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III.a.2 Offshore Wind Costs

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2011-04-27

Title: 2050 Offshore Wind Costs

Content: h1 Lead and sign-off

2050 Costs team lead - Michael Clark 

Working-level analyst - Henry Shennan, Ben Marriot(DECC)

Senior analyst - Sam Thomas, Rocio Concha

h1 Data sources

MottMac10

Markal3.24Doc

ESME

h1 Technologies costed in this sector

* Offshore wind turbine

h1 Offshore wind turbine

Costs summary (£ per KW):

| Overall   | Low | High   |
| Capital   | 525 | 4155   |
| Operating | 35  | 159.75 |

h2 Current Calculator assumptions

* Lifetime =  20yrs
* Efficiency =  Capacity factor = 35-45% 
* Input Fuel = Wind

h2 Investment Cost sources

* High cost = Offshore Wind Round 3 - FOAK, from MottMac10, Availability = 95.6%, Aux power = 2.4%, Load factor = 43% Life = 23yrs
* Low cost = Offshore Wind, -30% from ref from ESME, Availability factors = 35-40%, Life = 20yrs

h2 Fixed Operating Cost sources

* High cost = Offshore Wind Round 3 - FOAK, from MottMac10, Availability = 95.6%, Aux power = 2.4%, Load factor = 43% Life = 23yrs
* Low cost = Vintage 1 from Markal, Availability factor = 22-50%, Life = 25yrs

h1 Issues, concerns and questions

* The capacity factor appears quite ambitious in comparison to other models

Category: 2050 pathway costs



User: Tom Counsell

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Title: III.a.2 Offshore Wind Costs

Content: h1 Technologies costed in this sector

* Offshore wind turbines - Please click on: offshore wind cost data

h1 Costs Methodology

h2 Methodology used

The user defines the number of offshore wind turbines. Once the trajectory is set by the user, the number of plants to be built are defined. Investment costs are a function of new build and operating cost are a function of the number of plants operating within that time period. We assume turbines retire after 20 years and the cost of replacement is included.

Please see 2050 Methodology for a full description of the costs approach in the Calculator.

h2 Methodology issues and uncertainties

* The capacity factor appears quite ambitious in comparison to other models

* Do CAPEX estimates capture connection to grid costs and wider network costs?

# For connection to Grid, Mott Mac FOAK 3rd Round Offshore are modelled as up to 75km from shore in 50 metres of water, giving a high levelised cost of ~£190/MWh. The Offshore Valuation Report [http://www.offshorevaluation.org/downloads/offshore_vaulation_full.pdf] has the highest levelised cost in 2025 of £153/MWh (£226/MWh in 2015) of a floating wind turbine 100-200km from shore. Therefore, it appears that the highest cost range largely captures the cost of floating wind turbines deployed after 2025.

# We have compared the costs here to the capital costs assumed in the offshore valuation report[http://www.offshorevaluation.org/downloads/offshore_vaulation_full.pdf], which included floating wind turbines up to 200km from shore and they did not exceed the high end of the capital cost range.

Mike Knowles comments -  DECC other cost data and it covers all sources IMechE used in EP11/02 used plus Markal, IEA and ESME. The costs for Offshore are very broad e.g., MML working range £1050 to £4276/kW peak and operating costs £30 to £214/kW.  IEA £2725 to £3700/kW capital cost and £191 to £361/kW op costs. They do not give sufficient confidence with such a broad scope of conditions, -distance from shore;water depth etc.. 

Vattenfall's Thanet Array and Ormonde (Barrow)recent offshore projects have been reported as being £2600 to £3200/kW and being actual projects seem consistent with mid-range IEA costs. They are are for nearshore <10kM and 20 to 30m depth waters. Since 2ROCs gives a 20-year income stream of £2.76billion at 35% load factor for the Thanet Array reportedly costing £780M, this  would yield a 12% IRR. and that is for 20 years and is RPI-inflated. 

Would it not be sensible to categorise offshore wind costs for this exercise nearshore <10kM/<30m depth;medium<100km/??m depth and long distance <200kM/??m depth? 

# The wider network costs are captured in the electricity transmission sector

h1 Technical Assumptions

* Lifetime =  20yrs
* Efficiency =  Capacity factor = 35-45%  (linear trajectory from 2010 to 2050)

Mike Knowles comment 35 - 40% is optimistic - LF on unchanged configuration basis averaged over 5 years 2005 to 2010 was 30.8% ref DUKES 2011 Further comment 17 5 12 - In 2011 installed renewable capacity was 12.15GW that supplied 34.75TWhs or 9.5% of total supply. This contrasts with 6.8% in 2010 , a low wind and rain year. Original RO target for the obligation for the whole of 2011 was set at 12% Offshore Load Factor for 2011 unweighted average is 37.05%. The weighted average load factor over previous five years on a smaller total capacity was 31.2% as stated in the IMechE's RO banding response! 2011 Quarterly variations of LFs for offshore were - Q1 33.4 ; Q2 34.6 ; Q3 30.4% ; Q4 49.8!! Q4 was clearly exceptionally windy! 

However LFs could equally go down in 2012 or 2013 by as much as 15%+ based on annual average wind speed variation i.e., down to 8%. Furthermore the offshore wind farms so far are underperforming conultants assumptions by 18%. 

* Input Fuel = Wind

h1 General Comments

Please use this space to make any general comments. Please add your name when commenting.

Category: Sector by sector cost assumptions



User: Knowlesmichael2

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