France has decided to accelerate, significantly, its offshore wind program for a very simple reason: offshore wind will provide reliable, low-cost, clean electrons to power the French economy. Just announced, a new offshore wind project that will deliver electricity to the French grid for 44 Euros per megawatt hour (mWh) (e.g., under $US50 per mWh and thus under 5 cents US per kilowatt hour).
This is striking news about the continued plunging of offshore wind electricity prices. A decade ago, more than mildly engaged with some of the most involved people in the offshore wind industry, it seemed an optimistic outcome would be electrons coming ashore about 8-10 cents per kWh by 2020 or so … and even that seemed pretty ambitious. Truth in advertising — this was work related. The executive leadership that I was involved with and seeking to convince that leveraging a Corporate capacity to support offshore wind would make sense as part of long-term planning simply didn’t believe that 8-10 cents would ever be achieved. They doubted this would fall below about 15 cents per kwh and thus simply didn’t see the industry as competitive nor likely to grow. And, thus the opportunity wasn’t pursued. If they (if we) had only known …
So much of the public attention, to the extent there has been, re renewables and the power sector has been on solar panels. “In sight, in mind” might be a sensible term. Seeing panels on your neighbors rooftop certainly can catch your attention. Onshore wind (and the NIMBY-ite battles against it) have had significant attention as well. And, with wind farms powering meaningful shares of power demand in numerous areas (Germany, Texas, Iowa, …) with wind farms the ‘scenery’ for miles on highways in many areas, they too have had much attention. And, solar and onshore wind price plunges have kept them below offshore wind costs. But, these offshore wind cost reductions are serious and well below the ‘new build’ cost for any fossil fuel alternative.
Offshore wind price reductions have occurred for a number of reasons:
- Economies of scale: writ large, building more of something drives down costs (in no small part because of) …
- Learning (curves) making the next turbine, the next windfarm, that much easier (lower resource inputs of people & facilities) that foster
- Technology developments from ever larger wind turbines (thus more efficient per kilowatt hour and higher capacity figures) to floating towers to better electrical interconnections to other specific components that are all incorporated into and captured in
- Business models, learning, and experience which have, for example, made offshore wind a straightforward project financing for bankers rather than an unknown and uncertain arena. This drives down financing costs, from time to process paperwork to ‘risk premiums’ while also opening up ever-more financing houses to potential offshore investments (and, thus, competition).
Offshore wind appears to be a great example of public (structuring good permitting processes, setting policy that enables planning, etc …)-private (learning curves, financing, …) interactions to drive rapid advances in a technology and business arena to provide a meaningful tool for transforming the power (and larger energy) sector in much of the world.
The price point is far from the only impressive thing about this announcement. In mid-2019, the award is announced for the project. The wind turbines will be powering French homes in less than three years. From award to power generation for a 600 megawatt capacity power facility in the developed world (with tight permitting and other challenges) is, well, a rare beast.
The combination of rapid implementation path and extremely competitive (low) prices have led the French government to change, radically, its offshore wind plans.
”Today, the project off Dunkirk shows that costs fall even faster when projects are well set up,” Prime Minister Philippe said in a Policy Statement to the National Assembly.”We will be able to increase the pace of future calls for tenders to one gigawatt per year. It’s a good thing for the price of electricity, for our industry and for our planet!”
As Francois de Rugy, the French Minister of Ecology, explained
“With the launch of the Saint-Nazaire park project today, France is finally entering the age of offshore wind turbines. By 2022, 80 wind turbines installed off Saint-Nazaire will provide 20% of the electricity of Loire-Atlantique. It’s a first in France. But we do not stop there, we accelerate. Today, we are also initiating the Dunkirk park project, at a rate comparable to the best European results, which demonstrates the competitiveness of the French sector. Tomorrow, we will launch and award larger projects: 1GW per year, compared to 750MW originally planned in the Multi-Year Energy Program, by working with all the territories,”
French offshore wind is a very tangible example of
- Cost-competitiveness of renewable energy options
- Continued price reductions of major renewable options
- Expertise-supported flexible government decision-making to leverage clean-energy technology and business advances
- Taking tangible steps to Make Our Planet Great Again.