Steep Cost Reductions Confirmed as Ribbon Cut on Giant Dudgeon Offshore Wind Farm

World | Wind Energy

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The giant 402MW Dudgeon offshore wind farm off the coast of Norfolk was officially opened yesterday, providing further evidence costs are falling sharply across the industry.

Operator Statoil and its partners Masdar and Statkraft announced the construction costs for the project had fallen more than 15 per cent from £1.5bn to £1.25bn since the original investment decision for the project was made in 2014.

The project and its 67 turbines are now fully operational, providing enough power to the grid for up to 410,000 homes.

Statoil’s CEO Eldar Sætre hailed the project as “an important contribution to realizing the UK’s renewable energy strategy”.

“The UK has already achieved impressive reductions in CO2 emissions with clear policies to phase out coal, and last year achieved the lowest CO2 emissions since before year 1900,” he said. “Statoil is proud to contribute to this both by being a large supplier of natural gas and by our investments in offshore wind.”

He added the project was further evidence of Statoil’s plan to diversity its portfolio of energy projects.

“As part of our strategy to develop from an oil and gas company to a broad energy major, Statoil will grow significantly in profitable renewable energy, with an ambition to invest around NOK 100 billion towards 2030,” he said. “Dudgeon has successfully been developed in cooperation with Masdar and Statkraft, and is a key part of Statoil’s strategy to complement our oil and gas portfolio with profitable renewable energy solutions, as well as adding to Statoil’s strong UK presence.”

The company is now hoping to curb costs further for the Dudgeon wind farm and the neighbouring Sheringham Shoal project.

“Over recent years Statoil has worked hard to reduce costs, improve efficiency and increase profitability in both our oil and gas projects and our renewable projects,” said Statoil’s executive vice president for Technology, projects and drilling, Margareth Øvrum. “Reducing costs by more than 15 per cent, or £250m, at Dudgeon and completing the construction phase without any serious incidents is a great achievement by all three partners.”

The news came as the UK government cranked up pressure on offshore wind developers to deliver further cost reductions.

In a surprise move the Budget confirmed the existing £557m budget for clean power auctions through to 2021 would be extended to 2025 with no further funding assigned.

The government said the rapid recent fall in renewables costs meant no further funding was needed to meet the UK’s clean energy goals over the period. It also hinted some additional contracts could be offered if projects could show that they can be delivered without any increase in levies and helped meet the government’s strategic goals.

However, the government’s official projections predict negligible increases in capacity for all forms of renewables barring offshore wind, which it expects to rise from 5.2GW to 14GW by 2025.

“The renewable energy industry has a little more certainty than it did this morning,” RenewableUK’s chief executive Hugh McNeal said yesterday. “The existing budget of £557m remains intact, and there is a commitment to maintain the Carbon Price Floor at current levels until coal comes off the system. The removal of an annual cap on the Levy Control Framework reduces the risk of a boom and bust cycle. While this is welcome, what is missing is the ambition to take full advantage of the UK’s global-leading renewables industry at such a crucial time for our country.”

James Court of the Renewable Energy Association said the failure to increase the £557m budget could lead to a hiatus in renewables investment.

“The UK government seem to be turning their back on renewables by announcing no new support for projects post 2020 and a freeze on carbon taxes,” he said. “This could see a hiatus in much needed infrastructure development. Considering this is coming only a couple of months after the much vaunted Clean Growth Plan, it’s hugely disappointing.”

Source: businessgreen.com