Chapter 7 - Offshore wind energy

Abstract

Offshore wind farms have been deployed since 1991, mainly in the North sea and Baltic sea but in recent years also in the United States and East Asia. Learning effects in offshore wind parks have been masked by various other developments over the past two decades, leading first to an increase in capital expenditures (Capex) and average levelized cost of electricity (LCOE) between 2003 and 2012, followed by a steep decline between 2015 and 2018. Based on changes in Capex, capacity factor, weighted average cost of capital (WACC), and operational expenditures (Opex), the LCOE increased from 120€/MWh in 2000 to 190€/MWh in 2015 and then decreased to about 100€/MWh at the end of 2018, with average projections for 2021 reaching 70€/MWh. Especially the increase in capacity factor has been a major driver in reducing the LCOE. Given the strong fluctuations in the past and many factors influencing the LCOE of offshore wind projects, it was not possible to derive meaningful one-factor experience curves and learning rates that would allow extrapolation for the future cost projections. Multifactor learning curves approach taking into account raw material costs, location-specific properties, and soft factors such as developments in WACC show more promise, but more deployment of offshore wind is needed to demonstrate whether such models can provide more accurate cost trend forecasts for the coming years.