commissioned by the British government. Firm project proposals in Europe amount to 3900 MW by 2007. With a history of growth that exceeds
expectations, the wind industry is on a fast-track learning curve that will slash the price of a kilowatt hour made at sea. Here's how it will be done
Evidence suggests that the increased revenue from exploiting higher wind speeds farther offshore can outweigh the increased cable costs and electrical losses. Move a 1000 MW near-shore station 100 kilometres offshore in a similar water depth and even if the electricity fetches no more than two cents a kilowatt hour -- less than the sales prices for gas generated electricity today -- the extra revenue from 20% more energy yield balances the extra costs. Repeat the exercise for a 100 MW wind station and the same economies of scale are not achieved, but the break-even point for the extra energy yield of stronger winds far offshore is still a sales price of six cents a kilowatt hour -- less than the going rate being paid for offshore wind today.
It is these economic attractions that are encouraging the rush to secure permits for offshore wind plant construction in Europe, North America, Japan and elsewhere. Finding ways to get costs down is also the catalyst for a virtuous circle: the faster the costs fall, the more it will inspire general confidence in stepping up the activity that will bring costs down. Growth is likely to accelerate as offshore electricity prices approach those of the conventional sources. In Britain that means halving them and in Denmark cutting them by a third.
In broad brush terms the capital costs of offshore wind are 30-50% higher than on shore, but they are partially offset by higher energy yields of up to around 20% for near-shore installations and 40% farther offshore. There is plenty of scope for economies of scale to narrow the remaining difference between onshore and offshore costs. Much bigger wind turbines installed in far larger groups are the key that unlocks the crock of gold. Offshore projects are more capital intensive than onshore projects, so the cheaper loans and longer repayment periods that are expected to be on offer as the technology becomes more established cut even more off the energy price than for onshore wind.
Add to this the potential for further gains from mass production and grouping offshore wind plant in geographic zones (so they can share infrastructure costs) and the fall in offshore electricity prices will be rapid indeed. How fast is dependent on government backing the construction of large projects: the UK is leading with its capital grants and strategic site-zoning. What is certain is that there is more than enough potential for offshore wind power prices to fall to a point where they compete with the cheapest power on the market.
Meeting the challenges of harvesting offshore wind energy economically is giving birth to an entire new industry. Resource measurement and site identification require different technology and skills to that needed on land. Wind turbines for offshore use have different design requirements. Pre-installation assembly facilities must be set up at dockside locations. Turbine installation requires new types of lifting technology and even whole new ship designs. Above all, the choice of foundation type and of long term maintenance strategies -- which could include the design and construction of dedicated vessels and permanent offshore service bases -- are subject to rigorous debate with optimal solutions still being investigated.
Some challenges can be met by drawing from the lessons of onshore wind power. The way in which energy losses and turbulence vary with inter-machine spacing is well understood as are cable costs, so the trade-offs between widely-spaced turbines and long lengths of cabling can be estimated with reasonable accuracy. Operating a group of wind turbines at sea from a distant control terminal is not that much different from operating the same group on land. Indeed, since the instrumentation on a large turbine becomes a lesser proportion of the total machine cost, there is likely to be a pay-off in adding extra sensors for relaying more operational data back to base, allowing for more finely tuned control.
But while these areas are within the bounds of common wind power industry knowledge, many of the challenges to making offshore wind power an economic solution to power supply are sending engineers back to the drawing boards for a rethink of the fundamentals.
Prospecting for sites offshore is expensive. Assessment of wind speeds requires a measurement mast, say 80 metres tall, to be driven into the seabed and operated for at least 12 months. This exercise can cost up to EUR 2 million. Most of the potential savings will come from development of bigger wind stations, enabling the cost to be spread. For a 1000 MW wind farm, site prospecting amounts to just EUR 2 of a predicted installed cost per kilowatt of EUR 820 by 2012, while for a 30 MW wind farm it is EUR 30/kW.
Costs could also be reduced by using satellite measurements -- regularly used by weather forecasters -- to quantify offshore wind speed. First, however, the industry has to be satisfied that the resolution and accuracy are adequate. Alternatively, it may be possible to develop analytical techniques that can produce reliable wind speed estimates, taking into account data from nearby sites. These procedures stand a better chance of being adopted offshore, as the sea surface has known characteristics, potentially less complex than the topography on land.
Finding the best winds is the key to bringing down costs through increased energy yield. Around 25 masts are now installed off British, German, French, Spanish and Scandinavian coastlines. The assessments made so far suggest that moving a near-shore site 100 kilometres farther out from the coast can increase wind speed by up to a substantial 1 m/s. That amounts to at least a 20% reduction in the final energy price.
The wind turbines themselves account for at least half of the total cost of an offshore wind station (fig 2). As with wind plant onshore, reducing machine costs is key to bringing down energy price. The turbines in the 40 MW Middelgrunden wind farm off Copenhagen cost EUR 675/kW while the DTI estimates EUR 765/kW for turbines modified for offshore use (box). Larger machines and improved production techniques means that wind turbine costs are falling by 15% for every doubling of global installed capacity -- and capacity has been doubling every three years, or a little under. Following these trends, prices will fall by around 40% by 2012. Even if the trends decline, a fall of 20% seems reasonable to expect.
Advances in generator technology, pushed by the pressure to go offshore, are also delivering cost reductions. Nearly all the machines on offer (table) now have double-fed generators, full-span pitch control and operate at variable speed. Compared with the "standard" induction generators used by the industry to date both on and offshore, the new double-fed asynchronous units give better control of the power factor. This higher quality electricity not only reduces cable losses -- a vital factor for offshore economics in particular because of the length of underground cable involved -- but also reduces charges imposed by the network operator for having to provide reactive power. Furthermore, the use of asynchronous generators -- provided they have advanced electronics -- allows wind turbines to feed reactive power (essential for the grid) into networks, providing operators with a potential additional income stream.
Most of the cost of foundations lies in their manufacture and placement, making it unlikely that increases in size will lead to significant decreases in price. The foundation costs for a 5 MW wind turbine, however, will not necessarily be 66% higher than those of a 3 MW machine. A lot of work is in progress on foundation design and a 20% reduction in costs to EUR 192/kW by 2012 is probably the least we can expect.
After early experiments with gravity base foundations (a large and heavy mass of material, normally concrete, sometimes encased in steel) the monopile is emerging as the foundation of choice. Not that gravity foundations hold no potential for lower cost. The energy division of British consulting engineers Arup claims its patented system, which involves pre-assembly of the base and turbine onshore before it is towed out to sea, is a worthy competitor.
Monopiles, despite lengths of up to 35 metres, are relatively light and versatile. While installation requires a pile driver or drill, this disadvantage is offset by the need to prepare the seabed for gravity base foundations and to protect them from scour (shifting seabed). Whether or not a socket has to be drilled first for a monopile, as at Yttre Stengrund in Sweden, depends on the seabed. Piles can be driven into sand or mud, but rock must be drilled first and a socket used.
Monopiles have to get bigger to cope with bigger turbines. So far pile diameters have increased from three metres in the early days, to 3.5 metres at Blyth in England, to four metres at Horns Rev and the North Hoyle project now being built off the north coast of Wales. Diameters of five to six metres are the next step, together with more sophisticated drilling techniques.
A third option is a steel tripod, which uses relatively small piles underneath each leg. Although the tripod is both more complex and heavy than the monopile -- and thus more expensive -- it has the advantages of rigidity. Deeper waters necessitate taller columns on which to mount the turbine tower. Up to around depths of 30 metres, a 70 metre tower, say, can sit safely on a monopile. Above that depth, and the tripod comes into its own. The tripod was used for an early 200 kW single-turbine installation in Sweden, operating since 1991, and has been proposed for use in a 60 MW, 12 turbine project for the proposed Borkum project in German waters.
Savings in installation costs will come partly through the use of purpose-built vessels now being built for the offshore wind industry (box) and partly through the use of more sophisticated procedures, currently under investigation. One cost-saving strategy is the erection of the foundation, tower and nacelle onshore before floating the entire structure out to its site. Information on installation costs is scant as they are not always segregated from turbine costs, but it appears they account for EUR 30-60/kW of the total cost. On that basis, a 20% saving -- in line with the estimate for turbine costs -- seems to be an achievable goal.
One cost out of the control of man is the size of the construction window: the weather remains a formidable adversary. Most of the wind farms built so far have experienced delays and the start to construction of PowerGen's project at Scroby Sands off the English east coast was put back by about six months to avoid the risks posed by winter weather. Even in this area, however, advances in installation technique will reduce the cost penalties of crews and equipment standing idle because of bad weather. Operations involving cranes in high winds, even if a jack-up barge is used to provide a stable platform, are impossible.
Cost cutting care
Just as the costs of installing large offshore wind farms justify the construction of specialist vessels, the same considerations apply to taking care of them. The maintenance contract for a 100 MW wind farm is likely to be worth over EUR 1,000,000 annually. Operation and maintenance costs account for 25% of the energy price, so a 33% reduction over time, to account for learning curve experience, perhaps rising to 50%, by taking into account additional savings from larger arrays, can reduce energy costs by 12%.
Different maintenance strategies are being contemplated and the most cost-effective may take time to evolve. Savings are likely to come partly from better utilisation of men and materials on the much larger wind farms, partly from sheer experience as the industry grapples with the problems of balancing access costs, the cost of lost energy production from machines with faults, and the competing modes of transport. At Horns Rev, owner Elsam has scheduled two annual service inspections per turbine and each turbine is expected to require one to three extraordinary service checks a year when components malfunction. At times, it may make sense to wait for other faults to occur and deal with several together, or to advance a scheduled service. Some early studies did float the concept of "maintenance on breakdown" -- do not fix unless broken, but this is not expected to catch on. NEG Micon, however, is aiming at only one planned service visit per year on its offshore plant.
Although helicopters are much more expensive than boats, for sheer feasibility of access they are proving to be indispensable. Despite their high costs, they make efficient use of manpower -- and time is money. At Horns Rev, a combination of boats in calm weather and helicopters is being used, with technicians flown to the site if wave heights are more than 1.5 metres.
As wind farms grow, the economics of permanently manned offshore bases within the turbine arrays start to look attractive. The farther from shore, the greater the cost of ferrying people to the installation. The summertime complement of offshore windsmiths could be higher than during the winter period when less maintenance can be carried out.
Electrical costs are EUR 110/kW for the Middelgrunden wind farm off Copenhagen, far less than the DTI's EUR 375/kW for UK conditions, where turbines are not about to be installed within a stone's throw of the capital city. The cost span, however, is an indication of how dramatic the savings can be. The total cost of Middelgrunden came out at around EUR 1200/kW, which compares with EUR 1500/kW for the DTI's estimate for a UK offshore plant; the difference is mainly attributable to the much lower electrical connection costs in Denmark.
A recent research result calculates that electrical costs can drop from EUR 90 per installed kilowatt of generating capacity, to EUR 40/kW when moving from a 100 MW wind farm to a 1000 MW wind farm (within 20 kilometres of the shore). Additional savings from cheaper cables and from experience in laying and installing them could produce more bonuses.
Moving farther offshore increases these costs, but not in direct proportion (moving from 20 kilometres to 100 kilometres from the coast puts up costs by a factor of about three). The crossover point for balancing the increased costs against the value of the extra energy is surprisingly low, as noted at the start of this article.
Once the distance from shore is more than 100 kilometres, the economic advantages and disadvantages of using direct current (DC) or alternating current (AC) cabling to send wind power ashore come into play. Switching from AC to DC at 150 kilometres potentially reduces costs by about 25%. When to make that switch is the subject of much discussion.
Electricity networks run on AC current and wind turbines have nearly always delivered AC power to the grid. As the length of the connection increases, however, losses induced by the fluctuating voltages in buried cables rise steadily and necessitate some form of "compensation" at distances above around 40 kilometres. The cost of this equipment, plus the losses, tends to tilt the balance in favour of DC transmission at distances above about 100 kilometres, but towards the use of AC transmission for projects closer to shore (fig 3). All the projects in immediate development are well within 100 kilometres of the coast, making AC the obvious choice.
On the other hand, the increasing tendency for wind turbines to employ generators that initially produce direct current may tilt the balance back towards DC connections at shorter distances. Direct DC connection eliminates the need for inverters on wind turbines with generators that produce DC power. They can, in theory, be replaced by a single, larger inverter at the point of connection to the network. The drawback is that DC transmission voltages are much higher than those at which wind turbines generate. The extra cost of sorting out that problem also works against using DC for shorter distances.
ON THE BOTTOM LINE
The generation cost of offshore wind -- what a kilowatt hour costs to produce -- is dictated by two factors: the overall project cost and the terms under which it is financed. The overall cost elements are site selection, the turbines, foundations, installing the hardware, operating and maintaining it and getting the power into the electricity grid. The potential for cost-cutting in each area suggests that nearly 50% can be shaved off the total by 2012 (fig 1).
Learning curve experience indicates that a 40% reduction in the cost of buying and installing an offshore wind turbine is realistic to expect within ten years. To be on the safe side, assume the drop is 20%. Electrical costs for a 550 MW wind farm 100 kilometres from shore -- smaller than projects being proposed for that distance -- come down to EUR 45/kW by 2012. That's 80% less than for the recently completed 160 MW Horns Rev wind station, 16 kilometres offshore. Foundation costs are on track for a 20% reduction to EUR 192/kW within ten years. Wind measurement and other preparatory costs are more or less independent of project size, so the bigger the project the less impact on overall cost: site selection will come down by at least 50%, from EUR 120/kW to EUR 60/kW. Finally, more sophisticated and streamlined operations and maintenance techniques will knock at least EUR 25/kW off the annual cost of maintenance, which today is EUR 55/kW.
The bottom line (and conservative) prediction is an overall project cost, for a 550 MW farm, 100 kilometres from the shore, coming online in 2012, of around EUR 850/kW. That is just under 60% of current prices. Translating capital cost to generation cost depends on the financial terms. The effect on cost of a favourable public sector framework compared with private sector conditions is dramatic. Costs quoted for the Middelgrunden station in Denmark, derived using public sector interest rates and depreciation periods, are EUR 0.035/kWh. Projections by the UK government for its first wind stations are EUR 0.0.76/kWh -- far higher despite the better British wind speeds. The difference is a reflection of the capital intensive nature of wind energy prices: British costs are greater because of the impact of private sector conditions on the annual costs charged to the project to account for depreciation and interest.
Assuming a drop to EUR 850/kW, UK costs should drop to around EUR 0.04-0.045/kWh by 2012. The upper boundary is consistent with the lowest estimate produced by the UK government team -- cautious lot indeed (fig 2). This price could well be close to that of gas-fired generation, depending on future trends in the price of gas. If Denmark were to maintain its public sector treatment of offshore wind, the cost on a site with good winds comes down to EUR 0.03/kWh -- less than the price of gas. Put another way, to compete with gas in 2012, UK offshore prices need to halve, while in Denmark -- based on Horns Rev -- they need to fall by about one third. The offshore wind industry is well on track to achieve those reductions and give gas a run for its money.