Offshore initiative to drive down costs -- Price saving potential of £30 billion

UK: Five major international energy companies are collaborating in a £30 million research and development (R&D) drive to slash the cost of offshore wind.

Denmark's DONG Energy, Scottish and Southern Electricity subsidiary Airtricity, RWE Innogy, StatoilHydro, and Iberdrola subsidiary ScottishPower Renewables are hoping to reduce costs by at least 10%.

Known as the Offshore Wind Accelerator (OWA), the initiative is led by the UK's Carbon Trust, which aims to reduce both the capital and performance costs of offshore wind farms. Key topics are offshore foundations; wake effects of large arrays of turbines; developing better access systems during wind farm construction and operation to maximise turbine availability; and increasing the efficiency of electrical systems of offshore wind farms to reduce transmission losses. On foundations, the team will be looking at new types with lower capital and installation costs.

The Carbon Trust's Mark Williamson says high costs and risks of offshore wind have been seriously holding back deployment. "We've identified a range of opportunities to reduce costs, increase performance and improve the economic viability of offshore wind farms. This new collaborative initiative brings together five leading energy companies to encourage technology innovation and significantly accelerate growth in the sector at this crucial time."

The first phase of the five year initiative involves a set of feasibility studies. Invitations to participate in the work are to come before the end of the year. Large scale demonstration projects are to follow from 2010 onwards.

The OWA initiative follows a report, published by the Carbon Trust, which claims that costs of the third round of offshore wind projects off the UK coast could be reduced by 40% if wind farms were built at sites in shallower waters nearer to shore and through reductions in technology costs. This would bring the cost of delivering 29 GW down from £75 billion to £45 billion, according to the report "Offshore wind power: big challenge, big opportunity."

The Carbon Trust says the UK could need at least 29 GW of offshore wind if it is to meet its 2020 renewables targets, while the government has its sights on 25 GW by that year (page 76). This would mean the offshore wind sector providing 25% of the country's electricity. But at current costs, returns to potential investors in offshore wind are not attractive enough to enable this level of deployment, it says.

Siting constraints from shipping, Ministry of Defence radar coverage and environmental concerns are set to push Round 3 wind developments into deeper waters 70 miles from shore at great expense to developers, finds the report. Relaxing constraints on shallower water sites could cut costs by £16 billion, it states. Increased R&D could reduce costs by a further £14 billion.

At current costs, onshore and offshore wind deployment to meet 2020 targets will add 8% to customers' electricity bills, says the Carbon Trust. The actions in the report could cut that addition to 1%. Moreover, if gas prices remain high, wind power could lower electricity prices, it states.

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