OWC: Low cost offshore wind is coming sooner than we think!
DRIVING DOWN COSTS: Ray Thompson of Siemens Gamesa Renewable Energy. Picture: Simon Kench.
By Hull Daily Mail | Posted: 4 May 2017
A LEADING figure in Hull’s blade team has told how the industry will surprise itself – and Government – with how fast it has brought cost reductions to the table.
Already hitting the £100 per megawatt hour mark four years early, Ray Thompson, head of business development at the recently merged Siemens Gamesa Renewable Energy, is eyeing up a sea change when the latest auction process for subsidies completes.
Dong Energy and Triton Knoll are in for Humber projects with more than 2GW between them, and it brings into sharp focus a call for more deployment and a further jobs and investment bonanza for the region.
Speaking at Offshore Wind Connections at Bridlington Spa, Mr Thompson said: “A few years ago we saw projects in early Contracts for Difference (the subsidy scheme) get £140 to £150 pmwh.
“Wholesale electricity price is £37. We are being driven towards a subsidy-free environment and alternatives have a range of costs. Gas is £75 to 80, the first nuclear deal is £92.50 and other technologies are vying for government attention and support with much higher costs.
“Offshore wind will be on par with the lowest cost generation in early 2020, but I think we will surprise ourselves again. I am convinced offshore wind projects of significant size and scale are the cheapest way to generate electricity. We have turned the world upside down. We were seen as expensive technology, that’s going to change.
“There is a good deal of confidence in industry. We will see low prices delivered. My forecast is in the £80 space. We wait to see what happens with that. It brings tough choices for government, we will be half the price of tidal lagoons. It will be crazy not to grow that and build more now we have realised low cost. It is a transformational point in industry and we should be proud of what we have done.”
While there is a current pause as we head to the polls again, Mr Thompson and other speakers are keen to get the ball rolling quickly come June 9.
“We need to make sure industrial strategy work going on features offshore wind very heavily,” he said. “We are in a really strong position.”
Mr Thompson said costs had been brought down in the three key areas: capital expenditure, operational expenditure and energy output.
“Every one of these elements has moved in the right direction,” he said. “One of the things we are now seeing now is bigger turbines. That’s a huge factor in driving down costs. When we built London Array in 2012 - still the biggest offshore wind farm in the world – we installed 175 wind turbines. If we were building it today it would be 90. That’s 85 less foundations, array cables and installation vessel visits. It is making a massive difference.”
Dong Energy’s Westermost Rough offshore wind farm, built and operated out of Grimsby, was a world first with 6MW turbines. West coast projects have just seen 8MW installations.
Vessels, funding and business models and clever building and monitoring were all flagged up, so too port-centric operations, with 75m blades front of mind.
“The UK is investing in port-side facilities and helping us take costs out,” he said. “The story of Hull is a great one. We have gone from ground zero in terms of a brand new site to employing nearly 800 people.
“We are incredibly proud of what we have been able to achieve from that recruitment process We had 26,000 applications for the jobs, demand from people to come and work for us was incredible.
“It is not like a factory I have seen anywhere else. The enthusiasm shines through, there is such a fantastic atmosphere in there, it is incredible. We are also very proud that 96 per cent of the people who are employed directly have Hull and Humber postcodes. We have really worked hard to maximise the local benefit.”
Showcasing The Blade installation as part of Hull’s City of Culture status and the apprenticeship intake, Mr Thompson added: “We are very proud of what is happening in Hull and the Humber and we are keen to grow the centre we have. We are really keen to stay rooted in this part of the world, to build on the success and expertise and make sure it is a key part of our activity going forward.”
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