Bringing down the cost of offshore wind
Offshore wind power is currently the most expensive type of renewable electricity being rolled out on a grand scale in Germany. Experts now say costs can be further reduced by a third. So when will the feed-in tariffs be lowered?
As Renewables International recently reported, the first offshore wind projects in Germany seemed to be producing much more power than expected – and hence must be posting much greater profits than anticipated. Nonetheless, there is no talk about reducing feed-in tariffs, which remain locked in at the current level for the next few years while all others have an annual automatic reduction for newly installed systems.
The goal is to reduce the cost of offshore wind power below 10 cents per kilowatt-hour by 2023. The German Offshore Wind Energy Foundation believes that the sector can reduce costs considerably. Depending on the scenario, costs can be reduced by 32 to 39 cents according to a recent study conducted by Prognos and Fichtner for the Foundation (PDF in German).
The authors mainly believe that provisions for risks, investment costs, and maintenance costs can be reduced considerably. "We are talking about more than 4,000 euros per megawatt of installed capacity today," says Prognos’s Frank Peter, co-author of the study. If Germany manages to install 9 gigawatts over the next 10 years, the analysts believe investment costs can be reduced by 17 percent below level of 2013 to less than 3,500 euros per megawatt. The authors believe that Europe will install 20 gigawatts. But if twice as much is installed, investment costs could drop by 27 percent within 10 years, putting the price at only 3,000 euros.
In the short term, logistics for installation offer the greatest cost reduction potential. After all, the greater the demand for insulation logistics, the better installation ships will be tailored to the requirements for offshore wind. But later, the trend to ever larger turbines and more efficient production processes will take over, especially if more is installed and economies of scale allow turbines to grow from 4 to 8 megawatts on average.
Operating costs also currently make up a big part of the pie. Depending on the scenario, they could drop by 19 to 33 percent from the current 134,000 euros per megawatt to 108,000-90,000 euros. "Maintenance costs largely depend upon which ships and what concepts are used," Peter says. "If the turbines are close to the shore, you can send out staff from shore. But if they are too far out at sea, where more and more of them are currently being installed, maintenance staff will have to come from stationary platforms. Wind farm management would also be well advised to coordinate maintenance cycles with neighboring turbines so that each wind farm does not have to be serviced individually."
"In all scenarios, offshore wind power would cost less than 10 cents per kilowatt-hour, but only if industry has investment security, says Andreas Wagner, head of the Foundation. "It is important for us to know that feed-in tariffs will be offered after the elections next month."He specifically criticizes the current coalition for undermining investor confidence by breaking a taboo; in February, Markel's coalition proposed to retroactively do away with all feed-in tariffs for renewables – including offshore wind – for the first five months after installation. "Offshore wind farms can take 10 years or more to build, so reliable policies are indispensable," he adds. Overall, he says the study is mainly an attempt to calm down the debate by making recommendations not only to politicians, but also to industry. (Sven Ullrich / Craig Morris)