DOE secures UK technical assistance for offshore wind development

The Department of Energy (DOE) has secured technical assistance from the government of the United Kingdom that shall be funneled into addressing development issues for targeted offshore wind projects in the Philippines – including those on marine spatial planning, licensing, and permitting.

The technical assistance, as announced by the energy department, will be delivered via the Southeast Asia Energy Transition Partnership.

Several government officials, led by Energy Undersecretary Rowena Cristina Guevara were in the UK from February 13-17, purposively to learn how the British energy market accelerated its offshore wind farm developments and how it transformed into its success story of becoming the largest player in the world on that technology sphere.  To date, UK’s offshore wind farm capacity already hovers at 14 gigawatts with more than 11,000 turbines deployed across more than 40 projects.

“The visit allowed the delegation to meet relevant UK regulators and industry stakeholders for knowledge sharing of best practices, regulatory framework, and industry development, and opened-up potential opportunities for UK-Philippines collaboration in offshore wind,” a statement from the DOE said.

Additionally, the technical discussions with the Philippine delegation centered on:

contracts for differences (CfD) which touches on setting the cost of offshore wind-generated capacity being delivered to the grid; as well as those on consenting, permitting and licensing; marine spatial planning and leasing; grid development and integration; addressing supply chain concerns as well as navigating the risk profile of project financing.

Guevara conveyed that from that visit and familiarization tour, one realization that came forth is for the Philippines to form an inter-agency committee “to facilitate OSW development in the country.”

Through the CfD mode of awarding contracts for offshore wind projects, the UK gained traction on lowering the cost of connected offshore wind power capacity, and that added up to its overall supply portfolio.

Based on data culled from the Department of Business, Energy and Industrial Strategy (BEIS) of the UK, strike prices on CfD auctions for offshore wind power projects had been ranging from £39.65 per megawatt hour (MWh) in 2012; £57.50/MWh for auction in 2017 and there were also higher-priced contracts for smaller scale developments, including the £87/MWh price for a contract that was awarded last year.

As explained, the falling cost of offshore wind power in the UK can be attributed to several factors, including: increasing size and efficiency of offshore wind turbines, as well as improvements in installation and maintenance techniques.

In particular, the CfD auction is a major mechanism that has been supporting new renewable energy installations in the UK – and for offshore wind, it was able to log record-low prices through the years. Nevertheless, that is the same dilemma that is now threatening the future viability of this technology deployment because it raises concerns on the economic return that investors would be cornering from projects.

It was expounded that pricing for offshore wind development in the UK is not straightforward – as the cost of installation depends on multiplicity of factors – including the size of the wind farm, the technology used as well as the location of the facility.

Typically, it was emphasized that the larger the wind farm, the lower the cost per unit of electricity generated – and that’s because larger wind farms benefit from economies of scale, as the costs of building and maintaining the infrastructure are spread over a larger number of turbines.

Another factor that affects the cost of offshore wind power is the technology used. Over the years, there have been significant advances in offshore wind turbine technology, which has led to more efficient and cost-effective turbines. For example, the latest generation of offshore wind turbines (the 18-megawatt model) is larger and more powerful than previous models, entailing then that fewer turbines are needed to generate the same amount of electricity.

The location of the wind farm is similarly an important factor in determining the cost of offshore wind power. Offshore wind farms that are sited in areas with high wind speeds and shallow waters tend to be more cost-effective, as they require less expensive foundations and can generate more electricity per turbine.

Apart from the CfD, the UK government has also institutionalized the Offshore Wind Sector Deal, an added policy support which propelled $250 million industry investment to help improve supply chains as well as innovations in the sector. ###

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