Wind Energy Overview Report 2022
Updated: Apr 11, 2022
Introduction
Energy sources from wind use the kinetic energy created by air in motion to produce electricity through the various turbines offered in the market. The amount of energy produced majorly depends on the size of the turbine and the lengths of its blades which is directly associated with the wind speed (IRENA, 2020). Wind and solar energy are currently the fastest-growing renewable technologies globally due to falling costs, targeted policy support, and the wider acceptance of global markets of the competitiveness of renewables compared to traditional fossil fuels (IRENA,2020).
Global wind generation capacity has increased around 75% in the past 20 years with onshore wind projects leading the way with an installed capacity of 698GW in 2020 with offshore following with 34GW and offering tremendous potential for growth in the future (IRENA, 2020). Furthermore, projected values of wind energy are speculated to drop even further as nations will strive to achieve their net-zero goals.
As seen in Figure 1, Figure 2, and Figure 3, onshore has seen a stable improvement of technology due to turbine price drop, turbine technology progresses, and the increase of supply chain competition. A global weighted- average cost of electricity (LCOE) has seen a fall of 56% since 2010 from EUR 0.078/kWh to EUR 0.034/kWh in 2020 with a predicted average reaching EUR 0.035/kWh in 2030 and EUR 0.022/kWh in 2050. Average capacity factors rose from 27% to 36% with steady increasing projections reaching a capacity of 52% by 2050. The total CAPEX had a decline of 31% resulting in a 2020 cost of EUR 1192/kW with projected cost reaching a low EUR 946/kW in 2030 and EUR 726/kW in 2050.
On the other hand, larger turbines, longer blades with higher hub heights, and access to higher winds saw offshore wind farms move further from the shore which resulted in a capacity factor increase of 8% from 2010 to 2020 with projections suggesting a capacity of 47% and 52% for years 2030 and 2050 (IRENA,2020) (IRENA,2019). Also, as seen in Figure 2, a reduction of 48% of LCOE in the years 2010-2020 is evidence suggesting the implementation of more offshore farms around the globe with projections in 2030 and 2050 reaching LCOE of EUR 0.062/kWh and EUR 0.044/kWh respectively.
Wind energy technical aspect
Turbine efficiency and manufacturing costs improved immensely over the last decade with the current offshore turbine MIH Vestas having a specific power of 450 W/m2, the most powerful wind turbine of the present (Deutsche WindGuard, 2018). Nevertheless, the choice of turbine suitability depends on the project specifics. For example, high specific power turbines are more suitable for regions with high average wind speeds.
Therefore, to reach the same capacity factor (yearly average power production/rated power production) the appropriate turbine-specific power should be chosen by giving the most focus on average wind speeds (Deutsche WindGuard, 2018). Studies predict that the capacity density of offshore turbines will reach values of 5.36 MW/km2 (Deutsche WindGuard, 2018) with onshore farms in Europe having an average space density of 19.8 (6.2-46.9) MW/km2 (Enevoldsen and Jacobson, 2021).
A variation of offshore foundation types is present mainly depending on the water depth, soil conditions, and the size of the turbine. 77% of offshore wind farms completed in 2016 suggest steel monopiles as the option of choice. The latest technology of floating foundations has the potential to decrease CAPEX cost by 65% in scenarios simulated in 2027 to 2040 (McKinsey, 2016). Moreover, floating substructures have the prospect to explore locations with deep waters that offer a great opportunity on capitalising on wind energy.
Innovations and technology enhancements (FLOATING turbines)
Ongoing innovations and technology enhancements towards larger, more efficient wind turbine generators (WTG’s), as well as increase of hub height and rotor diameter help, improve the capacity of wind energy conversion to electricity as well as a tab into higher energy-dense locations. Current research and development suggest that in 10-20 years’ time turbines with a capacity of up to 20MW will be efficiently used (IRENA,2019).
Also, the very low onshore and PV prices imply the potential of a low-cost green hydrogen production viable. A study showed that from recent auctions in Saudi Arabia, green hydrogen could cost as little as EUR 1.42/kg H2 making it hypothetically competitive with today’s natural gas steam methane reforming with carbon capture (IRENA,2020).
Current offshore wind turbines are mostly monopile foundations as discussed above which restricts the installation of turbines up to 50m deep. Floating foundations, eliminate the constrain of depth and makes the installation of the turbine substructure easier. This opens a bigger market for large offshore farms at remote locations with deeper water and much stronger winds which means higher energy production. As floating technology improves and standardization of design is promoted, it can provide a lower-cost alternative to fixed-bottom foundation substructures.
Furthermore, floating foundations offer a more environmental solution to fixed-bottom foundations as there are fewer seabed activities during construction (IRENA,2016). The main floating foundation type as illustrated in Figure 4, are spar-buoy, semi-submersible, and tension leg platforms. Industry experts estimate that offshore farms will be operational by 2025 (IRENA,2016) with global capacity reaching 30GW by 2030 (IRENA,2019).
However, for floating turbines to have a significant portion of the global renewable energy market in the future, overall costs should decrease. As this is a fairly new technology, the supply chain will have to adapt and learn the advanced operations required which will delay the market to catch up and costs to go down (IRENA,2016). A study carried out comparing 6.1MW floating and fixed base offshore turbine foundations found that floating is still more expensive capping at EUR 4687/kW with fixed base costs being at EUR 3588/kW.
It was found that due to the turbines not being optimized for floating offshore applications, the price is higher. A system loss for the fixed-bottom foundations was found to be 16% whereas floating foundations were 20.9% mostly due to additional electrical cable losses due to deeper waters (catapult.org, 2021).
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Costs
When developing wind farm projects, the overall project costs are mostly accumulated at the construction phase due to the very expensive turbines, foundations, and transmission assets compared to the relative pre-financial close costs of environmental impact assessment, wind studies, and others (Deloitte, 2014).
As shown in Figure 5, Figure 6, and Figure 7, onshore projects have higher variability in cost per installed MW. On the other hand, offshore projects are generally more complex and around 2-3 times more expensive than onshore turbines due to the bigger size of blades and larger substructures required (Deloitte, 2014) (Blaiklock, M., 2014).
Table 1 which includes data from (Deloitte, 2014), (catapult.org, 2021), and (IRENA,2020) summarises recent data of CAPEX, OPEX, LCOE, Capacity factor, and IRR for onshore and offshore projects.
The overall cost of offshore wind farms is generally higher than of onshore due to larger turbines and the greater costs accumulated from operating and maintaining turbines. Due to harsh marine environments in the open sea, a higher level of failure to some components is evident as well as the requirement of vessels to access the site.
In general, costs could vary significantly in projects depending on the location, service contract, and land lease deals made. As seen in Figure 8 and Figure 9, the LCOE breakdown of the study carried out by (catapult.org, 2021), shows that onshore farms turbine costs have a higher overall levelised impact compared to offshore. On the other hand, offshore farms have a higher O&M cost for the reasons discussed above.