Influence of input costs and levelised cost of energy on wind power growth

Offshore wind energy costs have fallen significantly since the initial installations of the early 1990's. While installation costs for offshore wind are higher than many other sources of low carbon energy, the relative increase in capacity factor from onshore leads to higher energy yields, meaning that the unit cost or the levelised cost of energy for offshore wind is becoming increasingly competitive. In this study, a methodology is defined for modelling ranges of levelised cost for offshore wind, analysis shows the mean values of levelised cost of offshore wind in Ireland could be as low as 122 euro /MWh. However, when variables such as capital expenditure, cost of finance, variable capacity factors and commodity price shifts are considered, simulations show a large range in potential outcomes, with approximately 60% of the scenarios falling between 108 euro /MWh to 137 euro /MWh. The methodology and results assist decision making for investment purposes, and in determining the level of support required for offshore wind energy in Ireland. Understanding the financial components of these large-scale projects and ensuring returns on investment will ultimately lead to a reduction in CO2 intensity for electricity production in Ireland from the current levels of 316 kg CO2-eq/MWh.