Offshore Wind Costs in 2050 Could Be Lower than Previously Expected

Wind energy costs, including both offshore and onshore wind, could decline 37–49 per cent by 2050, resulting in costs 50 per cent lower than predicted in an analysis in 2015, according to a new study funded by the U.S. Department of Energy and published in Nature Energy.

In the same study performed in 2015, experts at that time anticipated 24–30 per cent reductions in the levelized cost of energy (LCOE) by 2030 and 35–41 per cent reductions by 2050.

The latest analysis, from 2020, shows offshore wind levelized cost of energy LCOE fell 28–49 per cent from 2014 to 2019 on the basis of a variety of recent global and European Union estimates, far greater than predicted in 2015, with industry maturation and cost declines further accelerating over the past five years.

Cost reductions witnessed over the past five years and continued advancements are the main reasons behind the anticipated cost decline, according to the study.

Finance and materials prices played a role with the cost of capital dropping to historically low levels and relevant commodity such as steel seeing a decline in prices. The steep cost reductions also coincided with increased use of competitive procurement, according to the analysis, which further states that experts may have previously under-predicted cost pressures now induced by auctions and other forms of competitive procurement.

Cost reductions increased demand for offshore wind, leading to further industrialisation of not only wind turbines but also foundations, installation and other elements. Furthermore, technical advancements allowed turbines to grow more rapidly than experts previously predicted.

Increased turbine size is also viewed as the most critical driver for LCOE reduction. Previously forecasted growth in typical offshore wind turbine capacities from 2014 to 2030 was looking at an increase from 3.4 to 11 MW. In 2019, actual turbine capacities reached 7 MW in offshore wind, in just five of the 16 intervening years.

Floating wind’s LCOE decline is going slower than that for fixed-bottom and, given the nascent state of floating offshore wind, experts predict that LCOE in 2025 will be higher than 2019 fixed-bottom costs.

The analysis is based on two surveys, one conducted in 2015 and the other one in 2020, where the respondents came from the wind energy industry and have various expertise in the sector. The study, carried out and published in the U.S., was conducted under the auspices of the IEA Wind Implementing Agreement for Cooperation in the Research, Development, and Deployment of Wind Energy Systems (IEA Wind).

The study is authored by staff at the Lawrence Berkeley National Laboratory, National Renewable Energy Laboratory (NREL), and University of Massachusetts—Amherst, and funded by the U.S. Department of Energy (DOE).