Offshore wind is widely expected to play a major role in UK compliance with the EU Renewables Directive. Projections from a range of analysts suggest the UK may need at least 15 to 20 GW of offshore wind capacity by 2020 (HoL, 2008) . Though the government has not set a specific target, the central range in its Renewable Energy Roadmap is that up to 18 GW could be installed by 2020 (DECC, 2011) with aspirations to go well beyond that in the decades that follow.
Development rights in the UK have been awarded by the Crown Estate (the owner of the seabed) in 4 rounds to date. Rounds 1 and 2, which commenced in 2001 and 2003 respectively, granted rights for a total of circa 8 GW of development. Round 2.5 gave Round 2 developers the rights to an additional 1.5 GW, whilst Round 3 rights, awarded in 2010, were for over 30 GW of potential development (The Crown Estate, 2010a, The Crown Estate, 2010b, Douglas-Westwood, 2010).
Given the substantial ambitions for UK offshore wind deployment the issue of cost and cost reduction has therefore been the subject of considerable interest. Drawing heavily on the data and analyses of UKERC TPA’s 2010 report (Greenacre et al., 2010), this paper examines cost trends in offshore wind energy, comparing past forecasts with outcomes to date, and analysing the main reasons for the disparity between them. The rationale for the study is to support and inform Chapter 5 of the UKERC TPA report ‘Presenting the Future: An assessment of future cost estimation methodologies in the electricity generation sector’. The case study has three specific aims:
- Examine the key trends in contemporary costs and future cost projections (Section 2);
- Understand the drivers underlying these key trends andthe reasons for differences between anticipated cost levels and actual out-turns (Section 3);
- Identify implications for cost estimation methodologies (Section 4).