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OFFSHORE WIND EUROPE
Offshore wind smashes $100/MWh
Tom Harries
22 November 2016
1
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Bloomberg New Energy Finance
OFFSHORE WIND INSTALLATIONS COUNTRY RANKING, 2016 (MW)
5,106
3,280
1,163
1,271
520
706
69
5,281
3,271
1,672
404
600
165
302
10,387
6,552
2,835
1,675
1,120
871
201
371
0 11500
United Kingdom
Germany
China
Denmark
Netherlands
Belgium
Sweden
Other
MW
12
11
17
112
110
40
124121
5730
258
222
0 150
Japan
Korea (Republic)
Finland
United States
Ireland
Taiwan
Norway
France
Portugal
MW
Commissioned
Finance secured / under construction
StatusEMEA
APAC
AMER
Region
3
Note: Post-2020, this forecast covers announced/planned projects as well as planned capacity additions as part of national schemes, such as annual capacity auctions. ‘Other’ includes Finland, France, Ireland, Italy, Japan, Korea, Taiwan, US, Norway, Portugal and Sweden. Bloomberg New Energy Finance
GLOBAL OFFSHORE-WIND INSTALLATIONS BY COUNTRY, 2016-30 (GW)
1.6 1.5 0.91.9
0.91.7 1.2 0.9
2.71.2
3.0
0.7
1.00.4 1.8
0.50.5
0.7 0.7
0.7
0.8
0.8
0.8 0.8 0.81.0
1.5 2.62.6 2.8
3.03.0 3.0 3.0
3.0
3.0
3.0
3.0 3.0 3.0
0.40.60.6
0.7 0.70.7 0.7 0.7
0.7
0.51.4 1.1
1.8 2.0 2.9
2.3
2.1
2.6
2.9
1.5 1.6 1.3
1.9
4.9 5.3
8.0 7.8 7.5 7.98.5
6.9
8.57.6
9.7
5.3 5.4 5.1
2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Other
Belgium
Netherlands
Denmark
China
Germany
United Kingdom
13.8 18.7 24.0 31.9 39.7 47.2 Cumulative86.678.970.463.655.1 112.2107.1101.696.3
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Note: Based on forecast from the H2 2016 Offshore Wind Market Outlook Source: Bloomberg New Energy Finance
THE GROWING INFLUENCE OF AUCTIONSEUROPEAN OFFSHORE WIND FORECAST, 2005-25 (GW)
0.1 0.1 0.2 0.30.5
1.1
0.2
1.3
1.9
0.7
3.8
0.8
3.4
2.5
5.0
4.4
3.7 3.63.8
2.8
4.4
0.0
1.0
2.0
3.0
4.0
5.0
6.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
GW
Commissioning date
5
Note: Based on forecast from the H2 2016 Offshore Wind Market Outlook Source: Bloomberg New Energy Finance
THE GROWING INFLUENCE OF AUCTIONSEUROPEAN OFFSHORE WIND FORECAST SPLIT BY AUCTION CAPACITY, 2005-25 (GW)
0.4
2.32.6
3.7 3.6 3.8
2.8
3.6
1.5
2.71.8
0.8
0.1 0.1 0.2 0.30.5
1.1
0.2
1.3
1.9
0.7
3.8
0.8
3.4
2.5
5.0
4.4
3.7 3.63.8
2.8
4.4
0.0
1.0
2.0
3.0
4.0
5.0
6.0
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Non-auctions
Auctions
From 2019, auctions will be responsible for
46-100% of annual installations
Commissioning date
GW
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Source: Bloomberg New Energy Finance
HOW TO COMPARE APPLES WITH APPLES
It is inaccurate to compare winning bids across different country policies
EUR 49.9/MWhDKK 0.475/kWh
EUR 72.7/MWh
£ 119.89/MWh
£ 114.39/MWh
DKK 770/MWh
Tariff duration(no. of years or full-load hours?)
Tariff linked to inflation?(reducing/ flat tariff in real terms)
Merchant tail(power price for years after tariff)
Currency(a single currency for comparison)
Project lifetime(no. of operational years)
Key factors to consider:
To a lesser extent…
Commissioning year(can impact starting price of tariff)
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IMPACT OF AUCTIONS ON OFFSHORE WIND COST OF ENERGYPROJECT LCOE BY COMMISSIONING YEAR, 2012-28 ($/MWH)
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SOME OTHER REASONS FOR LOW PRICES
9
Note: X-axis denotes commissioning date, bubble size denotes project capacity. A project-weighted average was used for projects with multiple turbine models Bloomberg New Energy Finance
AVERAGE TURBINE SIZE FOR EUROPEAN PROJECTS BY EXPECTED COMMISSIONING DATE, 1990-2025 (MW)
120
400
496
0
1
2
3
4
5
6
7
8
9
1990 1995 2000 2005 2010 2015 2020 2025
CommissionedFinancing secured / under constructionPermittedAnnounced / planning begunAnnual weighted average
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EUROPEAN OFFSHORE TURBINE MODEL MARKET SHARE BY INSTALLED CAPACITY, 2016 (MW)
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EUROPEAN OFFSHORE TURBINE MODEL MARKET SHARE BY PIPELINE CAPACITY, 2016 (MW)
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AUCTIONS ARE DRIVING DOWN CAPEXDISCLOSED EUROPEAN CAPEX VALUES, 1998 – 2018 ($M/MW)
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Note: Data accurate as of 7 June 2016 Source: Bloomberg New Energy Finance
WHO IS SUBMITTING RECORD-LOW AUCTION PRICES?TOP 10 DEVELOPERS BY % EQUITY, 2016 (GW)
Experienced developers are winning the latest auctions
Winners of last three offshore wind auctions:
Near-shore auction: Vattenfall ($55/MWh)
Borssele I & II: Dong Energy ($66/MWh)
Horns Rev III: Vattenfall ($81/MWh)
1.88
1.03
1.21
1.12
3.29
0.64
1.06
5.17
1.67
1.59
1.36
1.26
0.64
0.56
0.53
0.49
0.48
Dong
Vattenfall
E.on
Iberdrola
RWE
Northland Power
Stadtwerke Muenchen
Siemens
SSE
Statoil
Commissioned Finance secured/ Under construction
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WIND FARMS ARE GENERATING MORE MEGAWATT-HOURSFORECASTED AND HISTORICAL DENMARK AND UK CAPACITY FACTORS VSCOMMISSIONING DATE
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WE ARE INSTALLING WIND FARMS QUICKERINSTALLATION TIMES FOR NEAR SHORE PROJECTS VS PROJECT COMMISSIONING YEAR (DAYS/UNIT)
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WHAT DOES A TYPICAL OFFSHORE WIND PROJECT LOOK LIKE?EUROPEAN PROJECT CHARACTERISTICS, 2016
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WHAT DOES A TYPICAL OFFSHORE WIND PROJECT LOOK LIKE?EUROPEAN PROJECT CHARACTERISTICS, 2016
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Note: Floating projects capacities (in yellow) are exaggerated for visual purposes. Source: Bloomberg New Energy Finance
WHAT DOES A TYPICAL OFFSHORE WIND PROJECT LOOK LIKE?EUROPEAN PROJECT CHARACTERISTICS, 2016
Deeper
0
60
120
180
240
0 100 200
Water depth (m)
Distance from substation to shore (km)
Far
Shallow
Deep
Near
How do we classify a ‘typical’ offshore wind
project?
Near-shore &
shallow waters
vs.
Far-shore &
deep waters
vs.
Floating
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