Europe to spearhead renewable energy cost reductions for offshore wind through 2028
Europe’s levelised cost of energy (LCOE) for bottom-fixed offshore wind will fall from an average of $133/MWh in 2019 to $51/MWh in 2028, according to new research by Wood Mackenzie.
Europe will continue to lead its regional counterparts for power generation cost over the next decade.
Wood Mackenzie forecasts a reduction below power prices in mature offshore wind markets, such as Germany, the UK and Netherlands, once we hit 2023.
The US is expected to experience the steepest learning curve and will reach Chinese LCOE levels of $57/MWh by 2028. Due to the low-wind speed and challenging site characteristics, LCOE in the emerging markets of Asia, excluding China, will stay above grid party in the next decade.
Globally, LCOE is expected to sit at an average of $66/MWh by the end of the next decade, halving from $132/MWh in 2019.
Technological advancements and innovations, especially next generation wind turbines, are expected to be among the main drivers of cost reduction. These will mitigate increasing cost pressures from the steep drop in bid prices and a growth in exposure to merchant risk.
“Next-generation wind turbine technology has an increased energy capture capability, with higher hub height, a better power curve and more efficient turbine control system. The growing turbine size, along with innovations across the balance of plant segments and offshore transmission assets, will counter challenging site characteristics and immature local supply chains in emerging markets.
“Offshore wind turbine sizes are expected to reach 20MW in the next ten years. Leading Western developers have already filed permits to use a 20MW turbine for projects in the UK and Sweden.
“A clear and stable regulatory framework provides a clear and sustainable roadmap for offshore wind deployment. Moreover, the introduction of tender schemes is increasing competition among LCOE developers, which, in turn, serves as a catalyst for LCOE reduction,” said Shimeng Yang, Wood Mackenzie Senior Research Analyst and report lead author.
Note: all LCOE figures in this press release are averages