R&D roadmap for Norwegian offshore wind power. R&D roadmap for Norwegian offshore wind power

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1 R&D roadmap for Norwegian offshore wind power The Research Council of Norway s RENERGI programme is seeking to commission consultants to draw up an R&D roadmap for the development of technology, industry and power generation associated with offshore wind energy, both seabed-based and floating. Project participants should comprise an interdisciplinary team with relevant expertise in technology, business development, innovation theory and economics. The project may be carried out by two or more consultancy groups in collaboration Further information about the consulting commission: R&D roadmap for Norwegian offshore wind power The Research Council of Norway s RENERGI programme is seeking to commission consultants to draw up an R&D roadmap for the development of technology, industry and power generation associated with offshore wind energy, both seabed-based and floating. Methods Project participants should comprise an interdisciplinary team with relevant expertise in technology, business development, innovation theory and economics. The project involves obtaining relevant information directly from owners and operators of ocean-based wind power generation facilities, from the supplier industry (turbines, towers, foundations, installation services), from technology development companies, from the Norwegian Electricity Industry Association (EBL), from Statnett and any other power grid owners, and from Nord Pool ASA. Information should also be obtained from the research project Balance Management in Multinational Power Markets headed by SINTEF Energy Research AS under the RENERGI programme, as well as any other relevant projects under this programme. Information about other energy technologies may be based on literature studies. The information collected must be systematised, presented and analysed as neutrally as possible, independent of the current strong support for developing Norwegian offshore wind power in the context of both new power generation capacity and industrial development. The report must be technologically and financially realistic and based on empirical data. The percentage figures in the headings indicate the desired time and resources devoted to that segment of the project. The report must be accompanied by an electronic presentation of the most important elements with key graphs, tables and illustrations.

2 Remuneration for the project will be based on a pre-agreed amount, with a maximum set at NOK 1 million, excluding VAT. Pre-qualification In the first round tenderers are requested to submit a brief description of their expertise and the expertise of any collaborating consultancy groups (maximum one-half of an A4 page). The estimated time-frame for project implementation and the number of individuals participating in the project must also be specified. This information is to be sent to: abr@forskningsradet.no. The deadline for submission of pre-qualification information is Friday April , 11:00 am (Norwegian time). After this, a few tenderers will be invited to submit a project proposal. One or more of these tenderers will then be invited to present their proposal before a contract is signed. Hypothesis The large-scale realisation of offshore wind power generation at ocean depths of more than 50 metres may be technically and financially feasible. This will, however, require major, rapid advancements. The objective of the roadmap The roadmap is to describe the main features of the technological, commercial and economic status that must be achieved by 2030 to facilitate energy production on a beneficial scale. In addition, the roadmap is to specify essential, specific milestones that must be achieved by 2014 in order to reach the goal for Full cost of offshore wind power (20 %) The project will compile updated cost figures for representative existing wind farms on land and in shallow waters, both nearshore and offshore. Investment costs and operating and maintenance costs must be broken down into key components and totalled as production cost per unit of energy (NOK/kWh). A rough estimate must be submitted for typical transmission costs, i.e. the additional costs of investing in power lines, including their operation and maintenance, to transmit power over longer distances from the wind farm to populated areas, industrial areas or existing grid connections. A rough estimate must also be submitted for the intermittency costs involved in the largescale replacement of coal power and natural gas power with offshore wind power. Intermittency costs are the necessary costs of purchasing a reserve supply of conventional generating capacity during periods when there is little wind in major production areas. This reserve power can be assumed to be a combination of hydropower and natural gas power. The price calculation for large-scale delivery of reserve power must take into account any necessary conversion and expansion of power generation facilities, energy storage sites (water reservoirs, natural gas storage facilities) and grid infrastructure.

3 A rough estimate must be performed for the total full-cost price (NOK/kWh) for energy delivered to the main grid in current major Northern European markets for coal power. The total full-cost energy price must include all costs of power generation, transmission to the main grid and necessary backup systems or agreements (for hydropower or natural gas power) to achieve a satisfactory replacement of large-scale coal power for base-load capacity. Calculations are to assume a significant restructuring of the Northern European energy system a minimum of 100 TWh. Market analysis (15 %) Average energy prices and subsidy levels (subsidy value converted into NOK/kWh) for wind power during the period must be determined for the Norwegian market and major export markets. Information about subsidy levels for existing ocean-based wind power generation facilities must also be obtained. A rough, standard estimate of price trends for electricity in markets of interest must be carried out, based on knowledge about anticipated growth in demand for electricity in these markets, expected expansion of cheaper forms of energy such as hydropower and nuclear power, anticipated developments in supply and demand for coal and natural gas, and anticipated developments in national and international regulation of CO 2 emissions. A rough estimate of willingness to pay (converted into NOK/kWh) for electricity for the offshore petroleum industry must be performed in connection with the potential electrification of production, which would involve replacing today s natural gas-based power generation in the offshore petroleum industry with a combination of offshore wind power and reserve power transmitted via cables from the mainland. Pertinent data bases are available at the Norwegian Petroleum Directorate, the Norwegian Oil Industry Association, and the Norwegian Water Resources and Energy Directorate, among others. Cost reduction (20 %) A cost curve (NOK/kWh) must be graphed to indicate the development necessary for offshore wind power to become financially competitive by The curve s starting point can be defined by documenting production costs for existing wind farms in shallow waters, nearshore and offshore, with an additional cost for foundations 20 metres deeper than existing ocean-based wind farms, and including transmission costs and intermittency costs as mentioned above. These costs may be called current production costs for offshore wind power. It can be assumed that the same full cost will apply to the first full-scale installations for floating offshore wind power as for deepwater, seabed-based wind power. The benchmark targeted by 2030 may be defined in terms of the production costs for recent land-based wind power, and assuming normally good resources, moderate costs for area usage and short distances to existing power lines. Current production costs for offshore wind power are to be itemised into the most important cost components. The likelihood of achieving more or less than the necessary cost reductions must be assessed for each cost component. The assessment must be based on recognised technological, commercial, economic and innovation-theory conditions. The analysis must be founded on the factual history of the development, commercialisation and cost reduction of conventional wind power, ocean-based wind power in shallow waters, related marine technology and any other advanced energy technologies.

4 Priority areas (30 %) The roadmap must lead to a list prioritising the cost components which must be reduced, as well as how much and how quickly they must be reduced in order for offshore wind power to be competitive by The roadmap must also identify which technological, operational (including maintenance) and structural conditions (energy systems, ownership, financing) are in need of improvement as well as appropriate strategies for promoting necessary cost reductions. Based on this, relevant areas and topics where research could contribute to cutting costs and commercialising offshore wind power must be described. A list of specific technological challenges and associated research tasks must also be provided. Need for financial support/cost to society vs. benefit to society (5 %) The roadmap is to be constructed on the assumption that offshore wind power generation, by 2030, will have been brought down to a competitive cost level due solely to the fact that the energy produced will be exempt from general CO 2 -emission regulations and taxation, and that this type of power generation will have geographical access to electricity markets that are not committed through political support and other essential framework conditions to development of cheaper forms of power generation such as hydropower, land-based wind power, geothermal power and nuclear power. In other words, offshore wind power should be in approximately the same competitive position that land-based wind power is today, provided that there are available areas with normally good wind resources and moderate rental costs for area usage. If the goal for 2030 is to be met it is crucial that the Norwegian authorities allocate funding for R&D and construction of pilot and demonstration facilities, as well as provide substantial investment and/or production support to an increasing number of production units and support for the construction of necessary infrastructure in the years leading up to Based on the development of land-based wind power in Denmark during the past 30 years, a standard reasoning and rough financial estimate must be performed for the total present value of incentives and regulations that have driven development over the years. In addition, a standard estimate and/or a description of the economic value of any future Norwegian offshore power generation capacity and associated supplier industry for both domestic and export-based production must be provided. Calculations and reasoning may be based on available knowledge about the economic value of Danish land-based wind power generation capacity and associated supplier industry. Potential (10 %) Previous reports have indicated a physical expansion potential of 14,000 TWh across the Norwegian continental shelf. Assuming that export-oriented, energy-intensive industry for the next 50 years will primarily be located and developed in areas with access to inexpensive coal power, natural gas power, hydropower and nuclear power, the market for Norwegian offshore power production will be mainly limited to electrification of the North Sea petroleum industry and ordinary supply (buildings, light industry, electric transport, etc.) to the countries proximal to the North Sea. The size and geographic distribution of this market must be calculated, with an eye to expanding offshore wind power in Norwegian waters.

5 Additionally, an assessment or estimate must be performed of the potential for increased production of offshore seabed-based wind power in areas with depths down to 40 metres, to the south and west of the Norwegian continental shelf of the North Sea. This assessment/estimate must take into account present economic activity such as fisheries and shipping. The purpose of such potential mapping is to provide an indication of whether sufficiently large ocean areas (down to depths of 40 metres) are available beyond the Norwegian continental shelf for the countries proximal to the North Sea to entirely replace their current consumption of fossil fuel-based electricity. The potential mapping should provide guidelines for assigning priority to Norwegian R&D activities with regard to concepts for seabed-based installations in shallow waters, seabed-based installations in deep waters, and floating installations. It should also set guidelines for prioritising between development on the Norwegian continental shelf and development of an export-oriented supplier industry.