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24 October 2019

Oregon floating wind back on, NREL shows costs have plummeted

The entire energy market is badly served by forecasting that does not take into account projects which are not currently in development – instead a list of projects that are already partially developed are set as a maximum limit for a market potential. And then it changes, which is why most forecasts call way short of a particular technology’s potential.

In floating wind in June we released our own first forecast, avoiding this weakness – we added up existing projects in the USA for example, and added a further 450 MW of floating wind, which would come into development once LCOE for floating wind had fallen significantly, well before 2030 and in time to do the development on further projects by that date.

This week we can show some justification for this, with the US National Renewable Energy Laboratory (NREL) at the Department of Energy, writing a report commissioned by the Bureau of Ocean Energy Management (BOEM), which suggests that someone will pick up abandoned offshore wind energy projects off the coast of Oregon – It claims that as much as 62 GW of wind is available there, but focuses in on 5 separate 600 MW projects.

The report made the point that the levelized cost of energy (LCOE) for that old list of projects, had been $197 per MWh when the project was first considered and rejected, and at current and future equipment pricing this will be down to $63, in the 2032 time frame.

Clearly not all of these projects will be picked up, but a pilot and perhaps a single lease build out might see another 400 MW to 500 MW of wind energy extracted from floating wind in the US before 2030, with significantly more to come in the years following that. This has always been our point. In this instance, NREL can go over a discarded piece of project work and just put in fresh numbers, but in many other instances, a development team which has nothing on its horizon would simply look at the next best location and reach the same conclusion in a couple of years, and need to put in perhaps a year or so of work to reach that point.

Wind speeds off the coast of Oregon vary between 7.75 up to 10 meters per second, easily good enough to harvest significant wind power, and 5 separate locations were identified, and different calculations based on whatever technology is available two years prior to go ahead. This then translated into energy outputs and LCOE in 2019, 2022, 2027 and 2032.

The one in 2027 only relies on a turbine being available which is as powerful as the current GE Haliade-X, offering 12 MW and a rotor span of 222 meters. So much of this LCOE change is due entirely to new turbines being available. The assumption is that a semi-submersible platform will be used which is what has been used on all floating wind projects to date in the US.

If all 5 sites were constructed, which would be some time beyond 2032 each would provide something like 600 MW of energy, or 3 GW the lot. While this is outside the scope of our forecast, which only went to 2030, we did highlight the fact that a few years later another 10 GW at least would come into play.

When you do a forecast you have to predict cost falls, assume that they will attract a developer and assume the work will start as soon as an attractive LCOE makes money for an investor, and we have a moving target with these technologies. A full copy of this report can be found here.