provide “longer term visibility” and set out plans for further Contracts for Difference auctions beyond those already announced.

The Offshore Renewable Energy Catapult, in partnership with the Carbon Trust, also said this week that the development of floating wind farms in the UK will require ring-fenced support within the Contracts for Difference (CfD) mechanism.

Last week the Energy Technologies Institute urged the government to bring down offshore wind costs by absorbing “consenting costs” as happens in the Netherlands already.