Technological learning potential of offshore wind technology and underlying cost drivers

Abstract

Detailed analysis of technological learning of energy technologies is scarce. For floating wind, this is missing altogether. In this study, we applied experience curve and bottom-up cost modeling methodologies and assessed the long-term cost reduction potential and contribution factors of fixed-bottom and floating offshore wind in their mature markets. Further, to emphasize the role of strongly varying site characteristics of offshore wind farms and their influences, the grid connection cost is separately discussed from the total technology costs (Capital Expenditure and LCOE). Our assessment shows that, excluding grid connection costs, fixed-bottom offshore wind LCOE is 40 €/MWh at 31 GW cumulative capacity (2023–2024) and decline to 28 ± 3 €/MWh by 100 GW. Floating wind LCOE is 123 €/MWh at 1 GW cumulative capacity (2027 – 2030) but decline to 33 ± 6 €/MWh by 100 GW. Moreover, floating wind can achieve cost parity (i.e., 40 €/MWh, excl. grid connection cost) by deploying 21 GW, requiring 44 billion € of learning investment in the form of subsidies to compensate the price gap for the technology in the energy system. We also conclude that grid cost forms a substantial portion of total offshore wind cost, and an integrated offshore grid can efficiently future wind farms and reduce costs. Lastly, we compared our assessment with literature and found that fixed-bottom cost developments are commonly underestimated and the near-term developments for floating wind are overestimated due to limited understanding of component-level cost developments and developing financing conditions.