IDEAS home Printed from https://ideas.repec.org/a/eee/renene/v160y2020icp1174-1184.html
   My bibliography  Save this article

An economic model for offshore transmission asset planning under severe uncertainty

Author

Listed:
  • Bains, Henna
  • Madariaga, Ander
  • Troffaes, Matthias C.M.
  • Kazemtabrizi, Behzad

Abstract

The inherent uncertainties associated with offshore wind are substantial, as are the investments. Therefore, investors are keen to identify and evaluate the risks. This paper presents a model to economically evaluate projects from an offshore transmission owner’s perspective by considering the revenue streams, capital costs, and operational expenditure. To allow a more realistic economic evaluation, data, regulatory information, and expert knowledge are collected, curated and, where necessary, combined with statistical techniques. A generic 1.2 GW project is used as a case study. This research contributes to a deeper understanding of the severe uncertainties involved in offshore transmission planning and their impact on a project’s expected profit. Understanding their impact, through a sensitivity analysis where individually one factor is varied within an interval, supports informed decision making with limited information. Uncertainty in interest rates, planned operational expenditure and, particularly, cable failure rates were found to be critical to an investor’s return. For the case study considered, comparing cable failure rates based on operational experience to inputs based on literature, resulted in a 64.2% lower net present value. In conclusion, further research into cable failures, and addressing the uncertainty in inputs used for economic evaluations could be beneficial to the industry.

Suggested Citation

  • Bains, Henna & Madariaga, Ander & Troffaes, Matthias C.M. & Kazemtabrizi, Behzad, 2020. "An economic model for offshore transmission asset planning under severe uncertainty," Renewable Energy, Elsevier, vol. 160(C), pages 1174-1184.
    • Handle: RePEc:eee:renene:v:160:y:2020:i:c:p:1174-1184
    DOI: 10.1016/j.renene.2020.05.160
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S096014812030865X
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.renene.2020.05.160?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. González, J. Serrano & Rodríguez, Á.G. González & Mora, J. Castro & Burgos Payán, M. & Santos, J. Riquelme, 2011. "Overall design optimization of wind farms," Renewable Energy, Elsevier, vol. 36(7), pages 1973-1982.
    2. Martin, Rebecca & Lazakis, Iraklis & Barbouchi, Sami & Johanning, Lars, 2016. "Sensitivity analysis of offshore wind farm operation and maintenance cost and availability," Renewable Energy, Elsevier, vol. 85(C), pages 1226-1236.
    3. Sajadi, A. & Strezoski, L. & Clark, K. & Prica, M. & Loparo, K.A., 2018. "Transmission system protection screening for integration of offshore wind power plants," Renewable Energy, Elsevier, vol. 125(C), pages 225-233.
    4. Dicorato, M. & Forte, G. & Pisani, M. & Trovato, M., 2011. "Guidelines for assessment of investment cost for offshore wind generation," Renewable Energy, Elsevier, vol. 36(8), pages 2043-2051.
    5. Serrano González, J. & Burgos Payán, M. & Riquelme Santos, J., 2013. "Optimum design of transmissions systems for offshore wind farms including decision making under risk," Renewable Energy, Elsevier, vol. 59(C), pages 115-127.
    6. Salo, Olli & Syri, Sanna, 2014. "What economic support is needed for Arctic offshore wind power?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 31(C), pages 343-352.
    7. John Warnock & David McMillan & James Pilgrim & Sally Shenton, 2019. "Failure Rates of Offshore Wind Transmission Systems," Energies, MDPI, vol. 12(14), pages 1-12, July.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Hutchison, Zoë L. & Gill, Andrew B. & Sigray, Peter & He, Haibo & King, John W., 2021. "A modelling evaluation of electromagnetic fields emitted by buried subsea power cables and encountered by marine animals: Considerations for marine renewable energy development," Renewable Energy, Elsevier, vol. 177(C), pages 72-81.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Sadik Kucuksari & Nuh Erdogan & Umit Cali, 2019. "Impact of Electrical Topology, Capacity Factor and Line Length on Economic Performance of Offshore Wind Investments," Energies, MDPI, vol. 12(16), pages 1-21, August.
    2. Satir, Mert & Murphy, Fionnuala & McDonnell, Kevin, 2018. "Feasibility study of an offshore wind farm in the Aegean Sea, Turkey," Renewable and Sustainable Energy Reviews, Elsevier, vol. 81(P2), pages 2552-2562.
    3. Serrano González, Javier & Burgos Payán, Manuel & Riquelme Santos, Jesús & González Rodríguez, Ángel Gaspar, 2015. "Maximizing the overall production of wind farms by setting the individual operating point of wind turbines," Renewable Energy, Elsevier, vol. 80(C), pages 219-229.
    4. Lin, Zi & Cevasco, Debora & Collu, Maurizio, 2020. "A methodology to develop reduced-order models to support the operation and maintenance of offshore wind turbines," Applied Energy, Elsevier, vol. 259(C).
    5. De Prada Gil, Mikel & Domínguez-García, J.L. & Díaz-González, F. & Aragüés-Peñalba, M. & Gomis-Bellmunt, Oriol, 2015. "Feasibility analysis of offshore wind power plants with DC collection grid," Renewable Energy, Elsevier, vol. 78(C), pages 467-477.
    6. Ioannou, Anastasia & Angus, Andrew & Brennan, Feargal, 2018. "A lifecycle techno-economic model of offshore wind energy for different entry and exit instances," Applied Energy, Elsevier, vol. 221(C), pages 406-424.
    7. de Prada Gil, Mikel & Gomis-Bellmunt, Oriol & Sumper, Andreas, 2014. "Technical and economic assessment of offshore wind power plants based on variable frequency operation of clusters with a single power converter," Applied Energy, Elsevier, vol. 125(C), pages 218-229.
    8. Ederer, Nikolaus, 2014. "The right size matters: Investigating the offshore wind turbine market equilibrium," Energy, Elsevier, vol. 68(C), pages 910-921.
    9. Schwanitz, Valeria Jana & Wierling, August, 2016. "Offshore wind investments – Realism about cost developments is necessary," Energy, Elsevier, vol. 106(C), pages 170-181.
    10. Nikkhah, Saman & Rabiee, Abbas, 2018. "Optimal wind power generation investment, considering voltage stability of power systems," Renewable Energy, Elsevier, vol. 115(C), pages 308-325.
    11. Christoph Wolter & Henrik Klinge Jacobsen & Lorenzo Zeni & Georgios Rogdakis & Nicolaos A. Cutululis, 2020. "Overplanting in offshore wind power plants in different regulatory regimes," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 9(3), May.
    12. Song, Mengxuan & Wen, Yi & Duan, Bin & Wang, Jun & Gong, Qi, 2017. "Micro-siting optimization of a wind farm built in multiple phases," Energy, Elsevier, vol. 137(C), pages 95-103.
    13. Jin, Xin & Zhang, Zhaolong & Shi, Xiaoqiang & Ju, Wenbin, 2014. "A review on wind power industry and corresponding insurance market in China: Current status and challenges," Renewable and Sustainable Energy Reviews, Elsevier, vol. 38(C), pages 1069-1082.
    14. Sun, Zeyi & Li, Lin & Bego, Andres & Dababneh, Fadwa, 2015. "Customer-side electricity load management for sustainable manufacturing systems utilizing combined heat and power generation system," International Journal of Production Economics, Elsevier, vol. 165(C), pages 112-119.
    15. Abdollahzadeh, Hadi & Atashgar, Karim & Abbasi, Morteza, 2016. "Multi-objective opportunistic maintenance optimization of a wind farm considering limited number of maintenance groups," Renewable Energy, Elsevier, vol. 88(C), pages 247-261.
    16. Sajid Ali & Sang-Moon Lee & Choon-Man Jang, 2017. "Techno-Economic Assessment of Wind Energy Potential at Three Locations in South Korea Using Long-Term Measured Wind Data," Energies, MDPI, vol. 10(9), pages 1-24, September.
    17. Adedipe, Oyewole & Brennan, Feargal & Kolios, Athanasios, 2016. "Review of corrosion fatigue in offshore structures: Present status and challenges in the offshore wind sector," Renewable and Sustainable Energy Reviews, Elsevier, vol. 61(C), pages 141-154.
    18. Ahmed Al-Ajmi & Yingzhao Wang & Siniša Djurović, 2021. "Wind Turbine Generator Controller Signals Supervised Machine Learning for Shaft Misalignment Fault Detection: A Doubly Fed Induction Generator Practical Case Study," Energies, MDPI, vol. 14(6), pages 1-15, March.
    19. Behnam Zakeri & Samuli Rinne & Sanna Syri, 2015. "Wind Integration into Energy Systems with a High Share of Nuclear Power—What Are the Compromises?," Energies, MDPI, vol. 8(4), pages 1-35, March.
    20. Deveci, Muhammet & Cali, Umit & Kucuksari, Sadik & Erdogan, Nuh, 2020. "Interval type-2 fuzzy sets based multi-criteria decision-making model for offshore wind farm development in Ireland," Energy, Elsevier, vol. 198(C).

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:renene:v:160:y:2020:i:c:p:1174-1184. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.journals.elsevier.com/renewable-energy .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.