WHY REDUCE COST IN THE VALUE CHAIN THROUGH STANDARDISATION? Estimated LCOE for tendered Danish o shore wind projects EUR/MWh (2016) 120 100 ~50% LROE Grid connection cost 80 60 40 20 0 Anholt, 2010 Horns Rev 3, 2014 Danish Nearshore, 2016 Kriegers Flak, 2016 Source: Danish Wind Industry Association Notes: Projects by auctioning year. LCOE estimated by using LROE as proxy. Levelized revenue of electricity (LROE) = Revenue estimate at final investment decision using winning CfD strike prices, contract duration and a power price assumption. Grid connection cost reflect the levelized cost cowered by the TSO outside the scope of the tender Only one decade ago the wind energy industry saw Levelized Cost of Energy (LCoE) of above 100 EUR/ MWh. Since then the cost reduction journey has only been going one way and that is down. Today’s LCoE is in an area below 60 EUR/MWh – a drop of approximately 50% (as shown in the figure). The world has also seen its first subsidy free project bids approved in auctions for 2023 an onwards. The industry needs to find common ground on where the next cost reductions are found and how to get there. This calls for communication, coordination and collaboration between all stakeholders in the industry- utilities, Original Equipment Manufacturers (OEM’s), suppliers and research institutions. Cost reductions are a joined effort and results are found in collaboration. Vestas Wind Systems, Siemens Gamesa Renewable Energy and MHI Vestas have taken up the challenge to list areas with potential for further cost reduction on components and system level as well as defining the areas which respectfully is “core” and “non-core” within technologies and sourcing. The cost reduction areas are listed in the following two lists: · Wind Turbine Generator list · Operation & Maintenance list The table provide a “hot” list that should be seen as guidelines for future research, development and/or demonstration (cost reduction) projects both within onshore and offshore. Any such project could be initiated either through Energy Innovation Cluster (EIC)1, as projects directly between supplier and OEM or between other collaboration consortiums. The “not list” are describing where the OEM’s do not see a common area for cooperation. Megavind invites anyone to challenge the lists with further ideas. We recommend that companies and knowledge institutions use the LCoE calculator (developed by Megavind) to quantify the saving. Other models will lead to wrong comparisons and different baselines. 1) The previous Offshoreenergy.dk
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