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5 December 2019

Tower makers in best place to slash costs for floating wind

As we said in Rethink’s forecast earlier this year – floating wind is on the verge of takeoff, with as much as 19 GW to be installed globally by 2030. Currently however, it’s stuck in a Catch 22-style conundrum: The industry needs to become cost competitive before it takes off, but also needs to develop its supply chain in order to do so. While some players may wait around for subsidies, which may or may not materialize, looking to the cost-saving experts in the onshore tower manufacturing sector could provide an ideal route to slash the costs of floating platforms early on.

At WindEurope’s Offshore 2019 conference last week, it was clear that the industry is incredibly excited by the prospect of floating wind, with some expecting it to account for as much as half of offshore wind installations by 2050. The IEA has claimed that theoretical capacity lies in a region where the technology alone could supply the whole world with electricity 11-times over. While this is about as blue-sky as you can get in terms of optimism, the reduced environmental and societal impacts of floating wind, as well as potential for costs to fall below that of fixed-offshore wind, means that floating wind will almost certainly be an integral part of a renewable-based energy mix.

Today the levelized cost of energy of floating wind is around $126 per MWh – nearly double some fixed-turbine projects. While we have estimated that costs will fall to competitive levels by the end of the 2020s, supply chain development will be essential. Production costs, including the turbine tower, are three times greater in Principle Power’s WindFloat than for a traditional monopile turbine, with cost of manufacture a large contributor towards this.

The primary difference in manufacturing requirements is due to the floating structure itself, which is often made of steel. While the steel components of offshore wind turbines are often among the most expensive – the tower alone contributing to around 26.3% of Capex cost according to IRENA – in terms of price per kilogram, components in the offshore wind sector are among the most cost effective across the world’s steel-based industries.

While the supply chain for offshore wind is stretched as it is, incorporating floating structures into the operation of tower-makers could provide a great route of providing the economies of scale for floating wind, without going down the avenue of creating an entirely separate supply chain. As onshore wind power is also far more wide-spread than offshore, agnostic tower manufacturers will have greater production capacity and are also unlikely to have the same issues with meeting local content requirements, which many in the industry are worried about providing a bottleneck to the growth of offshore wind as a whole.

Most towers, as well as floating wind components, are made of rolled steel of thickness up to 80mm, with parts of varying diameter used in tapered tubular structures. It is worth considering that the volatility of the price of these components is largely dependent on the global price of steel, which has not been wholly predictable. While prices are currently fairly steady, costs plummeted by over 50% between 2012 and 2016, before bouncing back to historic highs in some parts of the world in October last year. However, with increased competition with other lightweight materials, as well as the increased distribution of manufacturers, several analysts predict that the costs of steel components in wind turbines may fall by as much as 15% to 20% by 2030. In this period however, the steel industry will also have decarbonization to worry about, and reductions of this magnitude may be slightly over optimistic.

Fortunately for the offshore wind industry, countries with the largest floating wind ambitions, for the most part, already have reasonably well-established supply chains and steel industries, with France and Japan among those looking to dive into floating wind. Countries like the UK, China and Denmark may also see this as an export opportunity, with large-scale manufacturing facilities already dedicated to offshore wind technology.