The economics of floating offshore wind – A comparison of different methods

Abstract

Floating offshore wind (FOW) is a fast-maturing technology with the potential to cement Europe's leadership in renewables globally. European companies are the pioneers as they lead three quarters of the 50+ FOW projects at different stages of development worldwide today. Floating offshore wind can extend the frontiers of innovation in renewable energy technologies, however dedicated policies are needed to make it a European success story. Europe should capitalise its first mover advantage. FOW needs urgent action from the EU and Member States to maximise the local economic benefits of a nascent supply chain. These should ensure that cost reduction continues through economies of scale, low financing costs and Research & Innovation (R&I) funding. This paper sets the policy blueprint needed for FOW in Europe to 2030. It draws from the Industry Vision Statement published in 2017 and the rapid developments in technology and policies worldwide that have occurred since. It describes why FOW needs action from policymakers and projects cost reduction pathways, measured as the levelised cost of energy (LCOE). And it sets out the vast potential and economic opportunities at stake for Europe by developing this industry.

Deriving Current Cost Requirements from Future Targets: Case Studies for Emerging Offshore Renewable Energy Technologies

“…If the percentage contribution (α i ) of different cost centres to the CAPEX is approximately known, the available budget for each cost centre CAPEX i can be calculated. This is shown in Equation (3).…”

“…Estimates of the levelised cost of energy (LCOE) of the first commercial arrays of these technologies vary, depending on data sources, assumptions made, and the date of the study. The ranges found in literature are around 67-250 €/MWh for floating wind [3,4], 115-476 €/MWh for tidal stream and 98-804 €/MWh for wave energy [5]. LCOE targets for these technologies have been established at a European level, at 90 €/MWh, 100 €/MWh and 150 €/MWh by 2030 for floating wind, tidal stream and wave energy, respectively, as part of the Strategic Energy Technology Implementation Plans (SET-Plans) [6,7].…”

Incorporating stochastic operation and maintenance models into the techno-economic analysis of floating offshore wind farms

“…The use of O&M costs and net AEP from the O&M model, proved suitable for this purpose. Despite obtaining LCoE values that show up to 24.3% difference from previously reported costs in the literature for the pilot parks they are inspired by, the results are considered to be within the uncertainty range of LCoE calculations (see [20]). Given the large uncertainty associated with discount rate and investment time line assumptions, which can result in up to 50% variation of the LCoE value [20], the CoE is also provided here.…”

“…Floating offshore wind technologies are still being developed, and often techno-economic analysis of innovative concepts aims at understanding their economic potential to find the most suitable solutions. It was suggested in [20], that different cost measures will be more suitable to compare innovative technologies with the goal of selecting the best designs, rather than to compare different possible project deployments. In that study, the Cost of Energy (CoE) assuming a 0% discount rate was recommended for the former, whereas the Levelised Cost of Energy (LCoE) accounting for discounting was preferred for the latter.…”

“…The discount rate and investment schedule, i.e. when each of the costs occur, are highly project dependent and have a large impact on the final cost estimates [20]. A definition of a 'risk levy' associated to different floating offshore wind technologies represented within the discount rate is also subject to large uncertainties.…”