Offshore Wind Primer

Offshore wind farm off Walney Island in the Irish Sea. Photo by Andy Dingley

In the quest for clean energy, offshore wind stands out – not just for its towering turbines which are already taller than the Eiffel tower and set to grow further, but offshore wind also stands out for its surprising economics. Despite being about twice as expensive as its onshore counterpart, offshore wind is riding a wave of rapid global expansion. Why is offshore wind so expensive, and what drives this surge in investment towards seemingly pricier energy?

How do turbines need to be changed to suit offshore environment?

Adapting wind turbines for the offshore environment is a complex engineering challenge. Waves, storms, and the corrosive marine atmosphere demand robust solutions to ensure the turbines' longevity and reliability. It is just such a harsh environment. Not to mention the need for underwater cables and offshore transformer stations. Let’s look at some of the engineering involved in adapting an onshore turbine design for offshore use.

Support structure

The most obvious difference is probably the support structure. Attaching a turbine to the sea floor is obviously a totally different kettle of fish compared to the methods we can use on land, and while the above water tower may be similar, the underwater substructure faces a very different environment. The dynamic forces exerted by the ocean make this a challenging problem, and different types of foundations are employed depending on the sea depth, seabed conditions, and environmental considerations.

Monopiles are the most common support structures, these are large steel tubes driven deep into the seabed. They must resist extreme forces while limiting rotation at the top, ensuring the turbine's stability. Monopiles are quick and easy to install, but in deep waters it is hard to make the single tube stable enough to resist overturning. They are mostly used up to about 50 m depths.

Beyond that depth, jacket structures are more common as they offer a lighter solution for deeper waters. This type of support structure comes from the oil and gas industry, where they have been used in waters of hundreds of metres deep. Their design, featuring a lattice of tubular steel legs and braces, provides high resistance to overturning moments through a wider base. They use less material than a simple monopile but with a more complex manufacturing method. So far, jacket structures have been used up to about 60 m depth for offshore wind. There’s no real reason why they couldn’t go deeper, but the amount of steel used would be substantial if they went much deeper.

The other main type is gravity bases, which are similar in concept to the slab foundations used for onshore turbines. They rely on the weight of the structure itself to keep the turbine in place, but it’s not quite as easy as in onshore foundations because buoyancy forces reduce their effective weight, so they often need to use additional ballast to compensate. Where conditions are suitable for gravity foundations, they can be an economic choice, and they have the additional benefit of often causing less environmental damage than drilling pilings. However, transport and installation are challenging, due to their weight and bulk.

Other innovative support structures like tripods, tripiles, and floating platforms are also being explored to accommodate various offshore conditions. Floating offshore wind is especially interesting since it can be used in far deeper waters than fixed bottom.

Size

The next obvious difference between onshore and offshore wind is the size. Offshore wind turbines are significantly larger than their onshore counterparts, with most new onshore models in the 4-6MW range, while offshore typically range from 12-16MW. There are a few reasons why bigger makes more sense for offshore than onshore. Easier transportation of huge components is one—no need for components to fit on trucks and under bridges as they can be shipped directly from factories at ports. The offshore support structures and undersea cable installation costs are cheaper for fewer large turbines than many smaller ones.

The largest offshore turbines now exceed the height of the Eiffel Tower, and there's a trend toward even larger units, mainly from Chinese manufacturers. Minyang's recent unveiling of a 20MW turbine from their Shanwei factory highlights this trend, the announcement had a photo of staff in front of what looks like a large nacelle, which is the box at the top of the tower that houses the drivetrain. Photos of the blades, which would have to be 140-ish metres long or any of the other gigantic components were conspicuously absent however, perhaps they have only made a large box. China seems to be gearing up for yet bigger turbines to come, with a new blade test facility for 30MW turbines recently announced.

Will offshore wind turbines be as tall as the tallest building in the world?

Corrosion

The next big design challenge for offshore wind turbines is to protect against corrosion. The marine atmosphere is moist and laden with salt particles, which make conditions perfect for rust to form and destroy turbine components. To get around this, turbines are equipped with high-spec surface coatings, and designers go to great lengths to stop moist salty air getting close to sensitive components. They use sealed generators with air-to-air heat exchangers and maintain the air in the nacelle above the dew point to prevent condensation. The nacelles and hubs may be pressurized to further safeguard internal components from coming into contact with outside air.

Reliability

One offshore design consideration that you can’t see, is the added importance of reliability. Offshore wind maintenance is far more challenging, costing about three times (Lazard) that of onshore due to difficult weather conditions and accessibility. High winds and rough seas delay repairs, and transport needs to be by boat or helicopter, which is takes longer and costs more than the simpler logistics of onshore maintenance. Therefore, offshore turbines are designed with redundancy in critical systems, such as dual pitch angle measurement systems and spare frequency converter modules, and they may use more robust components than what is strictly necessary, like double-row pitch bearings.

Benefits and Cost of Offshore Wind

All these extras compared to onshore wind mean that offshore wind costs more – a lot more – than onshore wind. In the US, the total capital cost for onshore wind ranges from about 1.5-2.5k/kW (Lazard), and offshore wind is a little over double that, making it one of the most expensive (Lazard) renewable energy technologies. This initial outlay is offset by several compelling advantages.

Advantages of Offshore Wind

Offshore wind turbines are exposed to higher wind speeds than onshore, because on the ocean there are no trees, hills or buildings to slow down winds close to the ground. The smoother airflow over water surfaces also results in lower wind turbulence at sea compared to land, which improves turbine efficiency and potentially extends operational life. The wind offshore also tends to be more consistent than onshore, which translates into higher capacity factors, that is they produce closer to their maximum more of the time compared to onshore turbines. All of these add up to significantly increase energy output over their lifetimes. Perhaps counter-intuitively, offshore wind farms can often be located closer to coastal cities than onshore wind can, reducing the need for expensive transmission infrastructure and minimizing transmission losses.

Levelized Cost of Electricity (LCOE) of Offshore Wind

All those advantages help to either increase the amount of energy offshore wind generates, or to decrease the total cost of the wind farm. On the one hand, we have more expensive turbines offshore, but on the other hand more energy is generated, and some projects costs are reduced compared to onshore. To make a like for like comparison to find out whether the net effect is for cheaper or more expensive energy, we can use the Levelized Cost of Energy (LCOE) as a comprehensive measure of the average cost per unit of electricity generated over a plant's lifetime.

When you add up all the costs and divide by all the energy generated over its lifetime, a MWh of offshore wind costs about twice as much as a MWh from onshore wind, on average, according to Lazard's latest LCOE report. The overlap in the figure below shows that a great offshore wind project will yield cheaper energy than a bad onshore project, even in the US which is where Lazard’s data comes from.

A great offshore wind project will yield cheaper energy than a bad onshore project. Source: Lazard report, April 2023.

Offshore Wind in Denmark

In a country like Denmark which has favourable offshore wind resources and a long history of projects to learn how to reduce costs, that overlap is much larger. That is, there are many examples in Denmark of offshore wind farms delivering cheaper power than onshore wind.

Denmark serves as a prime example of a country suited to offshore wind. Surrounded by the North Sea and the Baltic Sea, it’s in a fantastic position to harness strong and steady winds. They have been doing so since 1991 when they installed the world’s first offshore windfarm at Vindeby, a town whose name aptly translates to “windy city”. There is also an element of necessity behind the Danes’ embrace of wind energy. Denmark has been going hard on onshore wind for decades , and now frankly, they’re running out of good spots to put them. With limited land available and a very populated countryside, Denmark has turned to its expansive maritime territory to expand its wind capacity.

Most new Danish wind installations in recent years have been offshore, which now makes up about a third of their 7GW total wind capacity, and nearly half (46%) of actual energy coming from wind in Denmark. Together that’s over 50% of Denmark’s electricity coming from wind. And looking to the future, plans to add at least another 6GW of offshore wind by 2030 should more than double the amount of wind energy generated in the country, though much of the new capacity will be exported abroad.

Danish offshore wind installations in recent years makes up about a third of their 7GW total wind capacity. Source: Energy Statistics 2022 report, Danish Energy Agency.

Non-financial Benefits

But not everywhere is as blessed as Denmark to have offshore projects that are cost competitive with onshore wind. Even where electricity from offshore wind comes at a premium to onshore, many regions around the world are still ambitiously expanding their offshore wind capabilities. More ambitiously than Denmark in fact. For example, the UK is aiming to increase from 15GW of offshore wind today to 50GW by 2030, enough to power every UK home . Over in the US, New York’s target to go from essentially zero today to 9GW of offshore wind power by 2035 is another example of a significant investment in offshore wind.

Why would they do that when it costs so much? There are compelling non-financial reasons driving the shift towards offshore installations. The first reason is one we already mentioned when we talked about Denmark. In densely populated or ecologically sensitive areas, space to install onshore wind farms may be limited. Offshore wind offers vast expanses of space with minimal land use conflicts and have a lower environmental cost compared to onshore installations. Furthermore, some people don’t like looking at wind farms, or think they are too noisy to live nearby. Offshore wind turbines, if they’re located far from shore, can avoid those perceptions and lead to better social acceptance.

Value

There are financial reasons that aren’t captured in the LCOE as well. Namely, the value of offshore wind can be much higher than onshore and other renewables.

Complementary Generation Profiles

One of the most significant advantages of offshore wind is the often uncorrelated nature of its generation profile with onshore wind and solar power. When the sun is not shining and onshore wind is not blowing, offshore wind is often cranking. In places with a lot of solar power and onshore wind, the times when those sources are unavailable are the times when electricity prices are high. In a 100% renewables future, those are the times that expensive storage would be needed. This means that offshore wind can earn more money for the energy it generates, and contribute to a more consistent energy supply and reduce reliance on energy storage solutions.

Matching Generation with Demand

Another source of value is that in many offshore areas, the windiest time of day aligns closely with peak demand periods, which is usually in the evenings. This alignment is crucial because this is when energy prices tend to be higher. So once again, offshore wind farms can achieve higher revenues per megawatt-hour compared to onshore wind or solar installations, whose peak generation times don’t tend to coincide with peak demand.

A good example of this is New York's coastline, whose consistent and strong winds are particularly robust during the late afternoon and evening hours. This is in addition to the significantly below average onshore wind resources available in New York. In New York and New England, onshore wind’s capacity factors are in the range of just 12-18% which makes offshore wind's capacity factor in the high 40s as seen in the figure below, a highly attractive option for energy generation, despite the higher cost of the turbines.

In New York, offshore wind's capacity factor in the high 40s is a better choice for energy generation than onshore wind with capacity factors in the teens. Source

For an Australian example, In Perth, Western Australia, offshore wind capacity also peaks in the late afternoon and evening as can be seen in the figure below. This phenomenon is so prevalent that it even has a local nickname, the Fremantle Doctor, called that because it consistently brings relief after oppressively hot summer days. The shape of this curve of potential offshore production is very close to the opposite of the solar power curve, it’s quite a perfect match.

Offshore wind capacity in Perth peaks around 3-9 pm. Source

Something similar can happen seasonally too. In New York, offshore wind achieves maximum capacity factors in the winter, which is perfect to contribute during times of high heating demand. In Perth, the Fremantle Doctor is strongest in the summer, which is when peak energy demand occurs there as air con is turned on to deal with maximum daily temperatures routinely over 40°C.

During summer months (December-February) in Perth, average capacity factor of offshore wind is higher which coincides with the peak energy demand for air-conditioners. Source

Offshore Wind Crisis

Putting the how and why of offshore wind into context, things have not been going swimmingly for offshore wind recently, especially in New York and the UK. In the last few years, the cost of offshore wind abandoned its long-term downward trajectory and rose a lot. We all know inflation has been high recently, interest rates have gone up and new energy projects of all kinds got more expensive for a while. Offshore wind prices rose more than other projects, and that’s because the capital cost is so much higher than in other types of energy. Prices in other sectors like solar panels and batteries have started to drop again whereas offshore wind prices remain elevated.

The consequence of all these things is that in 2023, about half of the offshore wind projects underway in New York were either in dispute or cancelled after the state denied developers' requests to increase the amount of money they’d be paid for energy from these projects. The economic pressures I just mentioned made the original contract prices unsustainable, leading to the difficult decision to cancel some projects, despite the developers having to pay millions in fees to do so. In response to this setback, New York State announced a new offshore wind solicitation for those same sites, allowing the original developers to resubmit bids for projects at revised prices, in competition with new bidders, which has just happened. Two big projects by Orsted and Equinor that were cancelled late last year have just been re-awarded at a higher price. Things are maybe back on track there.

The situation in the UK mirrored New York’s challenges when their 2023 auction for offshore wind projects received precisely zero bids. Developers were dissuaded by the ceiling price offered by the UK government, which was £44 ($54 US) of guaranteed revenue per megawatt-hour of power produced which they deemed too low to cover the now higher costs of project development. The UK has responded by increasing the price for the next round by 75% to £77, which shows a recognition of the financial realities facing the industry, but it is a little strange to me that they couldn’t have foreseen the need for that before the previous round, there was no shortage of industry experts warning them.

Conclusion

These events highlight the volatility and financial risks inherent in emerging areas like offshore wind, which have high capital costs. We will look back at 2023 as a blip on the overall picture of offshore wind, but it has given us all a reality check about what it will take to deliver all those gigawatts of capacity we are planning in the next decade. Renewable energy we have maybe gotten a bit too used to constantly decreasing prices ensuring project profitability without having to think about much else, or do proper risk analyses, and I hope that’s going to change in the future, with countries getting proactive about ensuring that the right pieces are in place for offshore wind projects to actually get delivered.

It’s really important to get these settings right to ensure a consistent pipeline of projects, if we’re to have any chance of achieving the ambitious targets the countries involved have outlined. When the entire industry stops and starts, it has a really harmful effect on everyone involved. A new industry like offshore wind needs certainty to get the supply chain secured, to get ports upgraded, ships built and a workforce trained. Hoperfully we can all learn from the turmoil of 2023 and do better next time these kinds of challenges come up.

Watch this content as a video on Engineering with Rosie on YouTube.