Energy cost reduction boost for offshore wind

Energy generation from offshore wind should hit a £100 per megawatt hour (MWh) cost target within a decade, industry leaders were told during a major renewables conference in Scotland this week.

They were warned, however, that looking for cost reduction in the low carbon sector generally would be likely to include a period of 10 years, or more, when costs would actually rise, before starting to turn down.

Both these comments came from Mott MacDonald’s chief economist of energy unit Guy Doyle who based much of his presentation to the Scottish Renewables annual conference in Edinburgh on evaluations done by his company for DECC and the Committee for Climate Change (CCC).

Acknowledging there continued to be a wide diversity of opinion on costs in relation to low carbon generation, he forecast £100 MWh as a realistic cost target for offshore wind, CCS and nuclear. It was likely to be the 2020s before that cost level was achieved, however.

“For offshore wind, specifically, we’ve had a period of increasing costs which have flattened over the last couple of years,” he said.

“It’s likely now we will see a combination of progress on learning, scale-up and supply chain development which should bring costs down, partly helped by increasing energy yields. The challenge, of course, is that offshore wind is now going into more difficult environments. Even so, we would expect that wind should get to £100 MWh within a decade.”

After stating the ‘conventional view’ that capital costs for low carbon developments will fall, and performance improve, as technologies mature, Doyle told delegates they may need to be patient.

“We’ve looked at learning curve studies for low carbon projects and, in reality, there’s a period when costs actually go up,” he said.

“There could be maybe 10 years or more when costs are rising as you’re finding out more about how the technology works and debugging systems. Only then do you get into the learning process itself and start to see costs begin to fall.

“The best cost reduction prospects will occur where there’s scope for mass production, where there’s a short lead time in construction and tooling up and where it’s possible to piggyback on innovation in other technologies.

“Considering these factors, solar meets all three; also wind, to a degree. It’s things like nuclear and CCS where there would appear to be real problems in terms of evolutionary learning.”

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