Learning from each other is a key factor in bringing down costs says Anders Soe Jensen, VP Deputy for Offshore Wind Business at Alstom Power and confirmed Topic Leader for Supply chain, logistics and O&M at EWEA OFFSHORE 2015. We spoke to him to find out more.
Reducing costs is a major topic of discussion in the wind energy industry right now, why do costs need to come down?
If we as an industry do not manage to bring down the levelised cost of electricity, this industry will die, it is that simple. In the long run society will not keep on funding this industry if we cannot become competitive with other sources of energy. However, we should have a discussion about what the levelised cost of electricity actually is for all sources of energy, i.e. coal, oil, gas or nuclear. This calculation should encompass all costs, including the cost of pollution and all subsidies, direct and indirect.
Where in the supply chain can the biggest cost reductions be made?
The most costly item is the wind turbine with close to 35% of the overall investment. Nevertheless, this is not where the biggest savings can be made because of the technology itself and the complexity of the systems. On the contrary, there are two levers that can significantly drive down the costs of offshore wind energy. The first one involves decreasing the costs of foundations with standardisation and optimised designs. These savings will also be made by wind turbine manufacturers who will learn from their past experience and will be able to decrease the loads on the substructure.
Managing the risks during production and implementation is a second important lever. The industry will learn from more than 10 years of experience in time management by optimising planning and technology risks during a project.
What trends in the offshore business can you observe that will contribute to cost cutting?
In the coming years, wind turbine manufacturers will create bigger machines. The size and the rated power increases will generate more energy for the same number of megawatts installed with fewer foundations, cables and installation phases. This will significantly decrease the levelised cost of electricity.
Another important lever is the cost of financing that will also decrease. The experience acquired from more than 7.4 GW installed in Europe shows the capability of the supply chain to decrease the risk and therefore a reduction in the cost of financing should follow.
Do you think the industry needs to be more innovative in looking for ways to cut costs, and if so how?
Innovation is one of the key levers to reduce costs. It is for instance necessary to work on the reliability of components to lower the cost of maintenance. On the other hand, innovative substructures are seen as a major axis for competitiveness. Alstom has decided to contribute to the Virginia Offshore Wind Technology Advancement Project in the USA to demonstrate the cost reduction that can be made on jackets. Floating wind turbines can also be an important source of cost savings in a mid to long term future.
How can the industry unite to cut costs?
Common R&D programmes managed by laboratories or universities are the best way to decrease the costs of innovation.
Optimisation of the supply chain by standardisation of components helps – it is already the case with tower manufacturers that can take advantage of the volumes ordered by the industry.
As the industry is still at its beginnings, sharing experiences and best practices will benefit all stakeholders.
By when do you foresee cost reductions starting to come into place?
Cost reductions have already started thanks to strong political and industrial ambitions. The industry has set a target of 35-40% of cost reduction for final investment decisions in 2020. By then, major efforts will be made on each component of a project. The general opinion is optimistic for these targets thanks to a good dynamism in the industry.