30% reduction in the overall production cost is necessary for the Offshore Wind Energy Generation industry to become subsidy free and competitive with coal and gas. SOVs hold a large amount of Operations and Maintenance costs, and increased operational effectiveness of SOVs contributes to the 30% reduction in LCOE.
Levelized Cost of Energy (LCOE) is the primary benchmark used among offshore energy producing industries, particularly in the Offshore Wind Energy Generation (OWEG) industry.
LCOE is an indicator of the energy production cost over the life time at wind farm level. LCOE is a metric for the cost of electricity produced and a key performance indicator of the overall competitiveness of different energy generating technologies.
It includes all costs: construction, financing, fuel, maintenance, taxes etc., and is measured as lifetime cost divided by expected lifetime power output (EUR/MWh).
The Offshore Wind Energy Generation industry is growing rapidly
In the OWEG industry, 12.1 GW was installed World Wide at the end of 2015, and this is estimated to grow to 13 GW by the end of 2016. By 2030, the target installed OWEG capacity is more than 200 GW.
Northwest Europe currently has the largest installed capacity of OWEG energy, accounting for more than 90% of the world capacity: Asia is following Europe with 7%, of which 80% is China.
US, Germany and China are the largest markets with forecasted OWEG capacity installed during the period 2016-2025.
These higher cost of OWEG energy has called for subsidies from the different governments in order to incentivate its installation. The purpose of the different subsidies is to reduce the overall LCOE cost and make more attractive the OWEG industry to potential investors.
Reduce LCOE in the OWEG industry
In order to be competitive with other energy generation sources (coal and gas), OWEG should at least achieve from 30 to 60% reduction in the overall production cost.
EU has set a target of LCOE reduction at 100 €/MWh by 2020. Download brochure to see how Ulstein can contribute.