IDEAS home Printed from https://ideas.repec.org/a/eee/rensus/v31y2014icp343-352.html
   My bibliography  Save this article

What economic support is needed for Arctic offshore wind power?

Author

Listed:
  • Salo, Olli
  • Syri, Sanna

Abstract

Wind power is increasingly being installed in cold climates and in offshore locations. It is generally recognised that installing wind power to offshore locations is more expensive than onshore. The additional challenges from Arctic conditions with annual sea icing are still poorly known. We reviewed the existing knowledge of offshore wind power costs and developed a calculation model for the economics of offshore wind turbines in Finland, including taxes and sea base rent, to obtain a base case for determining the required tariff support. The model was tested with different production and cost rates to obtain a tariff price, which would make offshore wind power on Finnish territory economically viable for the producer. The main developers of planned offshore projects in Finland were interviewed to obtain a comparison between the created model and industry expectations. The cost of erected turbines was estimated to be 2750€/kW. With this cost of capacity, it was clear that a higher than the current tariff price (83.5€/MWh) will be required for offshore developments. Our analysis indicated a price level of about 115€/MWh to be required. We found that even rather small changes in cost or production rates may lead to excess profits or economic losses and further research and pilot projects are required to define a more reliable tariff level.

Suggested Citation

  • 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.
  • Handle: RePEc:eee:rensus:v:31:y:2014:i:c:p:343-352
    DOI: 10.1016/j.rser.2013.11.051
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1364032113008009
    Download Restriction: Full text for ScienceDirect subscribers only

    File URL: https://libkey.io/10.1016/j.rser.2013.11.051?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. Heptonstall, Philip & Gross, Robert & Greenacre, Philip & Cockerill, Tim, 2012. "The cost of offshore wind: Understanding the past and projecting the future," Energy Policy, Elsevier, vol. 41(C), pages 815-821.
    2. Blanco, María Isabel, 2009. "The economics of wind energy," Renewable and Sustainable Energy Reviews, Elsevier, vol. 13(6-7), pages 1372-1382, August.
    3. Madariaga, A. & de Alegría, I. Martínez & Martín, J.L. & Eguía, P. & Ceballos, S., 2012. "Current facts about offshore wind farms," Renewable and Sustainable Energy Reviews, Elsevier, vol. 16(5), pages 3105-3116.
    4. Green, Richard & Vasilakos, Nicholas, 2011. "The economics of offshore wind," Energy Policy, Elsevier, vol. 39(2), pages 496-502, February.
    5. Snyder, Brian & Kaiser, Mark J., 2009. "Ecological and economic cost-benefit analysis of offshore wind energy," Renewable Energy, Elsevier, vol. 34(6), pages 1567-1578.
    6. Kaldellis, J.K. & Kapsali, M., 2013. "Shifting towards offshore wind energy—Recent activity and future development," Energy Policy, Elsevier, vol. 53(C), pages 136-148.
    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. 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.
    2. 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.
    3. Cross, Sam & Hast, Aira & Kuhi-Thalfeldt, Reeli & Syri, Sanna & Streimikiene, Dalia & Denina, Arta, 2015. "Progress in renewable electricity in Northern Europe towards EU 2020 targets," Renewable and Sustainable Energy Reviews, Elsevier, vol. 52(C), pages 1768-1780.
    4. Zakeri, Behnam & Syri, Sanna & Rinne, Samuli, 2015. "Higher renewable energy integration into the existing energy system of Finland – Is there any maximum limit?," Energy, Elsevier, vol. 92(P3), pages 244-259.
    5. Kaishan Wang & Di Wu & Kai Wu & Kun Yu & Chongwei Zheng, 2023. "Interdecadal Variation Trend of Arctic Wind Energy," Energies, MDPI, vol. 16(18), pages 1-19, September.
    6. 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.
    7. 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.

    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. 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.
    2. Poulsen, Thomas & Lema, Rasmus, 2017. "Is the supply chain ready for the green transformation? The case of offshore wind logistics," Renewable and Sustainable Energy Reviews, Elsevier, vol. 73(C), pages 758-771.
    3. Sun, Xiaojing & Huang, Diangui & Wu, Guoqing, 2012. "The current state of offshore wind energy technology development," Energy, Elsevier, vol. 41(1), pages 298-312.
    4. Gao, Xiaoxia & Yang, Hongxing & Lu, Lin, 2014. "Study on offshore wind power potential and wind farm optimization in Hong Kong," Applied Energy, Elsevier, vol. 130(C), pages 519-531.
    5. Rodrigues, S. & Restrepo, C. & Kontos, E. & Teixeira Pinto, R. & Bauer, P., 2015. "Trends of offshore wind projects," Renewable and Sustainable Energy Reviews, Elsevier, vol. 49(C), pages 1114-1135.
    6. Prässler, Thomas & Schaechtele, Jan, 2012. "Comparison of the financial attractiveness among prospective offshore wind parks in selected European countries," Energy Policy, Elsevier, vol. 45(C), pages 86-101.
    7. Toonen, Hilde M. & Lindeboom, Han J., 2015. "Dark green electricity comes from the sea: Capitalizing on ecological merits of offshore wind power?," Renewable and Sustainable Energy Reviews, Elsevier, vol. 42(C), pages 1023-1033.
    8. Brzezińska-Rawa, Anna & Goździewicz-Biechońska, Justyna, 2014. "Recent developments in the wind energy sector in Poland," Renewable and Sustainable Energy Reviews, Elsevier, vol. 38(C), pages 79-87.
    9. Castro-Santos, Laura & Martins, Elson & Guedes Soares, C., 2016. "Cost assessment methodology for combined wind and wave floating offshore renewable energy systems," Renewable Energy, Elsevier, vol. 97(C), pages 866-880.
    10. Dhunny, A.Z. & Timmons, D.S. & Allam, Z. & Lollchund, M.R. & Cunden, T.S.M., 2020. "An economic assessment of near-shore wind farm development using a weather research forecast-based genetic algorithm model," Energy, Elsevier, vol. 201(C).
    11. Jacobsson, Staffan & Karltorp, Kersti, 2013. "Mechanisms blocking the dynamics of the European offshore wind energy innovation system – Challenges for policy intervention," Energy Policy, Elsevier, vol. 63(C), pages 1182-1195.
    12. Makena Coffman & Paul Bernstein, 2015. "Linking Hawaii’s Islands with wind energy," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 54(1), pages 1-21, January.
    13. Philipp Beiter & Aubryn Cooperman & Eric Lantz & Tyler Stehly & Matt Shields & Ryan Wiser & Thomas Telsnig & Lena Kitzing & Volker Berkhout & Yuka Kikuchi, 2021. "Wind power costs driven by innovation and experience with further reductions on the horizon," Wiley Interdisciplinary Reviews: Energy and Environment, Wiley Blackwell, vol. 10(5), September.
    14. Nagababu, Garlapati & Kachhwaha, Surendra Singh & Savsani, Vimal, 2017. "Estimation of technical and economic potential of offshore wind along the coast of India," Energy, Elsevier, vol. 138(C), pages 79-91.
    15. Parkison, Sara B. & Kempton, Willett, 2022. "Marshaling ports required to meet US policy targets for offshore wind power," Energy Policy, Elsevier, vol. 163(C).
    16. Kaldellis, J.K. & Apostolou, D. & Kapsali, M. & Kondili, E., 2016. "Environmental and social footprint of offshore wind energy. Comparison with onshore counterpart," Renewable Energy, Elsevier, vol. 92(C), pages 543-556.
    17. Thomas Poulsen & Charlotte Bay Hasager, 2016. "How Expensive Is Expensive Enough? Opportunities for Cost Reductions in Offshore Wind Energy Logistics," Energies, MDPI, vol. 9(6), pages 1-23, June.
    18. Thomas Poulsen & Charlotte Bay Hasager & Christian Munk Jensen, 2017. "The Role of Logistics in Practical Levelized Cost of Energy Reduction Implementation and Government Sponsored Cost Reduction Studies: Day and Night in Offshore Wind Operations and Maintenance Logistic," Energies, MDPI, vol. 10(4), pages 1-28, April.
    19. Fares M’zoughi & Payam Aboutalebi & Izaskun Garrido & Aitor J. Garrido & Manuel De La Sen, 2021. "Complementary Airflow Control of Oscillating Water Columns for Floating Offshore Wind Turbine Stabilization," Mathematics, MDPI, vol. 9(12), pages 1-15, June.
    20. Torres-Rincón, Samuel & Bastidas-Arteaga, Emilio & Sánchez-Silva, Mauricio, 2021. "A flexibility-based approach for the design and management of floating offshore wind farms," Renewable Energy, Elsevier, vol. 175(C), pages 910-925.

    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:rensus:v:31:y:2014:i:c:p:343-352. 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.elsevier.com/wps/find/journaldescription.cws_home/600126/description#description .

    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.