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Conference programme 

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Poster session

Lead Session Chair:
Stephan Barth, Managing Director, ForWind - Center for Wind Energy Research, Germany
Emilie Kærn Danish Wind Industry Association, Denmark
Co-authors:
Emilie Kærn (1) F P Jakob Lau Holst (1)
(1) Danish Wind Industry Association, Copenhagen, Denmark

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Poster
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Presenter's biography

Biographies are supplied directly by presenters at OFFSHORE 2015 and are published here unedited


Abstract

New tool for calculating cost of energy

Introduction

A new and accurate tool for calculating cost of energy has been developed by Megavind, Denmark’s national partnership for wind energy.
A collaborative effort to cut 40% from the cost of offshore wind energy by 2020 is the promise made to governments by a broad wind industry platform.

Approach

To fulfil that promise without endless arguing about which members of the supply chain are saving how much and where, development of an agreed methodology for how to calculate each element of the cost was seen as an essential first step. Therefore Megavind, has guided the birth of an offshore wind cost calculator.
The calculator, a mathematical formula, allows users to input a variety of data into the model in a standardised way to arrive at a levelised cost of energy (LCoE) that the industry can agree on.


Main body of abstract

LCoE, by definition, is the production cost of each unit of electricity generated over the working life time of the plant - taking into account a wind farm's development cost, capital investment, financial costs, and lifetime running costs.
The cost calculator's design mirrors that already used by the offshore wind industry to evaluate the cost elements when deciding to invest in a project. It has been tested in a collaborative effort by the companies who initiated it: DONG Energy, Vattenfall, E.ON, Siemens Wind Power, Vestas Wind Systems, MHI Vestas Offshore Wind and DTU Wind Energy.

The LCoE model will in particular:
• Develop a commonly agreed and accepted method for calculating cost of energy from offshore wind power
• Create a common tool of dialogue across the wind industry
• Give the possibility to compare costs of offshore wind parks
• Give the possibilities in the long term to produce a benchmark on progress towards reducing LCoE for offshore wind.
• Provide the ability in the long term to identify main cost drivers and their relative potential for future LCoE reductions
Lower risk premium
Depending on the methodology used, two persons can reach very different estimates of LCoE for a planned wind farm simply due to differences in calculation method.
When a turbine manufacturer negotiates terms with a utility customer each using different modelling, agreement on finer details is made that much harder. As a result, both will add a risk premium which pushes up the LCoE.

Conclusion

A common industry standard for LCoE modelling solves the problem. It enables like-for-like comparison of wind farm costs; it helps pave the way for common efforts to cut costs by identifying main cost drivers and their relative potential for LCoE reduction; and it provides a basis for benchmarking progress towards the goal of 40% reduction in cost of offshore wind by 2020.
The cost calculator is publicly available as an open source calculation sheet for downloading from Megavind's website.






Learning objectives
Competitive interests do not allow the model presented to be publicly available with data, but Megavind encourages third party consultants to enter their own data for public use. The calculator was created for Megavind by ESP Consulting, an energy consultancy operating out of London, Copenhagen and Amsterdam.