The cost discussionWill onshore wind follow offshore wind?

Hans Rijntalder

14 June 2017

Why this discussion?

• Less than a year ago we could substantiate onshore wind by saying that onshore wind is still (too) expensive

• Now this not the case any more and onshore wind needs to realign it’s raison d’être

• The following questions come to mind:

– Is onshore wind expensive?

– Is onshore wind more expensive than offshore wind?

– Does onshore wind has cost reduction potential?

– Is onshore wind still worth the hassle?

Is onshore wind expensive?

• Prices offshore wind and solar dropped

• Renewable is cheaper than or comparable with fossil and nuclear sources

• Wind Europe expects price levels of 54 €/MWh for offshore wind

Compared to other sources

Source: EU, report by Ecofys November 2014

?

in LCoE

Costs analysis of onshore wind

• Based on questionnaires developers

• Current cost level in LCoE: 70 – 92 €/MWh*

• Typical breakdown average project

• Differences offshore wind: Cost of Capital

Analysis by Ecofys, april 2017

DEVEX4%

CAPEX66%

OPEX19%

Costs of Capital10%

Decommisioning Costs1%

DEVEX CAPEX OPEX Costs of Capital Decommisioning Costs

* In some cases lower cost levels can be found

Is onshore wind more expensive than offshore wind?

Compared to current Dutch offshore tender system

• DEVEX excluded Minister EZ

• Grid infrastructure (export cable, OHVS) TenneT

Are the costs comparable?

• Current situation: Offshore wind seems toat least equal onshore wind

• Future: Offshore wind will benefit of its vast potential in terms of scaling– Farm size

– Turbine size

– Steady pipeline competition

• What will onshore wind do?

Back to the question

Is onshore wind more expensive than offshore wind?

Does onshore wind has cost reduction potential?

Cost reduction potential

• Technical (e.g. logistical efficiency)

• Non technical international (e.g. standards)

• Non technical domestic (e.g. tender, extension of support, grid)

Ecofys, april 2017

0

10

20

30

40

50

60

70

80

90

Current price (€/MWh) Calculated price after cost reduction (€/MWh)

42 %

in LCoE

Does onshore wind has cost reduction potential?

Conclusions

• 40 – 50 €/MWh for larger (100 MW) sites with good wind resources

• 60 – 70 €/MWh for smaller, constrained and sites with less favourable wind resources

Yes..

Is onshore wind still worth the hassle?

• Large projects onshore (repowering) can profit from offshore system innovations (tender)

• Smaller projects can hopefully benefit from scale and standardisation from large projects

Off course …

Source: EU, report by Ecofys November 2014

in LCoE

Onshore wind

It is not all about costs

• Importance of locally owned and accepted projects, different and smaller players

• Useful to have local produced renewable energy close to the load center (households, industry)

• Allows for local/regional grid optimisation against reasonable costs

Conclusion

• We have no choice but to use all mainstream renewable sources as wind (onshore and offshore) and solar

• We should be extremely happy with the price developments of these sources compared to fossil and nuclear ones

Considering the current level of renewable energy…