Floating Offshore Wind Farms Barriers to Adoption | Winners and Losers
Dr. Evangelo Damigos; PhD | Head of Digital Futures Research Desk
- Sustainable Growth and Trends
Publication | Update: Sep 2020
Martin Wilkie, Head of Citi’s European Capital Goods Research Team, and Ji Cheong, European Capital Goods Research Analyst, highlight a couple of key barriers to adoption:
Barriers to Adoption
Subsidies: As with most renewable energy sources, in the early stages of adoption, wind energy has relied on government subsidies, usually in the form of guaranteed Feed-in Tariffs or Tax Credits. The Levelized Cost of Energy (LCOE) levels of floating offshore wind are expected to go down, although it may be a long time before it gets near cost competitiveness compared with other renewables. WindEurope forecasts LCOEs of floating offshore to decline 38% by 2050, and this rate of decline is similar to onshore (-35% by 2050) and fixed offshore (-41%). Equinor, operator of the Hywind floating offshore wind farm, aims to reach LCOE levels of €40-60/MWh for the wind farm by 2030 (levels that are comparable to current onshore wind LCOE levels).
Intermittency: Wind power, similar to other renewable energy sources, is disadvantaged by intermittency in nature (i.e., wind does not blow all the time). To compensate, there are various solutions that are under development, such as battery storage and ultra-high-voltage direct current (UHVDC) connectors (to balance with other uncorrelated renewable sources like solar). Utility-scale storage solutions are still in their nascent stage of adoption and are generally considered to be expensive, although costs are expected to come down as these solutions become more prevalent.
Winners and Losers
Turbine OEMs: Floating offshore technology presents new opportunities for the global wind turbine OEM players, especially to those that currently have exposure to the fixed offshore business.
HVDC / cable / interconnects: There are a few different types of cables and equipment involved in the power transmission process. Inter array cables inter-connect the turbines within the wind farm, through which electricity generated goes through to the transformer. From the transformer the electricity goes through export cables, which then are delivered to shore. Given the longer distance of floating offshore turbines from shore, cable costs will be of much more significance, especially when considering that it costs around $ 2 million/km for an HVDC cable.
Energy storage: The intermittent nature of wind power necessitates increased means of energy storage to compensate. The most recent example of a large-scale battery project is Tesla's 100MW-scale 'giant battery' connected to a 325MW wind farm in South Australia, with the battery cost estimated to be around million. IRENA estimates that global battery storage technology could reach 175GW in 2030.
Fossil / nuclear power generation: Further technological development and reduction in the cost of renewable energy indubitably shifts demand away from traditional fossil fuels and nuclear power, leading to unfavorable prospects for manufacturers of related equipment.
Objectives and Study Scope
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