ORE Catapult issued their second Cost Reduction Monitoring Framework (CRMF) report in March which showed that offshore wind projects achieving final investment decision (FID) in the UK in 2014 were, on average, based on an levelised cost of energy (LCOE) of £121/MWh (~$175/MWh) with the industry being confident of achieving a levelised cost of energy (LCOE) of below £100/MWh (~$145/MWh) by 2020.
Cost reductions have been driven by investment in turbine technology but further innovations are required from the ‘balance of plant’, such as foundations, cables and substations. However, ORE states that the main risk to achieving these cost reductions is that the growth and scale of the offshore wind market is currently behind schedule due to delays in additional Contract for Delivery (CfD) auctions by the UK government.
The report makes a number of recommendations to ensure cost reduction targets are met:
- Ensure additional CfD auctions in 2016 and subsequent years
- Prioritise industry support for areas where 2020 innovation targets are at risk
- Ensure continued progress in deployment of 66kV systems and undertake a review of the gaps in cable standards
- Ensure that demonstration sites are secured to de-risk gravity base structures and prioritise research into jacket foundation design and optimisation
- Continue research into the cost reduction potential of AC platform design, increased capacity AC cables, lightweight (or distributed) transmission systems and HVDC
- Coordinate industry and government actions to grow collaborative initiatives in a maturing market
- Engage regulators on lessons learned from across European legislators
- Consider whether the CfD process has results in increased barriers to collaboration
- Track the impact of slower than anticipated market deployment on investment in R&D and infrastructure
- Identify technology innovations that will deliver further cost reductions post 2020