Achieving a cost-competitive offshore wind power industry : what is the most effective policy framework?

Working paper

The promise of carbon-free, utility-scale power generation from offshore wind farms is encouraging a number of governments to implement policy support frameworks and national targets for offshore wind power generation. However, the high capital requirements for the deployment of offshore wind have proven that it is an expensive approach to meeting national renewable energy and carbon reduction targets, relative to other power generation sources. The capital requirement for offshore wind farms will be pushed even higher as consented development zones move further from shore and into deeper waters. In this paper, we analyse the major capital cost drivers of offshore wind plants and the implications of various policy frameworks on overall cost reductions for the industry. According to the results of our analysis, this issue – whether the promotion of scalability, or of competition for subsidies, will be more effective in driving down industry-wide costs – is highly market specific. Competitive policies are likely to be most effective when the market size is sufficiently large, whereas enhancing scale is more effective in nascent markets. However, we caution that in either case, the public costs of policies directly supporting offshore wind must be reconciled with the cost of supporting other low-carbon and zero-carbon technologies that may be equally as effective in helping governments achieve renewable energy and carbon reduction targets.

Authors: Brown, C; Foley, B

• Publication status: Published
• Peer review status: Peer reviewed
• Publisher: Oxford Institute for Energy Studies
• Series: OIES paper
• Publication date: 2015-09-01
• Paper number: EL 15
• Language: English
• Keywords: supporting policy; cost drivers; offshore wind; grid connection; OIES
• Subjects: Electricity; Energy policy; Power resources