1. Cost trends for Offshore Wind - and a look at the resources David Milborrow dmilborrow@compuserve.com

2. Objectives Quantify costs –These are linked to wind speeds –so what are the winds (m/s) ? –and how much (sq km) ? Resource basis: detailed D.En/CEGB study gives indicative answers on resource –note that water depths, etc, unchanged since 1982! A cautious look into the future

3. Offshore wind: constraints n Sea usage – Shipping – Military activity – Dredging – Oil rigs – Fishing? n Cost drivers – Water depth – Distance offshore n Grid connection points

4. How much sea?

5. Offshore resource 1982 study Solid – “probable” Open – “possible” England and Wales 19402 sq km Av wind 8.8 m/s ~1000 TWh Scotland 2343 sq km Av wind 9.2 m/s ~ 132 TWh “Probable”

6. Constraints

7. Cost impacts n PLUS n Foundations n Marinisation n Wave dynamics n Construction Total+30-50% O&M...........+0-50% n MINUS n Higher winds = increased output (Not UK, ES, GR) -30 to + 30% on price Overall: + 20-80% on onshore electricity price, but very site-specific

8. UK price estimates Source: DTI – “Future offshore” 100 MW wind farm, costs in £M Turbines51Electrical25 Foundations16Other 8 TOTAL100 (£1000/kW) Annual costs – capital12* O & M, rent 3.95 Annual yield: 310 GWh Generation cost ~ £51/MWh *Assumes 10% cost of capital and 20 yr depreciation

9. Prices are what you want them to be

10. Resource and cost – England and Wales

11. Transmission issues “Best resources in wrong place” –but cannot expect always to use best resources The location/resource balance: –cheaper to develop in south, even if winds ~0.5 m/s lower? –Best Scottish sites can only afford an extra ~£33/kW/yr TNUoS charges to stay cheaper than The Wash 20 TWh S of Thames axis, 30 GW in Wash area Plenty of thermal stations getting old!

12. Offshore challenges: reduce costs by:- n Larger machine sizes n Foundation design n Larger wind farms, spreading costs of:- – cable connection to shore – Operation and maintenance – specialist equipment for l transporting the turbine l installing foundations n Go further offshore to higher winds?

13. Wind speed increases with distance offshore Exact variations are clearly location-dependent!

14. Costs down, energy up A possible scenario in 2012 Near-shore, ~ 60 MW 100 km offshore, ~550 MW

15. Offshore – future costs (?)

16. Offshore wind and competitors Resource, cost and risk ResourceCost nowRisk PVHigh (?)Very highLow Energy cropsHigh (?)UncertainMedium NuclearHighUncertainLow (?) OFFSHORE WIND High~2*gasLow

17. Conclusions Considerable scope for cost reductions, from:- –Larger wind farms –Further offshore Exact rate of price reductions uncertain, but Considerable resources, and – Plenty of siting options