The UK is on course to achieve 30 per cent cuts to the cost of offshore wind within seven years, but needs to map out construction lessons along the way.
An Offshore Wind Cost Reduction Task Force Report has set out key actions for industry and government to cut the cost of generating electricity in the sector by over 30 per cent to £100 per megawatt hour by 2020.
The report finds that financiers find construction risks unattractive and, “even though investment continues to flow, the industry’s prospects are under constant scrutiny”.
Industry should work to develop simpler innovative deal structures, especially during construction, which align stakeholders, including the Credit Rating Agencies, and deliver reliable long-term index-linked income streams.
Industry should engage the insurance sector to explore ways that their experience and product range can be used to help mitigate risks during construction and operation. The OWPB should initiate this.
Developing industry-wide performance reports would share best practice and better enable “learning by doing” to be incorporated into future projects. Practical examples could include: Lessons from construction programme overruns; Experience of working with different contractors/ effectiveness of contract management strategies
Energy minister Charles Hendry, said: “Offshore wind will be a vital part of a diverse and secure low carbon energy mix in the decades ahead. But we are clear that costs must come down.
“I am encouraged that this report shows that substantial cost savings can be achieved if action is taken and I welcome this valuable work. I look forward to working closely with industry to take this forward further and deliver these ambitious targets.”
Andrew Jamieson, chair of the Offshore Wind Cost Reduction Task Force, ScottishPower Renewables policy and innovation director, and chairman of RenewableUK said: “To ensure that the UK’s world-leading offshore wind sector expands rapidly over this decade and fulfils its massive potential within the UK’s energy mix, it is vital that costs are reduced.
“In doing this not only will we reduce risk and drive investment into the sector, we will further protect consumers from increasing energy costs,