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Important!
Please keep this discussion focussed by following the guidelines at the bottom of this article. In particular, all comments comparing energy options like nuclear and renewables are off-topic.
What is meant by "internalized costs"?
Internalized costs are the costs which can be accurately accounted for in our current systems. In energy production, these costs typically consist of capital costs, financing costs, operation and maintenance costs, and exploration costs. Some energy options incur these costs in various stages such as extraction, transportation and refinement. Profits and taxes are excluded wherever possible in order to isolate the pure cost of production.
Internalized costs of offshore wind
Wind power costs depend strongly on several factors, the most important of which being the capital costs, capacity factor and discount rate. The current status of the internalized costs of offshore wind is well summarized in two recent reports from the IEA and BNEF.
To get an overview of capital costs, a graph compiled by the IEA Medium-Term Renewable Energy Market Report is given below.
The BNEF World Energy Perspective document gives capacity factors of European offshore wind farms in the range of 32-42%.
Discount rates for onshore wind were discussed in the IEA Medium-Term Renewable Energy Market Report where examples were given for a developed nation (Germany) and a developing nation (South Africa). Offshore wind carries substantially more risk due to large investment costs, harsh operating environments, connection challenges and a total dependence on policy. Increased risk implies increased financing costs.
Electricity
The LCOE of offshore wind is given below as a function of the capacity factor for different capital costs (at 8% financing costs) and financing costs (at $5000/kW capital costs). Other assumptions include O&M costs of $100/kW/yr and a plant lifetime of 20 years. The Excel file from which these figures were compiled can be downloaded here.
Heating
The cost of using offshore wind power for heat is given below.
Transport
As outlined in the previous article on the internalized costs of nuclear, transport costs using offshore wind energy will be estimated based on optimistic projected technologically mature synfuel production technology.
Commenting
In order to assist in finding the consensus view on the internalized costs of offshore wind, please follow these simple commenting guidelines:
Three types of comments are welcome, each introduced by a keyword:
- DATA: Please give your opinion on any of the numbers presented in the article. Of particular interest is the average global capital cost of offshore wind ($/kW), average global capacity factors and average global financing costs (%). Each DATA comment will be weighted by the number of "likes" when the data is ultimately processed.
- REBUTTAL: If you strongly disagree with an existing DATA comment, please write a short rebuttal. The "likes" received by a REBUTTAL comment will subtract from the "likes" of the DATA comment. A REBUTTAL comment can once again be rebutted to reduce its weighting.
- CORRECTION: If you see a serious error in the numbers presented in the above analysis, please correct me so that I can correct the article.
Miscellaneous guidelines:
- Make sure your comment gives only one piece of information (use multiple comments for multiple pieces of information).
- Keep things short.
- Please try to be as objective as at all possible. For this process to work, we all need to be in the mindset of dialectic instead of debate.
- Externalities, potential technological breakthroughs and other energy options are off-topic.
Many comments are welcome. More data = greater accuracy.
