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Offshore Wind Energy to reach Grid Parity only after 2020 like Solar Thermal Power – Advantage Solar Photovoltaic Energy

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Offshore Wind Energy is supposed to increase from around  3 GW today to 75 GW by 2020 as countries in Europe,Asia and North America heavily support this industry.Onshore wind energy growth on the other hand is expected to  slow down as 38 GW of Wind Capacity were installed in 2010 with Western Markets showing a sharp slowdown.Note every industry sees costs declining with large capacity except the mature industries.For example Wind Energy has seen a 10% decline in costs for every 100% increase in installed capacity.Note offshore wind projects offer even more Wind Energy Advantages than normal Land Based Wind Farms.The only problem facing offshore wind power is high costs  as the industry still is on the learning curve.PWC has come up with a survey where most of the participants say that it will take 10-15 years for offshore wind energy to reach grid parity.What this means is that Offshore Wind Energy Companies will continue to depend on government subsidies like higher electricity prices,tax breaks,low interest loans to survive.

Total Costs of a Offshore Wind Park

The cost of an offshore wind park can range between $4.5-5.5 per MW which is much higher than land based wind at around $2 million per MW.However the load factors for offshore wind are higher so they compensate somewhat for the higher capital and operating costs for offshore wind energy.Note the PPAs being signed for offshore wind range fro 20-25c/Kwh which is much higher than the 8-10c/Kwh given for onshore wind energy

What the Survey Showed

The average construction cost per megawatt varied among questioned European offshore wind power developers, with 38 percent of survey respondents saying their average cost came to less than $3 million, while 31 percent quoted $4-5 million.But most building contractors and manufacturers of wind farm components asked in the survey expected the cost for construction and turbines to drop in the next five years, making it cheaper to instal new wind farms.

Solar Energy Dropping by almost 10% Every Year compared to Offshore Wind

Solar Energy is the fastest growing renewable energy source because its cost are declining at a rapid pace.Solar Thermal Energy is getting left behind Solar PV with a number of CSP Plants being abandoned and converted to Solar PV Farms.Note Offshore Wind too might get affected if Solar PV costs continue to decline as rapidly as they are doing right now.While Offshore Wind is being heavily supported by European countries,its a matter of time before Solar PV starts making inroads into this Green Energy source as  well.Note Europe with 80% of the world’s offshore wind farms is also home to 80% of the world’s solar energy capacity as well.

Solar Thermal Power will also take almost 10 years to Reach Grid Parity

Abengoa which is a leader amongst Solar Thermal Companies thinks that Solar Thermal Power won’t reach Grid Parity till 2020 and may even take a further 10 years to achieve parity with the fossil fuel  energy sources costs.This makes you wonder if CSP is a technology worth investing in since  Photovoltaic Technology has already reached grid parity in some parts of the world and should reach parity in most parts by 2015.PV Technology has seen a rapid advance in technology and cost cutting over the past few years making the installation cost come down to $3.5-4/watt compared to $6-7/watt for CSP Technology

Offshore wind can shed subsidy in 10-15 years: study

Offshore wind power technology will become economic without state subsidies in 10-15 years’ time, most government bodies said in a survey published on Thursday by consultancy PwC.Nearly half of the government bodies interviewed said they expected offshore wind to survive without subsidies within 10-15 years, while 17 percent of respondents counted on less than 10 years and an equal share thought 15-20 years were needed.

Eighty percent of those who forecast a decrease said costs could drop 10-20 percent.”Nearly all of the developers we surveyed said supply chain capacity constraints are a significant problem for offshore wind construction to such an extent that 82 percent said they create the risk of a seller’s market,” PwC found in its poll.


Abhishek Shah

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