United Kingdom

United Kingdom

Offshore decommissioning could cost UK £3.6bn

UK: Decommissioning 37 offshore wind farms in various stages of development in UK waters could cost the government between £1.28 billion (€1.44 billion) and £3.64 billion (€4.12 billion), a new report has revealed.

North Hoyle, the UK's first large-scale offshore wind farm, was commissioned in 2004 (pic: Christopher Jones)
North Hoyle, the UK's first large-scale offshore wind farm, was commissioned in 2004 (pic: Christopher Jones)

Developers and owners are liable to cover the costs, which are believed to be less than 1% of levelised cost of energy (LCOE), according to a study carried out for the Department for Businesses, Energy and Industrial Strategy (BEIS).

But if they are unable to organise and fund decommissioning, BEIS, seabed landlord the Crown Estate and the Scottish government could pick up the bill.

Consultants at Arup defined decommissioning’ as inter-array cables being disconnected and their ends being buried, wind turbines being dismantled and transferred to shore, and foundations being cut below the seabed, and the top section removed and returned to land.

BEIS is the ‘executioner of last resort’ if a project’s developer or owner cannot fund decommissioning, Arup explained in its report, ‘Cost estimation and liabilities in decommissioning offshore wind installations’.

Developers told the consultants they "did not see a high risk" of this happening during a consultation, however.

Nevertheless, if developers were unable to fund the process, BEIS would have to pay between £1.03 billion and £2.94 billion for decommissioning 37 offshore wind farms that were under construction or in operation at the time of Arup’s analysis.

The Crown Estate and the Scottish government would pay the balance, which could be between £250 million and £690 million, according to Arup.

Costs can vary according to which vessels are used during decommissioning and depending on how long the project takes, the consultancy stated in its report.

There is also uncertainty about costs because, to-date, no large-scale offshore projects have been decommissioned.

One of the world’s first offshore wind sites — Ørsted’s 11-turbine demonstration project, Vindeby — was dismantled in September 2017, after 27 years of operation.

By comparison, the UK’s first demonstration project, the two-turbine 4MW Blyth wind farm, was commissioned in 2000, with the 60MW North Hoyle site following four years later.

Vessel day-rates are expected to be "highly volatile" owing to competition between offshore wind farm owners and operators of oil and gas assets for their services, the consultants stated.

Technology required for decommissioning more modern offshore sites is also likely to create uncertainty about costs, Arup suggested.

For example, the technology required to cut through large-diameter monopiles is not currently readily available.

Owing to this uncertainty, stakeholders suggested decommissioning costs should be reviewed when more information becomes available.

This might be, for example, after a number of offshore wind farms have been decommissioned and once the supply chain develops knowledge to provide quotations for the offshore operations with more certainty.

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