Results from a recent offshore wind industry survey show concern among offshore wind farm operators, manufacturers, and policymakers in Germany, Denmark, the UK, China, and Japan that other forms of offshore energy could eclipse wind. Based on Pike Research’s reports on the offshore wind and marine and hydrokinetic (MHK) industries, we concur that MHK technologies have the potential to be more cost-effective than offshore wind, but it will ultimately depend on the specific technology and location of the installation.
Put simply, the growth of the MHK industry does not pose a direct threat to the offshore wind energy industry in the next five years. In some cases, there might even be areas where the two technologies can be integrated or even share transmission costs. All eyes will be on the UK which is home to 90% of offshore wind installations currently installed and may see as much as 700 MW of wave and tidal projects installed by 2017.
Pike Research’s analysis of the offshore wind market shows that with 4 gigawatts (GW) currently installed, the industry has proven it can overcome the major engineering challenges of installing colossal turbines in some of the world’s harshest operating environments. While offshore wind installations typically generate more megawatt-hours (hence greater revenue potential) per unit due to their higher capacity factor (up to 45%, compared to 30% for onshore) and larger design (2.3-5 megawatt nameplate capacity), the jury is still out on its overall cost-effectiveness when you factor in operations and maintenance costs (which can be up to 60% of the lifetime cost) and transmission.
For comparison, the MHK industry is where the offshore wind industry was five to seven years ago – with several 10-50 MW commercial deployments expected in the next few years. MHK companies are all targeting a levelized cost of energy that would make them competitive (or better) with offshore wind, when deployed at scale. Like offshore wind, the biggest unknown is the operations and maintenance costs for these systems. Pike Research’s recent MHK report revealed that although wave power companies have been in the spotlight for the past few years, corporate interest and investment in tidal power technologies could make it the lowest cost MHK technology in the near-term. Rolls Royce has invested in tidal power for a number of years. Siemens’ recent acquisition of Marine Current Turbines shows that they think the technology is ready for primetime.
There is a sense that both industries are facing a make-or-break phase. If MHK can replicate the experience of offshore wind in the next few years, with a slow and steady rollout, it will be considered a major success by virtue of the high level of difficulty for installing 700 ton machines under water. But neither industry will be out of the woods. Both will need to continue to find ways to reduce O&M costs and minimize their impact on marine life. We’ll be watching closely.
Tags: Marine & Hydrokinetic Energy, Offshore Wind Power, Renewable Energy, Smart Energy Practice
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