TY - JOUR
T1 - Technological progress observed for fixed-bottom offshore wind in the EU and UK
AU - Santhakumar, Srinivasan
AU - Smart, Gavin
AU - Noonan, Miriam
AU - Meerman, Hans
AU - Faaij, André
N1 - Funding Information:
This article is produced as part of a research project named ENergy SYStems in TRAnsition (https://ensystra.eu/). ENSYSTRA received funding from the European Union's Horizon 2020 research and innovation program under the Marie Skłodowska-Curie grant agreement No: 765515. This publication reflects only the views of the author, and the Commission cannot be held responsible for any use which may be made of the information contained therein. The authors would like to thank the members of ORE Catapult for their valuable inputs and discussions during the secondment period. The authors would also like to thank the reviewers who had provided valuable comments and suggestions in improving the manuscript.
Funding Information:
This article is produced as part of a research project named ENergy SYStems in TRAnsition ( https://ensystra.eu/ ). ENSYSTRA received funding from the European Union's Horizon 2020 research and innovation program under the Marie Skłodowska-Curie grant agreement No: 765515. This publication reflects only the views of the author, and the Commission cannot be held responsible for any use which may be made of the information contained therein.
Publisher Copyright:
© 2022 The Authors
PY - 2022/9
Y1 - 2022/9
N2 - Offshore wind is a rapidly maturing low-carbon energy technology, for which the technology cost has increased before starting to decline. In literature, the cost development trends of offshore wind and factors responsible were poorly studied. Understanding the factors contributing to the cost developments and their individual impacts are vital for long-term energy policy actions and investment decisions. Therefore, this study combined three different but highly complementary quantitative methodologies to analyze the technological progress observed for fixed-bottom offshore wind in the EU and UK. The technology diffusion curve was first applied to identify the individual development phases of offshore wind technology. Then, the cost developments observed across the identified phases were quantified using experience curve and bottom-up cost modeling methodologies. In the formative phase of the development process, the offshore wind farm's specific capital expenditure had increased from 2 M€/MW in 2000 to 5 M€/MW in 2010, thereby resulting in negative LR. The increase in specific capital expenditure increased the Levelized Cost of Energy (LCoE) from ~110 €/MWh to above 150 €/MWh. After that, during the upscaling and growth phase, the specific capital expenditure declined from 5.4 M€/MW in 2011 to 3.3 M€/MW in 2020. LR of 8–11 % was observed for specific capital expenditure in this phase. In the same phase, the LCoE declined more rapidly than the specific capital expenditure, i.e., from roughly 150 €/MWh in 2011 to 69 €/MWh in 2020, a 54 % decline. This rapid decline observed in recent years was due to the favorable financing conditions, increased capacity factor, and decreased technology costs, including investment and operational costs. Based on the technological progress assessed for offshore wind and its contributing factors in this study, we also estimated the near-term offshore wind LCoE, 55 €/MWh in 2021–2023 and 48 €/MWh in 2024–2026, which aligns well with recent auction outcomes.
AB - Offshore wind is a rapidly maturing low-carbon energy technology, for which the technology cost has increased before starting to decline. In literature, the cost development trends of offshore wind and factors responsible were poorly studied. Understanding the factors contributing to the cost developments and their individual impacts are vital for long-term energy policy actions and investment decisions. Therefore, this study combined three different but highly complementary quantitative methodologies to analyze the technological progress observed for fixed-bottom offshore wind in the EU and UK. The technology diffusion curve was first applied to identify the individual development phases of offshore wind technology. Then, the cost developments observed across the identified phases were quantified using experience curve and bottom-up cost modeling methodologies. In the formative phase of the development process, the offshore wind farm's specific capital expenditure had increased from 2 M€/MW in 2000 to 5 M€/MW in 2010, thereby resulting in negative LR. The increase in specific capital expenditure increased the Levelized Cost of Energy (LCoE) from ~110 €/MWh to above 150 €/MWh. After that, during the upscaling and growth phase, the specific capital expenditure declined from 5.4 M€/MW in 2011 to 3.3 M€/MW in 2020. LR of 8–11 % was observed for specific capital expenditure in this phase. In the same phase, the LCoE declined more rapidly than the specific capital expenditure, i.e., from roughly 150 €/MWh in 2011 to 69 €/MWh in 2020, a 54 % decline. This rapid decline observed in recent years was due to the favorable financing conditions, increased capacity factor, and decreased technology costs, including investment and operational costs. Based on the technological progress assessed for offshore wind and its contributing factors in this study, we also estimated the near-term offshore wind LCoE, 55 €/MWh in 2021–2023 and 48 €/MWh in 2024–2026, which aligns well with recent auction outcomes.
KW - Cost reduction
KW - LCOE
KW - Learning rate
KW - Offshore wind
KW - Technological progress
UR - https://www.scopus.com/pages/publications/85134593736
U2 - 10.1016/j.techfore.2022.121856
DO - 10.1016/j.techfore.2022.121856
M3 - Article
AN - SCOPUS:85134593736
SN - 0040-1625
VL - 182
JO - Technological Forecasting and Social Change
JF - Technological Forecasting and Social Change
M1 - 121856
ER -