Samenvatting

From the start of the energy transition is has been believed that the development of wind power as a renewable source of electricity was vital for reaching the climate goals related to the decarbonization of the energy sector. The LCOE variable is globally applied when comparing the cost for the use of different technologies regarding renewable energy sources but is also used when determining price developments of electricity or energy production. It also highlights the viability of electricity or energy-producing technology.

The cost development is driven by many factors influencing the 5 variables making up the LCOE value. Most of the LCOE’s of renewable energy or electricity sources like geothermal, solar, water, and onshore wind follows a similar pattern, they become almost constantly cheaper over time. For offshore wind energy, the LCOE trend shows a different development over time compared to the LCOE values developments for other renewable sources that produce electricity. On average the price for the production of electricity per MWh by offshore wind only rose between 2000-2015 before dropping after 2015. This indicated that some driving factors behind offshore wind only made the technology on average more expensive as an electricity-producing technology.

This non-adaption to wright’s law has put extra pressure on the whole EU wide energy transition as offshore wind farms were either cancelled, postponed or reduced in size. All of these factors limit countries from reaching the climate goals they have set. The driving factors behind the LCOE trend of offshore wind are divided into two different categories namely; technology and infrastructure-based, and finance and risk-based.
The variables of the LCOE can be influenced by either driving factors from one category or influenced by driving factors from both categories. The investment expenditures or non-recurring cost are influenced by driving factors from both categories while the Operations and maintenance expenditures or recurring cost and the electrical energy generated was just influenced by technology and infrastructure-based driving factors. In contrast, the variable of the discount rate was just influenced by finance and risk-based driving factors. The offshore wind energy sector in the search for more space to construct bigger offshore wind farms at a higher efficiency due to better wind conditions kept on being constructed further from shore. As a result of the increasing distance to shore and the increasing project size, the cost associated with individual offshore wind farms has increased substantially over the last two decades. This increase in cost was exponential due to the additional cost associated with the increase in foundation cost as a function of the water depth, the electrical infrastructure cost as a function of the distance to shore and the technological developments increasing the overall turbine cost by an increase in power size and corresponding turbine dimensions.

This research clearly shows how the cost as a function of the substantive variables developed proportional to the supposed revenue increase as a function of those same substantive variables. As offshore wind was introduced it was believed that wind turbine just as their on-shore counterpart were almost maintenance-free. A unexpected amount of maintenance that needed to be conducted as a result of a underestimation in how the harsh weather conditions above the open sea could damage the turbine parts and subsea electrical cables being more frail than anticipated led to the use of inefficient maintenance strategies and an underdeveloped logistics aspect that had to deal with the decrease in accessibility as a function of the increasing distance to shore. These factors resulted in sub-par revenues from offshore wind farms motivated by additional and unexpected downtime which led to lower than expected capacity factors and availability percentages. With the distance to shore steadily increasing the influence on the numerator and denominator of the LCOE formula didn’t develop parallel not maintaining a balance within the LCOE formula and thus increasing its value up till 2015. The decrease in the LCOE values after 2015 were initiated by a combination of a decreasing trend in the distance to shore resulting in a better balance between the numerator and denominator of the LCOE formula which was both consequence and cause for a more beneficial financing structure. The introduction of the auction-style process in combination with more beneficial risk assessments and more transparent manners of financing applied led to an EU wide drop in the WACC variable.

Possible future cost reduction possibilities should not be focused on the substantive variables of technology and infrastructure aspect. The offshore wind energy sector will keep on increasing its distance to shore in the search for more efficiency and revenue. The expected additions of floating foundations in the near future in combination with the increasing distance to shore indicates an increase in the LCOE values back to their 2015 values. Countering the downside of this development by having more efficient maintenance, monitoring and logistics strategies that could be adapted into clusters of offshore wind farms is the biggest cost reduction potential on this specific aspect. The financial structure needs to motivate these developments and not identify them as having additional risks. Without a beneficial financial structure and an increase in market competitivity the offshore wind energy sector will never be profitable without extensive subsidies and contingencies.