Comment: Reversing the rising cost of offshore wind

Over the past two decades, the offshore wind industry has experienced a significant decrease in the levelised cost of energy – helping to drive progress and instil confidence in the feasibility of offshore wind.

However, recent months have seen an unexpected twist in the tale, with inflationary pressures and heightened global demand triggering a surge in development costs by as much as 40 per cent.

This sudden spike has cast a shadow over business cases and project feasibility, leading to the postponement or even cancellation of projects which cannot absorb these impacts. In fact, research suggests that more than $30 billion in investment has been put on hold until economic conditions improve. This represents a significant setback to reaching global climate targets, notably the Paris Agreement’s aim to limit the temperature increase to 1.5°C above pre-industrial levels.

Despite these headwinds, the sector remains buoyant and determined to prove the longer-term viability of the energy transition, throughout both the development and operational phases of the lifecycle. To help tackle these challenges, stakeholders are encouraged to continue focusing on technology and long-term planning to support the continuation of the historical downward cost trajectory.

The pivotal role of technology

Effective cost management is crucial for operators to run a financially viable asset. Maximising uptime and adopting innovative maintenance strategies can minimise the disruption and losses caused by breakdowns and unplanned maintenance.

One way asset owners can influence operating costs is by monitoring what is happening below the sea surface as well as above it. By assessing the condition of their subsea infrastructure – foundations, cables and moorings – via innovative technologies such as uncrewed surface vessels (USVs) and structural health monitoring, opportunities arise to identify and rectify defects such as fatigue, corrosion and scour before they compromise the asset’s integrity. This proactive approach can improve asset performance, extend its lifespan and, consequently, reverse the rising cost of offshore wind.

It is worth noting that an effective operations and maintenance (O&M) regime should consider the full supply chain, including the role of geo-data as an enabler for maintenance to be performed effectively. Ultimately, a simplified and unified supply chain can help increase uptime, revenue and asset longevity.

Long-term planning

We cannot afford to let short-term economic challenges derail the progress we’ve made in transitioning to sustainable energy sources.

In this context, it is imperative for the industry to anticipate and navigate the inevitable fluctuations in running costs and stay focused on the end goal. Succumbing to short-term economic headwinds is risky, and stakeholders should resist being swayed by current monetary challenges that could disrupt the long-term trajectory towards a more sustainable energy future. Data-driven asset management once again plays a crucial role here in making sure offshore structures are operational for many years to come, and that stakeholders have full visibility of any issues ahead. Having access to comprehensive and reliable sources of performance data such as how an asset’s performance and integrity changes over time will help to build confidence in future profitability and retain investment.

As the offshore wind industry grapples with rising costs, a combination of technology and long-term planning is essential. This will ultimately help stakeholders to reverse the rising costs of offshore wind and ensure the continued success and sustainability of this global success story.

Brian Bell is Global Director of Offshore Wind at Fugro