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Offshore cost will continue to escalate

EUROPE: Hopes for a short-term fall in offshore project costs as European developers move into deeper water and further offshore are unlikely to be fulfilled, according to marine consultancy Intertek METOC.

Reducing offshore costs by 2020 is seen as critical to the sector as it seeks to become financially competitive with other forms of electricity generation.

However, Intertek said this week that while offshore wind is set to rise as developers move into more challenging waters.

It said cost reductions should be sought in areas such as standardisation, installation and operations and maintenance.

According to the consultancy, which has been working in offshore energy markets since 1983, the key to achieving long-term cost reduction is sharing and applying industry best practice from other offshore energy markets such as oil and gas.

It also endorses industry-wide initiatives that could achieve cost savings of 30-50% over the next 10 years. This includes particular attention to cable installation, to date one of the main areas of cost overrun and insurance claims.

"The offshore wind industry is still learning, and any forced cost reductions may lead to an increased risk profile in the sort term," said Frank Beiboer, MD at Intertek.

"Rather, by investing up front in different turbine technologies, installation methods and supporting infrastructure, operators and investors are more likely to achieve true long term cost reduction."

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