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COST REDUCTION IN OFFSHORE WIND

What are the potential and why must R&D focus on it?By Jørgen R. Krokstad

Industry meets Science – 20 September 2012

Content Definition of LCOE and status within the industry

The potential of cost reduction

OWA – a R&D mean to accelerate technology development against cost reduction

Examples of Statkraft use of LCOE for research project initiation

Some questions for the audience

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Content Definition of LCOE and status within the industry

The potential of cost reduction

OWA – a R&D mean to accelerate technology development against cost reduction

Examples of Statkraft use of LCOE for research project initiation

Some questions for the audience

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Good news in the wind business!

LCOE is now between $33 and $65 per MWh

Clearly beats fossil fuels

Main reason:

Bigger wind turbines that have a higher capacity factor

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Definition of LCOE – Levelised Cost of Energy The sum of discounted lifetime generated cost (£)- divided by

the sum of discounted lifetime electricity output (MWh)

Generation cost: Capital (CAPEX), operating (OPEX) and decommissioning costs including transmission costs (OFTO) over the lifetime of the project

An expression of cost rather than revenue

The discount rate is the Weighted Average Cost of Capital over the lifetime

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CoE split (typical UK R2 project)

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Turbine

Foundation

Electrical onshore

Electrical offshore

Installation

Transport & logistic

Project management

Project completion

Insurance

CAPEX   ~ 2/3 OPEX   ~ 1/3

Unscheduled WTG service

OFTO

Other

Grid cost (BSUoS) Preventive WTG service

Costs must come downOtherwise projects will not get built

0,0

0,5

1,0

1,5

2,0

2,5

3,0

3,5

4,0

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012

Cost per MW installed (€m/MW)

Year

Greater Gabbard

Thanet

Rhyl Flats

Gunfleet Sands

Robin Rigg

LynnBurbo

Barrow

Kentish FlatsScroby Sands

North Hoyle

Source: Emerging Energy Research 2009; Garrad Hassan 2011; Renewable Energy World.com 2009 

Drivers– Rising commodity prices– Bottlenecks in supply chain– Complexity of sites, distance, depth– FX rate volatility

ROCs increased from 1.5 to 2

300MW

Content Definition of LCOE and status within the industry

The potential of cost reduction

OWA – a R&D mean to accelerate technology development against cost reduction

Examples of Statkraft use of LCOE for research project initiation

Some questions for the audience

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Innovation as input to Cost Reduction

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Offshore Wind Cost Reduction. Pathway Study:  Crown Estate 2012

Potential LCOE cost reduction

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TCE study 2012: FID 2011 to 2020

0 5 10 15 20 25 30

Turbine

Foundation

Collection & trans.

Installation

O&M

Total

Potential LCOE reduction by 2020 ( %)

Technology Innovation Needs Assessment Offshore Wind 2011

Content Definition of LCOE and status within the industry

The potential of cost reduction

OWA – a R&D mean to accelerate technology development against cost reduction

Examples of Statkraft use of LCOE for research project initiation

Some questions for the audience

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Offshore Wind Accelerator (OWA)Aim: Reduce cost of offshore wind by 10%

De‐risking and cost modellingCompetition: 400 entrants, 13 to be supported

Efficient software andlayout optimisation study

Investigating possibility and benefits of moving to higher voltage for array cables

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Choose sites carefullyFocus on reducing sensitivity of cost to distance and depth

)Source: Carbon Trust “Big Challenge, Big Opportunity” 2008

Wind speed Distance Depth

70

80

90

100

110

120

130

Depth (m)0‐20 20‐40 40‐60

70

80

90

100

110

120

130

Distance to shore (nm)60+12‐30 30‐600‐12

70

80

90

100

110

120

130

800‐900

Wind power (W/m2)

700‐800

<700 900+

CoE as % typicalnear‐shore site

Significant opportunity for innovation to drive down costs

Development Electrical Foundations Installation Turbine O&M

Monopiles

Gravity bases

Jackets

Buckets

New layouts AC vs HVDC links

Higher voltage arrays

Radial vs loops

Port‐based vs mother‐ship

New vessels, transfer systems 

Condition monitoring

Jack‐up barges + shuttles

Floating installation vessels

Float‐out and sink

Larger turbines

Blades

Drivetrain

Fabrication

Four designs prioritised for Round 3 from 104 entriesObjective: Reduce foundation costs by up to 30% in 30-60m

Shortlist Finalists

Keystone

Gifford / BMT /Freyssinet

SPT Offshore

UniversalFoundation

Airbus A320

Source: Carbon Trust Offshore Wind Accelerator 2010, IHC

IHC

Stage II focus

Installation

Demonstration

TranSPAR –ExtremeOcean Innovation

Concept development of 13 access systems is underwayVessels

Fjellstrand Windserver Nauti‐Craft

SurfaceEffectShip –UMOE Mandal

SolidSea Transfer – UniversityofStrathclyde

Pivoting Deck Vessel – North SeaLogistics

TranSPAR –ExtremeOcean Innovation

Divex LARS ‐ Divex

Offshore Kinetics L&R

Z Port – Z Technologies

Concept development of 13 access systems is underwayTransfer systems, launch & recovery systems

Auto Brow –Ad Hoc Marine, South Boats

MOTS ‐Momac

Wind BridgeKnud E. Hansen

TAS2 – Houlder & BMT Nigel Gee

Content Definition of LCOE and status within the industry

The potential of cost reduction

OWA – a R&D mean to accelerate technology development against cost reduction

Examples of Statkraft use of LCOE for research project initiation

Some questions for the audience

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R&D general selection criteria in Statkraft Effect evaluation

- reduced risk- increased long-term value- increased margin- increased volume

Expected added value – a multiple of R&D cost

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Profitable wind power 

plantsReduce 

lifecycle costs

Improveinternal 

competences

Reduce risks

Increase power production

Improve supplier 

competition

Reduced Cost of Energy

Objectives for the Demonstration Programme of DONG Energy –More objectives than to reduce LCOE

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Example of classification of R&D importance

22Statkraft presentation

Scour protection requirement

XX TopicsLoad case  requirements

0

0,5

1

0 0,5 1

Know

ledgegap ‐> high

Cost impact ‐> high

Classification of topic importanceTechnology class  ‐ Jackets

Concepts Phase I Monopiles – Bucket (UF) Numerical qualification with R&D input

0.231 Hz 0.265 Hz 0.267 Hz             0.244 Hz                      0.271 Hz

WMS SYSTEM (Wind Management System)Economical goals in Statkraft

WMAT

WMS SMALL SCADA

SMGTEMP

BI ZTALK WEB

1% increased production1% reduction of O&M‐costs5% reduction of balancing costs

Assessment of Standards

Content Definition of LCOE and status within the industry

The potential of cost reduction

OWA – a R&D mean to accelerate technology development against cost reduction

Examples of Statkraft use of LCOE for research project initiation

Some questions for the audience

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Some questions for the audience

Do you think LCOE or RISK REDUCTION is most important for offshore wind R&D?

Can pre-competitive research contribute to LCOE?

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www.statkraft.com

THANK YOU

LCOE – break down

STATKRAFT 2008

Offshore Wind Cost Reduction. Pathway Study:  Crown Estate 2012

Cost targets from Denmark – motivates R&D focus areas

‐2020 target ‐ CoE reduced by 50 %‐25 % increase in annual production‐40 %  reduction of Capex (WTG, Foundation, 

Installation) ‐50 %  reduction of Opex (O&M)

OWA and Universal Foundations