Summary:
Offshore wind is one of the renewable energy technologies with the largest potential. However, it still not competitive in costs with other similar technologies, and hence requires public support, which has been mostly done recently through auctions. These auctions have achieved seemingly very large cost reductions in the last years. However, some results may be misleading, because of the large differences between auctions in terms of their design and of the amount of costs explicitly or implicitly assumed by governments. In this paper we estimate the underlying CAPEX behind the most recent auctions’ winning bids for a consistent set of assumptions, but accounting for their different designs. Our results show that the cost reductions achieved are indeed real, and larger than shown before. We obtain costs reductions of 50% between 2020 and 2026, and a rather steep learning curve. This general reduction trend is robust to changes in our assumptions. However, our results also show that CAPEX estimates are very sensitive to WACC rates, capacity factors, or market prices (when auction designs rely on a larger market price exposure). On the other hand, wind farm size and distance to shore show low correlation with CAPEX. Finally, we also show that, if the current trend in cost reduction continues beyond 2026, offshore wind might achieve cost competitiveness by 2030. This in turn may point out to a higher share of offshore wind in future energy scenarios.
Keywords: Offshore wind energy costs; Learning curves; Renewable energy auctions
JCR Impact Factor and WoS quartile: 16,799 - Q1 (2021); 16,300 - Q1 (2023)
DOI reference:
https://doi.org/10.1016/j.rser.2021.111324
Published on paper: September 2021.
Published on-line: June 2021.
Citation:
G. Rubio-Domingo, P. Linares, The future investment costs of offshore wind: an estimation based on auction results. Renewable & Sustainable Energy Reviews. Vol. 148, pp. 111324-1 - 111324-11, September 2021. [Online: June 2021]
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