Technological progress observed for fixed-bottom offshore wind in the EU and UK

Abstract

Offshore wind is a rapidly maturing low-carbon energy technology, for which the technology cost has increased before starting to decline. In literature, the cost development trends of offshore wind and factors responsible were poorly studied. Understanding the factors contributing to the cost developments and their individual impacts are vital for long-term energy policy actions and investment decisions. Therefore, this study combined three different but highly complementary quantitative methodologies to analyze the technological progress observed for fixed-bottom offshore wind in the EU and UK. The technology diffusion curve was first applied to identify the individual development phases of offshore wind technology. Then, the cost developments observed across the identified phases were quantified using experience curve and bottom-up cost modeling methodologies. In the formative phase of the development process, the offshore wind farm's specific capital expenditure had increased from 2 M€/MW in 2000 to 5 M€/MW in 2010, thereby resulting in negative LR. The increase in specific capital expenditure increased the Levelized Cost of Energy (LCoE) from ~110 €/MWh to above 150 €/MWh. After that, during the upscaling and growth phase, the specific capital expenditure declined from 5.4 M€/MW in 2011 to 3.3 M€/MW in 2020. LR of 8–11 % was observed for specific capital expenditure in this phase. In the same phase, the LCoE declined more rapidly than the specific capital expenditure, i.e., from roughly 150 €/MWh in 2011 to 69 €/MWh in 2020, a 54 % decline. This rapid decline observed in recent years was due to the favorable financing conditions, increased capacity factor, and decreased technology costs, including investment and operational costs. Based on the technological progress assessed for offshore wind and its contributing factors in this study, we also estimated the near-term offshore wind LCoE, 55 €/MWh in 2021–2023 and 48 €/MWh in 2024–2026, which aligns well with recent auction outcomes.