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Cost reductions for offshore wind power: Exploring the balance between scaling, learning and R&D

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  • van der Zwaan, Bob
  • Rivera-Tinoco, Rodrigo
  • Lensink, Sander
  • van den Oosterkamp, Paul

Abstract

Offshore wind electricity generation is prospected to increase substantially in the near future at a number of locations, like in the Baltic, Irish and North Sea, and emerge at several others. The global growth of offshore wind technology is likely to be accompanied by reductions in wind park construction costs, both as a result of scaling and learning effects. Since 2005, however, significant cost increases have been observed. A recent surge in commodity prices proves to constitute one of the main drivers of these cost increases. This observation begs the question whether wind turbine manufacturers should return to the laboratory for undertaking R&D that explores the use of alternative materials and bring offshore wind energy closer to competitiveness. It is demonstrated that if one abstracts from material price fluctuations, in particular for metals such as copper and steel, turbine production plus installation cost data publicly available for a series of offshore wind park projects (realized in several European countries since the 1990’s) show a cost reduction trend. Hence various other sources of cost increases, such as due to the progressively larger distances from the shore (and correspondingly greater depths at sea) at which wind parks have been (and will be) built, are outshadowed by cost reduction effects. When one expresses the overall cost development for offshore wind energy capacity as an experience curve, a learning rate is found of 3%, which reflects a mixture of economies-of-scale and learning-by-doing mechanisms. Also the impact is quantified on offshore wind power construction costs from the recent tightness in the market for turbine manufacturing and installation services: without the demand-supply response inertia at the origin of this tightness it is estimated that the learning rate would be 5%. Since these learning rates are relatively low – in comparison to those observed for other technologies, and in view of the high current capacity costs of offshore wind in comparison to onshore wind energy – a renewed focus on learning-by-searching or R&D is recommended.

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Bibliographic Info

Article provided by Elsevier in its journal Renewable Energy.

Volume (Year): 41 (2012)
Issue (Month): C ()
Pages: 389-393

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Handle: RePEc:eee:renene:v:41:y:2012:i:c:p:389-393

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Web page: http://www.journals.elsevier.com/renewable-energy

Related research

Keywords: Offshore wind energy; Cost developments; Commodity prices; Economies-of-scale; Learning-by-doing; Learning-by-searching;

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Cited by:
  1. Schmitz, Matthias & Madlener, Reinhard, 2012. "Economic Feasibility of Kite-Based Wind Energy Powerships with CAES or Hydrogen Storage," FCN Working Papers 16/2012, E.ON Energy Research Center, Future Energy Consumer Needs and Behavior (FCN).
  2. Felix Groba & Barbara Breitschopf, 2013. "Impact of Renewable Energy Policy and Use on Innovation: A Literature Review," Discussion Papers of DIW Berlin 1318, DIW Berlin, German Institute for Economic Research.

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