UK strives to develop economically viable deepwater wind capabilities

The UK has the largest offshore wind capacity in the world, with 9.8 gigawatts (GW) installed. This is expected to rise to 19.5 GW by the mid-2020s.¹ The government has set a goal of 40 GW of power generation from offshore wind by 2030, in line with its ambitions to meet 2030 and 2050 net-zero targets. By investing £50 billion in the UK economy during the 2020s, offshore wind industry leaders recently told the House of Commons Environmental Audit Committee that offshore wind will play a central role in the UK’s economic recovery after the Covid-19 pandemic.²

Fig. 1. Xodus has developed a practical LCoE GIS modeling tool to compute and visualize the costs of fixed and floating offshore wind in UK waters.

While bottom-fixed offshore wind (BFOW) has matured and is now fully commercial, despite having limitations in certain water depths and geologies, floating offshore wind (FOW) is now seen as the answer to exploiting deepwater sites with abundant wind resources. There’s no doubt, both technologies will play a major role in decarbonization, thanks partly to the Offshore Wind Sector Deal agreed by the UK government in March 2019. However, as large-scale deployment of FOW is no longer a question of whether it will happen, but when, the costs and uncertainty associated with the technology remain high, Fig. 1.

COST-MODELING SYSTEM

Over the past 12 months, Xodus Group has developed a tool that incorporates geographical information systems (GIS) with sophisticated levelized cost of energy (LCoE) modeling to compute and visualize the costs of fixed and floating offshore wind in UK waters. Developed by in-house modelers and GIS specialists, the device is being used to provide a high-level and holistic understanding of where the ideal “gold mine” offshore floating wind locations are, and where a rush for investment and development are expected. The global energy consultancy has also opened an office in Boston, Massachusetts and welcomed Alexander Thillerup from Aegir Wind Solutions as its new V.P. renewables.

Fig. 2. Best locations for FOW installations in the UK.

Location, location, location. The UK currently has a total of 80 megawatt (MW) of FOW capacity (installed or under construction) from Hywind Scotland and Kincardine wind farms.³ With the launch of Scotwind, which has a significant proportion of sites suitable for floating wind, alongside the UK government’s consultation on the next contract for difference (CfD) allocation round including floating wind, 2020 is becoming the year when this burgeoning technology could take off in the UK. Floating foundations offer the offshore wind industry several key opportunities:

• They allow access to deepwater sites with higher wind resources.
• They can be developed faster with lower foundation requirement and higher energy yield.
• Upon achieving commercial development and economies of scale, floating wind projects can achieve cost parity with traditional offshore wind projects.
• Floating foundations offer economic and environmental benefits compared with fixed-bottom designs due to less-invasive activity on the seabed during installation.

According to industry estimates in 2019, the technical potential for floating wind power is around 7,000 GW for Europe, the US and Japan combined. Among the high potential markets, Japan has set a target of 4 GW to be installed by 2030, followed by around 2 GW in France, the U.S. and the UK, and 1 GW in Taiwan.⁴ By 2050, the Carbon Trust estimates that the UK alone could host up to 35 GW of floating offshore wind.⁵ Such figures bring forth the question of where will this expanding capacity be installed?

Many of the characteristics that define a good site for BFOW are the same as those for FOW. Hence, bathymetry becomes the main differentiating factor. Due to the current cost balance of the two foundation types, it is unlikely floating will compete with fixed in shallower water depths. Furthermore, some deep-draft floating technologies are not technically suited to shallower sites. For these reasons, it can be assumed that at least the first wave of large floating installations will be in deep waters unsuited to BFOW.

Xodus’ custom LCoE GIS tool has many different applications. It can be used for early site identification, but also for micro-siting and to understand the competition of a leasing or CfD round from different areas or developers. It has been used to model a generic project based on current technology and industry expectation. This consisted of turbines rated at 10 MW and a 500 MW total project capacity with a commissioning year of 2030.

Project CAPEX considers the distance of each site from the closest onshore substation with enough generation headroom, as well as the distance to a suitable installation port. Installation costs also vary with metocean and ground conditions, while array and export cable costs depend on water depth at the site. The energy yield is calculated from local wind conditions and includes a factor for availability dependent on metocean conditions. OPEX is also dependent on metocean conditions, along with distance to port suitable for operations and maintenance (O&M).

To understand where the most commercially lucrative areas for FOW development are located, the model was filtered to exclude fixed foundations, and by LCoE to include only the lowest values, Fig. 2. These areas have the lowest LCoE for FOW due to a more optimum balance being achieved across the range of parameters. The characteristics that are expected to define an ideal floating site can be grouped as:

Resource–the site should have high wind speed to achieve high energy yield.

Transmission–annual offshore transmission network use of system (TNUoS) costs should be as low as possible.

Installation–proximity to the coast and a grid connection point is important to reduce cable lengths.

O&M–onshore substation for grid connection should also have enough available capacity for connection without triggering extensive reinforcements of the network.

Table 1. Site specific pros and cons.

The model has been developed through the analysis of more than 40 different calculated layers, while CAPEX and OPEX estimations have been made through careful overlaying of these tiers. This balance of parameters is summarized specific to each of the areas identified in Table 1. Note that the results are based on a semi-submersible floating platform type, as this is the most progressed concept suited to a reasonably wide range of water depths. There will be some variation in the results if the model is applied to other floating platform types or specific designs.

EMERGING MARKET

Not long ago, fixed offshore wind structures were considered a risky investment, but the technology and cost pricing has matured and now deemed very competitive. It is anticipated that a similar progression will now occur in the FOW space, resulting in a rush for the best development sites.

While LCoE GIS tool from the Aberdeen-headquartered energy consultancy offers a purely techno-economic view of the potential for offshore wind development in UK waters, there are numerous environmental parameters and physical constraints (such as overlap with existing infrastructure) that have not been considered in the analysis. This will nevertheless impact site selection and suitability for development.

Instead, the model, which is more advanced that others in the same space, takes into account the reality of potential projects. The tool therefore presents the bigger picture and a starting point in terms of the optimal development areas from an engineering perspective, prior to removal of any unsuitable areas due to the various constraints that maybe encountered. Evidently, the engineering and environmental considerations would need further analysis, in tandem, to ultimately select which sites would be most suitable for development and to check compatibility with the UK seabed leasing and consenting processes.

ScotWind leasing round. Earlier this year, it was announced that the ScotWind offshore wind leasing round would go ahead as planned, despite the uncertainty caused by the spread of coronavirus. The lease sale, which was delayed twice last year, has several large areas around Aberdeen, the north-east of Scotland and the Highlands and Islands. Equinor, Shell and Total are amongst several energy firms who have stated their interest in the new leasing areas around Scotland. The announcement of new proposals is expected around 2021.

A notable takeaway from Fig. 2 is the number of areas that are consistent with the locations of draft plan options (DPOs) currently under consideration for the upcoming ScotWind leasing round. As the Crown Estate has excluded water depths greater than 60 m in Round 4, there is no overlap of the “gold mines” with these zones in the map. However, the map highlights the potential suitability of additional areas outside of these zones for floating wind projects which could be considered for inclusion in future leasing rounds. The Xodus LCoE tool is well-equipped to assist potential developers on determining the optimal areas within these DPOs/bidding areas to maximize revenue and minimize LCoE.

As the vast majority of areas identified in the map are in Scottish waters, there is therefore much greater potential for floating wind in Scotland, than in England—at least for the first tranche of commercial scale floating wind projects (i.e. <500MW), Fig. 3. This presents a unique opportunity for the country to lead the way in floating wind deployments and drive the industry forward. Key to this is likely to be early and substantial investment in building a floating wind supply chain. Increasing local content will also enable wider benefits to be realized in the local economy and communities.

Fig. 3. Scotland has better locations for floating wind installations compared to England.

Although fewer opportunities exist in England for floating wind, the areas identified still equate to extensive deployment opportunities, and are situated in complementary areas to those already under development. This may help to mitigate cumulative development impacts and aid with grid balancing activities.

Current analysis includes a number of assumptions about the project concept and configuration, timeline and route to market. Making changes to any of these aspects will impact the results. For example:

• Different turbine models being suited to different wind resource profiles.
• Varying project capacities affecting grid capacity limitations and supply chain.
• Changing technology characteristics impacting port suitability.

Careful consideration would therefore need to be given to the fundamental assumptions that make up each use-case. It is therefore recommended that the model and its filtering tool is re-run with tailored inputs to each specific project concept of interest to maximize the insights that can be gained from the model.

As such, development of the LCoE GIS tool is not static and future versions will augment the model fidelity to include a greater range of built-in input options such as turbine size, project capacity, timeline and project technology considerations among others, to facilitate direct comparison of a range of project options. Likewise, regional versions will also become available for the U.S. and Japanese offshore wind markets, for instance.

ASSESSING LOCATIONS

The LCoE in a number of the geographical areas identified in the current model is likely to improve significantly if certain future grid upgrades are made in their respective locale. Currently, the model selects the closest grid connection point, which could accommodate a 500 MW project. This leads to large offshore export cable lengths particularly around Shetland and the Western Isles, which at the moment, suffer with a lack of available grid connection options. Furthermore, onshore TNUoS charges are much higher in Scotland, particularly in the north of the country, than anywhere else in the UK.

For these remote locations significant development of the local grid infrastructure and any lowering of TNUoS tariffs that can be achieved could lead to a greater number of areas becoming very promising to potential offshore wind and marine renewables developers. These sites also have potential for bypassing grid connections through alternative routes to market, such as the development of hydrogen systems. An add-in module is currently under development by the company to calculate the levelized cost of hydrogen for various project configurations as an alternative, or combined, route to market.

Within the Scotwind leasing round, significant emphasis will be placed on FOW due to the number of sites currently not economically viable for BFOW. A high level of developer interest is anticipated in a number of these areas and the expectation is that an increased push will be made to lower the LCoE of FOW in the upcoming years. The potential of a separate strike price for floating offshore wind in upcoming CfD rounds is therefore likely to accelerate this development, as well as any co-development and investment initiatives for floating wind coupled with the fledgling offshore hydrogen production industry.

TIME FOR ACTION

Even in these locations, floating wind has a long way to go before it is commercially competitive against BFOW. Developers are now faced with a dilemma. Costs will reduce as development increases, but further delays could mean forfeiting the most promising locations to outside interests. The results of the leasing rounds will provide meaningful insight about future development and companies’ intentions to pursue a more environmentally friendly and sustainable energy mix in the 21st century.

REFERENCES 

1. https://www.gov.uk/government/publications/offshore-wind-sector-deal/offshore-wind-sector-deal-one-year-on
2. https://renews.biz/60759/offshore-wind-should-be-backbone-of-uk-green-recovery/
3. Crown Estate Scotland & OREC, “Macroeconomic benefits of floating offshore wind in the UK,” September 2018.
4. https://www.power-technology.com/comment/floating-offshore-wind-2019/
5. Carbon Trust, “Floating offshore wind: Market and technology review,” June 2015.