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ID: 178840

Addressing recent misreporting of findings from “Better estimates of LCOE from audited accounts – A new methodology with example / Aldersey-Williams, John

Aldersey-Williams, John	Journal Article
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Summary/Abstract

Recent interest in the Levelised Cost of Energy (LCOE) for offshore wind has led to considerable media coverage of this topic. The paper to which this article refers provides some useful insights, but the authors are concerned that their findings are being misreported and misinterpreted. Specifically, some of the media coverage appears to misunderstand or disregard the acknowledged limitations of the paper, citing it to support contentions regarding the likely trajectory of costs for offshore wind farms. This research note addresses some of these issues and urges caution in use of the original paper’s findings. This new research note recapitulates the main themes of the original paper and directly addresses the areas where its findings have apparently been misunderstood. It concludes with a restated and reinforced warning that the analysis and projection of historic costs in offshore wind, or indeed in any fast-developing technology sector, should be undertaken with extreme caution when used to consider future cost trends.

Key Words

Offshore Wind ; LCOE ; Accounts

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ID: 166403

Better estimates of LCOE from audited accounts – A new methodology with examples from United Kingdom offshore wind and CCGT / Aldersey-Williams, John

Aldersey-Williams, John	Journal Article
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Summary/Abstract

Around the world, government policies to support new renewable energy technologies rely on accurate estimates of Levelised Cost of Energy (LCOE). This paper reveals that such estimates are based on “public domain” data which may be unreliable. A new approach and methodology has been developed which uses United Kingdom (UK) “audited” data, published in company accounts, that has been obtained from Companies House, to determine more accurate LCOE estimates. The methodology is applicable to projects configured within Special Purpose Vehicle (SPV) companies. The methodology is then applied to a number of UK offshore wind farms and one Combined Cycle Gas Turbine (CCGT) project to develop new cost data which is then compared to that presently in the public domain. The analysis reveals that recent offshore wind projects show a slightly declining LCOE and that public domain cost estimates are unreliable. But of most concern is that offshore wind farm costs are still much higher than those implied by recent bids for UK government financial support via Contracts for Difference (CfDs). The paper concludes by addressing further the question of how offshore wind projects can achieve the degree of LCOE reductions required by recent CfD bids.

Key Words

Offshore Wind ; LCOE ; Accounts

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