The shift towards approaching projects through the prism of a levelised cost of energy is helping the offshore wind energy sector reduce its costs downwards at a faster pace than originally envisaged.
Power Engineering International spoke to Robert Rawlinson-Smith, the new Service Area Leader for Renewables Advisory at DNV GL about the growing positivity surrounding offshore wind technology and the challenges that remain.
DNV GL is working with a number of firms operating in the offshore wind sector, as the world continues to transition towards a low carbon electricity system. The company’s presence as an independent technical advisory and certification body is playing its part in helping firms negotiate a more complex energy environment where the need to show costs are being innovated down is paramount.
“In the last few years there has been a shift of focus towards levelised cost of energy and that’s opened up the possibility for improvements in technology. In the CAPEX phase projects might be more expensive but, over the project’s lifetime, there is a reduction in the overall cost of the energy.
Levelised cost of electricity (LCOE) is a measure of the overall competiveness of different generating technologies. It represents the per-kilowatt-hour cost of building and operating a generating plant over an assumed financial life and duty cycle.
“It’s a significant change in terms of people’s thinking,” says Rawlinson-Smith. “We always talk about LCOE models now and that’s something DNV GL has been active in promoting and developing our own models and we use those models to help clients understand the costs of their projects and where we can make real differences with those costs.”
At the European Wind Energy Association conference in Barcelona in 2014 it was noticeable how keen industry leaders were to get across to industry delegates the importance of competing on costs with other technologies. It’s a message that has not gone unheeded.
A report published by the Offshore Renewable Energy Catapult in collaboration with the Crown Estate, indicates the progress being made. With input from DNV GL and Deloitte, the report takes a closer look at the technological changes and project cost reductions that are being achieved.
“The Cost Reduction Monitoring Framework used a baseline and evidence was sought from the players in the market both in terms of actual project cost but also where those cost reductions were being achieved. In terms of costs projected, sponsored by financial investment over the last couple of years, costs have come down from about £140 per mw hr in 2010 to about £120 last year – slightly ahead of where the figure we expected to be at now. Assuming that continues we should hit the target which has been set at £100 per mw hour by 2020.”
“One of the biggest reasons for being ahead of the game is improvements in technology – particularly the emergence of the larger wind turbines. By now it was expected that projects would be a mixture of 4 and 6 MW turbines whereas we have actually seen the emergence of 6 MW and above machines a little bit earlier than people were expecting.”
That trend towards larger machines is advocated by DNV GL as fitting in with the LCOE model. Rather than looking at the cost of the individual machine it’s about looking at the cost of the project as a whole – taking into account the cost of installation, the cost of operations and maintenance and the energy yield from the turbine.
“Those cost of energy models suggest the bigger machines offer advantages because of the reductions in capital expenditure per megawatt because you’re effectively installing fewer bigger machines – it’s only achievable if you have confidence you can design and build those bigger machines.”
“The model has been used to justify investment and maybe increase the speed at which the bigger machines have been developed. Many manufacturers now have 6 and 8 MW machines being offered to the market. Those improvements in the technology from larger rotors and machines are a significant contribution to cost reduction.”
While there is some way to go before offshore wind technology reaches grid parity, the visible downward trajectory has been key in justifying public support. Rawlinson-Smith says the achievement to date should also be noted when its considered that government targets are less and less ambitious in terms of the projected installations hoped for.
“In that light the cost reductions coming about via technology are really quiet significant.”
DNV GL has participated and led a number of joint industry projects involving the improvement of process, what he refers to as ‘getting things right first time.’
One project examines technology driven cost reduction -Project FORCE (FOr Reduced Cost of Energy).
“It looked at improvements in the control system, load mitigation and integrated design for offshore wind- rather than designing the turbine and support structure independently.”
“It involves designing the structure as a whole from seabed up to blade tip and taking into account the interactions between the turbine support structure and then the wind conditions. By taking the integrated approach, potential for reducing costs is realised.”
The company also published A Manifesto for Cost Reduction in 2014. The data that emerged from that report came about through DNV GL working with turbine manufacturers and the industry around support structures as well as project developers.
That cross-spectrum knowledge immersion contributed to increased understanding and subsequently more development in costs reduction but where else can progress be made?
Challenges remain in the ongoing perception of construction risk and the lack of volume of projects diminishes the prospects of further best practices being identified. Rawlinson-Smith says ‘the competitive nature of the market also doesn’t encourage people to share as much as they might.’
“We are continuing to promote joint industry projects to capture as much learning as possible. Our approach can be summed up as doing things right, doing things better and doing thing differently for example by developing recommended practices for marine operations.”
“For example one big area for cost over runs is cabling installations and we’re working on reducing that risk.”
“In terms of doing it better we have developed tools aimed at optimisation of offshore construction – taking into account weather and resources to be brought to bear there and by having a tool that can help you design that construction process and including that within a cost of energy model.”
DNV GL are hoping that some momentum can come from the recent PARIS COP21 conference in creating a more coherent commitment to reducing carbon emissions and a better focus on renewable energy, overcoming the limitations of the political cycle.
“While the 2020 target now looks set to be successfully reached the positive trajectory can only be sustained if clarity of policy exists beyond that date.”