Offshore wind costs not as high as widely perceived

Cost reduction high on the agenda at Windforce 2013

Bremerhaven is hosting this week's Windforce 2013 event
Bremerhaven is hosting this week's Windforce 2013 event

Cost reduction in offshore wind energy is a popular theme at this week's Windforce 2013 event in Bremerhaven. But viewed over the longer term, offshore wind is not as expensive for the consumer as is often claimed, according to Ronny Meyer, CEO of German wind energy agency, WAB.

The more popular of Germany's two options for offshore feed-in tariffs – the so-called "compressed" arrangement – involves Eur 0.19/kWh paid for 8 years, followed by Eur 0.035/kWh for a further 12 years. It works out at roughly Eur 0.10/kWh over 20 years. This compares with the standard offshore wind tariff option of Eur 0.15/kWh for 12 years and Eur 0.035 /kWh for 8 years.

Onshore wind support calculated over a 20 year period is, for the moment, substantially lower at Eur 0.06/kWh, but offshore wind's output per MW can be double that of onshore wind, due to stronger, more constant winds at sea, so savings could quickly help to reduce the cost difference.

Perhaps more significantly, viewed over the 20 year support period, offshore wind actually undercuts current photovoltaic feed-in tariffs of Eur 0.11-0.16/kWh, depending on plant size. "In contrast to often expressed claims, offshore wind is clearly not the renewables cost driver," says Meyer.

There is concern, however, about the end-2017 expiry of the "compressed" option and the annual 7% reduction in feed in tariff payments for new offshore projects coming on line from 2018.

To ensure that cost reduction efforts and offshore work can continue smoothly, it would make sense to decouple the expiry of the compressed model from a particular date and apply it instead to a certain expansion target in MW, suggested DONG Energy's head of regulatory affairs and stakeholder management, Manfred Dittmar, in Bremerhaven. The German government's target is 10GW of offshore wind by 2020, but 6-8GW is widely accepted as being more realistic.

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