Supply chain changes could cut offshore wind farm costs by 30 per cent

27 June 2012

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27 June 2012 | Kamalpreet Badasha

Supply chain changes will help the offshore industry cut costs by more than 30 per cent, according to a report from a taskforce set up by the UK’s Department of Energy & Climate Change.

The Offshore Wind Cost Reduction Task Force Report details 28 recommendations, of which five concentrate on supply chain issues. The group estimates that the combined effect of all the changes would help to reduce the cost of generating electricity to £100 per megawatt hour by 2020. This would save £3 billion a year, as the current cost of electricity from wind farms is £140 per megawatt hour. 

Supply chain recommendations to government:

1. Government and industry to establish a supply chain risk register by the autumn to identify and deal with areas of weakness.
2. Increase engagement with component suppliers and related companies to ensure adequate capacity for growth.
3. Put in place mechanisms to support SMEs (small and medium enterprises) to enter the market. This would help drive down costs through increased competition.
4. Ensure financial support is available to component and turbine manufacturers, as well as a regulatory framework to increase market certainty.
5. Reveal project timelines to aid decision-making and give the supply chain confidence. 

Responding to the report, Charles Hendry, energy minister, said: “Offshore wind will be a vital part of a diverse and secure low-carbon energy mix in the decades ahead. I am encouraged that this report shows that substantial cost savings can be achieved if action is taken and I welcome this valuable work.”

The Offshore Wind Cost Reduction Task Force is led by wind energy sector professionals including representatives from Siemens Wind UK, The Carbon Trust and Centrica.

The 28 recommendations covered areas including finance, innovation, contracting strategies and, planning and consent. The report is based on evidence from a Crown Estate study, Towards Round 3: Progress in Building the Offshore Wind Supply Chain

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