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Offshore wind
Wind research and development
Research identifies challenges for onshore and offshore wind projects
A report launched by wind consultancy K2 Management and specialist insurance broker, JLT Specialty Ltd., has identified the key challenges and trends that will shape the future of onshore and offshore wind projects over the next twelve months.
Launched at the Offshore Wind Conference 2017 in London, ‘Reducing The Levelised Cost of Energy: Challenges, trends and opportunities in today’s wind projects for tomorrow’s business cases’ reviewed data from sixty onshore and offshore projects throughout Europe and Latin America.
The project clients varied from independent developers, state-owned utilities and private investors, giving a broad view of the challenges and opportunities facing the sector from a variety of different perspectives.
The key findings from the report include:
- A quarter of wind projects are looking to extend the life of their project – potentially by a further five years. Currently, twenty-five years is considered to be an achievable lifespan for an offshore project, but thirty years may be an achievable target. This news will be welcomed by developers and investors who, given the high cost of developing wind projects, are increasingly keen to optimise their return on investment.
- Developers are taking action to reduce their risk exposure on projects, with 60% of pre-construction offshore projects adopting five or less Engineering, Procurement, Construction and Installation (EPCI) contracts. Limiting these contracts could potentially reduce the costs of projects overrunning and the likelihood of a knock-on effect on other contractors as a result.
- A quarter of projects had underestimated the costs of operational expenditure, leading to concerns that this could have huge implications on performance and valuation of the project further down the line. Many of the projects that were surveyed had not yet reached the twenty-year lifetime, and so much of the project budgeting was based on educated assumptions, butthere was real concern that these underestimations could up the costs of projects by millions.
