LONDON (Reuters) - A 30 percent cut in the cost of producing electricity from offshore wind farms is possible in the UK by the end of this decade, helping it compete with cheaper power from onshore wind or biomass, two separate reports showed on Wednesday.
Britain has placed big bets on developing offshore wind farms to help it meet legally binding targets to reduce carbon emissions. It plans to run 18 gigawatts (GW) of offshore wind capacity by 2020, compared with around 2 GW currently in service.
The cost of building wind farms in the sea is still high, with estimates of 149 to 191 pounds per megawatt-hour (MWh) versus 76-79 pounds for gas-fired power plants.
Last July the government set up an industry group to find ways of reducing the cost to build offshore wind farms to 100 pounds per MWh by 2020. The group said in its first report on Wednesday that such a reduction was possible.
“Based on the evidence gathered and assuming our recommendations are followed, the CRTF (Cost Reduction Task Force) concludes offshore wind can reach 100 pounds/MWh by 2020,” said Andrew Jamieson, chair of the Offshore Wind CRTF.
The group, which is made up of senior figures from Britain’s offshore wind industry, made 28 recommendations on how costs can be reduced, focusing, among other things, on changes in the supply chain.
The group said that supply chain companies should form alliances when building wind farms, which could save up to 4 percent of costs and which has been a proven method in the North Sea oil and gas industry.
Companies active in installing equipment, providing support structures or making turbines could benefit most from cooperating with competitors, the group said.
A number of key offshore wind turbine manufacturers have already established a presence in the UK to benefit from the country’s offshore wind expansion, such as Spain’s Gamesa, Germany’s Siemens or Denmark’s Vestas.
A separate report published by Britain’s Crown Estate, which manages the seabed around the UK, also supported the view that a cost reduction to 100 pounds or below by 2020 was possible, saying that producing more efficient turbines was the main driver for cheaper wind farms.
Overall, the cost of building an offshore wind farm in 2020 could fall by 39 percent, the Crown Estate said, largely through development of larger and more reliable types of wind turbines.
More intense competition among turbine manufacturers, support structure providers and installers in the UK and the rest of Europe could also help reduce costs by as much as 6 percent, the Crown Estate said.
“We believe that there is no single solution to reduce the cost of offshore wind and all participants in the sector need to play their part,” said Rob Hastings, energy and infrastructure portfolio director of the Crown Estate.
Editing by Jason Neely