UK floating offshore wind could reach ‘subsidy-free’ levels by the early 2030s or sooner, according to a study completed by the Offshore Renewable Energy (ORE) Catapult’s Floating Offshore Wind Centre of Excellence (FOW CoE)
The Floating Offshore Wind: Cost Reduction Pathways to Subsidy-Free study suggests large floating offshore wind projects could secure contracts for difference (CfD) strike prices below current wholesale electricity price forecasts as early as 2029, depending on the deployment scenario pursued by the UK.
It also highlights the role floating offshore wind will play in the UK’s journey to net zero and towards delivering 100 GW of offshore wind by 2050, in line with the recent Climate Change Committee’s Sixth Carbon Budget.
The study summarises work undertaken as part of the FOW CoE’s Cost Reduction Pathways project, which used GIS mapping software to develop 75 GW, 100 GW and 150 GW offshore wind deployment scenarios to 2050. An initial 20 GW of floating offshore wind projects were defined in detail – in terms of location, scale and technology deployed.
The team developed a cost reduction pathways model (CRPM) to quantify the associated reduction in the levelised cost of energy (LCOE) of floating offshore wind for each of the scenarios. Key inputs to the CRPM included offshore wind deployment rates (UK and international), project component level learning rates (UK and international) and the cost of capital. The ‘bottom up’ approach to developing the CRPM involved extensive stakeholder engagement with the FOW CoE’s 13 industry partners, key stakeholders, technical advisors, supply chain, finance and insurance organisations.
The model identified areas off the east and northeast of Scotland, in the Celtic Sea and off the northeast of England as areas of high potential for short and medium term floating offshore wind deployment.
The CRPM highlights the critical role of both deployment rates and innovation in floating offshore wind cost reduction. In the short term and medium term, the primary driver of UK floating offshore wind cost reduction is scale of UK deployment, augmented by innovation. In the longer term, the primary driver is innovation, augmented by UK and international deployment rates.
With respect to the potential for floating offshore wind to deliver high levels of UK Gross Value Add (GVA), the rate and timing of this deployment is critical. Significant early deployment of floating offshore wind in the UK is vital to the UK securing high levels of GVA, and to ensuring the UK establishes a credible and cost-effective route to delivering 100 GW of offshore wind by 2050.
The study makes several recommendations to support the rapid cost reduction of UK floating offshore wind. These include that the UK’s floating offshore wind industry should be supported to grow rapidly, establishing a clear long-term vision for the growth of the industry. Consideration should be given to raising the target of 1 GW of floating offshore wind by 2030 to 2 GW, with a further 4 GW of floating offshore wind in receipt of a CfD for deployment in the early 2030s.
Other recommendations are that early support for technology innovation is needed to drive long-term cost reduction and maximise UK content in floating wind projects. It will also be a key driver of UK GVA through exports of products and services; and that an offshore leasing round should be established in the next two years to facilitate access to the most cost-effective deployment areas in England and Wales, specifically the Celtic Sea and northeast England.
ORE Catapult operational performance director and FOW CoE co-chair Chris Hill said, “It is vital the UK takes a strategic approach to supporting the rapidly developing UK floating wind industry to ensure the potential benefits are realised. This study provides a strong evidence base for key policy decisions relating to the growth and scale of the industry in the UK – both in terms of the focus for support, and timing. We look forward to continuing our work with key stakeholders to develop a long-term vision for floating in the UK and supporting the rapid growth of the industry – both in our journey to net zero and also as a key driver of economic recovery and growth.”
Mainstream Renewable Power head of global offshore Cameron Smith, also a FOW CoE co-chair said, “The report clearly outlines the huge impact floating offshore wind will have on the journey to net zero – both as a key component of a cost-effective net zero, but also as a driver of economic recovery and growth.
“Just under 10 years ago a similar vision for offshore wind was articulated by the Offshore Wind Cost Reduction Task Force. The offshore wind industry and stakeholders subsequently collaborated to rapidly reduce the cost of offshore wind, and in doing so created thousands of jobs and secured offshore wind’s central role in a cost-effective net zero. This report is equally ambitious and with effective collaboration, industry, government and other key stakeholders can build on and exceed the success of offshore wind over the last 10 years.”
RenewableUK head of policy and regulation Rebecca Williams said the report “shows floating wind can repeat the success of fixed-bottom offshore wind by achieving spectacular cost reductions over the course of this decade, to a point where we can generate electricity below the wholesale price.
“Floating wind has a key role to play in hitting the UK’s net zero emissions target. We can’t get there without it,” she said. “As long as industry and government work closely together to support the rapid expansion of floating wind, we can maintain our global lead in this innovative technology and export it worldwide, securing jobs and investment for UK companies. The government has set the industry a target of installing 1 GW of floating wind by 2030 as our next step forward, but we think we can aim higher and double that as long as we get the policy framework right.”