United Kingdom

United Kingdom

Call for UK state to correct offshore market failures

UK public sector must fix market failures, says cost reduction group

Minutes released from recent meetings of the UK government’s offshore wind cost reduction task force confirm that innovation is seen as critical to cutting the cost of offshore wind energy to £100/MWh (€120/MWh).

However, the group, which includes representatives comprising 30 agencies, companies and government departments, is concerned that innovation will not be forthcoming due to failure of the market to support the emergence of cost-effective improvements:

"There is a clear case for UK public sector intervention, as there are ongoing market failures, such as demand uncertainty, a lack of facilities and other infrastructure, insufficient co-ordination and sharing of data," state the task force minutes.

A number of areas have been identified as offering the greatest potential cost reductions, including the establishment of test sites and component testing facilities capable of supporting development of high yield and high reliability turbines, innovative turbine designs, and foundations for depths greater than 30 metres.

A lack of opportunity to test new technology offshore is highlighted. Demonstration units need two years of testing, but with developers of UK Round 3 of offshore projects ready to make purchasing decisions in 2014, demonstration units need to be in the water this year.

Task force member Phil De Villiers, from the Carbon Trust, has suggested several solutions. One is to de-risk national test centres by accelerating planning for new sites and increasing industry investment. Another is to encourage international collaboration, primarily within the EU, to test equipment overseas.

The task force believes technological innovation has the potential to reduce costs by 20% by 2020.

Cuts of 10%

The issue of project financing is another being explored by the task force. It notes that the onshore wind has expanded using innovative project financing, and the task force is exploring how this might be achieved by the offshore wind sector. Some European offshore wind projects have attracted non-recourse financing, proving that such options are possible.

The group has also been examining opportunities for electricity transmission and grid cost reductions, in conjunction with the RenewableUK offshore grid group. Chris Jones, from the RenewableUK group, has suggested grid costs serving offshore wind are likely to go up in the short term, but will then come down by around 10%.

One example of the capacity for technological innovation to cost cuts was unveiled by Dutch renewable energy company 2-B Energy and Scottish Enterprise last month. With claimed cost savings over conventional turbines of 45%, the 2-B concept is a two-bladed offshore turbine that significantly reduces the number of components required over the lifetime of the turbine, thus lowering operational and maintenance costs. The 6MW turbine would sit on top of a full lattice structure going all the way down to the seabed.

The Scottish European Green Energy Centre, in Aberdeen, is supporting 2-B Energy's application for funding through the EU FP7 research programme, with a view to the two-bladed turbine being tested offshore at Scottish Enterprise's Fife Energy Park at Methil.

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