The European offshore wind industry must shed 26% of outlays to reach cost-competitiveness with conventional forms of energy by 2023, according to a study by Ernst & Young. The report states that the industry must significantly reduce costs over the next five years through a number of key actions, outlining where savings can be found. These actions include deploying larger turbines to increase energy capture (9%), fostering competition between industrial players (7%), commissioning new projects (7%), and tackling challenges in the supply chain such as construction facilities and installation equipment (3%).
Together with clear political signals from lawmakers on regulation and support schemes, offshore wind could compete with conventional forms of energy such as gas, coal and nuclear in the first half of the next decade.
Alongside the release of the EY report, three of the biggest names in offshore wind have initiated a joint declaration – called ‘United Industry’ – as part of a commitment to reducing costs in the sector. Dong Energy, MHI Vestas and Siemens Wind Power and Renewables have promised to undertake joint and individual actions across the whole of the value chain to deliver "major long-term and tangible advancements."
Michael Hannibal, CEO Offshore of Siemens Wind Power and Renewables, said: "Cost reduction remains a top priority of the offshore wind industry. We need to create profitable investments for offshore projects independent of subsidies." Claus Hviid Christensen, Vice President in DONG Energy Wind Power, said: "For offshore wind to realise its full and significant potential, we need to continuously reduce the cost of electricity. The good news is that we are indeed on the right track, and we are already seeing the industry taking important steps forward with an impressive pace. With a clear political framework for the development of offshore wind power after 2020, I am confident that we will meet our target of making offshore wind fully competitive with alternative energy technologies."
Jens Tommerup, CEO of MHI Vestas Offshore Wind, said: "We have the markets’ most powerful product, we have added renewed competition to the offshore wind sector and our collaborative approach in optimising the supply chain represents three of the four pillars of cost reduction."