Report highlights financial implications of a wind-powered future
Thirty years ago, it would have been difficult to imagine that offshore wind could power every home in the UK.
Today that target is one of the key pillars of the UK government’s climate change policy.
The offshore wind industry has followed a path of rapid technological innovation to get here, reaching the scale and costs required by mass consumer markets.
And the pressure is far from relieved: Offshore wind capacity must be more than seven-fold by 2050 if the UK is to meet its net zero targets, according to the Climate Change Committee (CCC).
As the first wind turbines reach the end of their life, another challenge also arises: how can the sector reduce or eliminate waste from its operations?
To help answer these questions, ORE Catapult has launched a new joint industrial program – Circular Economy for the Wind Sector (CEWS). Its aim is to create a framework for decommissioning while exploring alternatives that can minimize the disposal of valuable materials and extend the life of offshore wind farms.
The most recent analysis conducted by CEWS produced some interesting findings on the financial implications of different decommissioning scenarios. Our full article is available here, but the main conclusions are:
The most profitable strategy will be partial repowering, which involves installing larger turbines on an old site. This option provides a maximum return to developers of £ 221 million, extending the life of the farm by 25 years and its power generation by over 34,000 GWh (equivalent to annual electricity consumption of nearly 10 million of outbreaks).
This option should be factored into the site rental plan from the start, however, as it requires developers to install larger foundations (in anticipation of installing larger turbines at a future date) or initiate a inspection plan to assess the structural capacity of the monopile to support a more powerful turbine. Our analysis assumed that there would be no significant additional costs for strengthening the foundation to support the turbine upgrade.
Full repowering offers a lower return for the developer of £ 105million. The reduced efficiency is due to the fact that full repowering requires more than just replacing the turbines (as in partial repowering); it also involves the replacement of infrastructure such as foundations and cables.
Life extension is different from repowering. It is not a question of replacing major assets (turbines, cables or foundations); they remain in place but are subject to minor repairs and corrective maintenance. This approach offers a net present value of £ 148million with the lowest investment cost of any scenario studied. It also preserves the site’s annual electricity production for an additional ten years. If this term is extended to 15 years, the net present value would reach £ 218million.
In contrast, a complete decommissioning of a site would result in a negative return in net present value of between £ 22 million and £ 55million. Removing the foundations, turbines and cables from the farm does not generate any future income, in addition to being an expensive process with the potential for delay.
The major problem surrounding this foresight is the lack of experience in carrying out the dismantling of offshore wind farms simply because the sector is so new. All new sectors experience something similar when growth has been exponential and research is rightly focused on increasing productivity.
Going forward, developers will need to consider decommissioning options in more detail during the design phase of offshore wind farms so that they can plan ahead and make optimal adjustments for cost savings. At present, end-of-life strategies are not fully developed until the end of the project and regulatory support is very limited to guide wind farm developers.
The costs of the different scenarios must also be weighed against their environmental impacts. Our report found that life extension offers the lightest carbon footprint with 63 tCO2e per year. Full re-engining created the highest emissions of 2,707 tCO2e per year due to the heavier footprint of vessel use. In comparison, partial repowering results in 1,417 tCO2e, total elimination 1,330 tCO2e and partial elimination 867 tCO2e.
It is essential that these conversations take place now and quickly with key stakeholders and the UK government to ensure developers choose the best option. We need to define best practices from both an economic and environmental perspective if we are to ensure the future sustainability of this large and growing industry. This will be the main activity of our new JIP over the next five years.
ORE Catapult and RenewableUK organize joint virtual conference, Circular Economy + Renewable Energy, June 29 to explore decommissioning and sustainability issues for the wind industry and sectors with common challenges.