BUSINESS DEVELOPMENT
To illustrate this point Wind Energy Update commissioned a survey of market experts and asked the Tier 0 developers this simple question:
If you were selecting an offshore contractor today, how important would these factors be?
Their answers are shown below.
The figures in the table above are an indication of approximate current values and are shown only to illustrate the arithmetic involved.
The CAPEX (capital expenditure) total includes the cost of the turbine, the support structure, the cabling array, the installation and the project & insurance costs. Also the eventual ‘end of life’ decommissioning is included here to give a total cost per MW (megawatt) of installed capacity, which is depreciated over the life of the turbine.
The message could not be clearer. “If your quality is not good enough, it doesn’t matter if you work just round the corner. If your quality is not good enough we will buy from someone whose quality is good enough, wherever they are based.” As for cost, this survey says that cost reduction is not an end in itself. Cost reduction has to be achieved within the constraints of the required quality of performance. Reliability and availability are massive factors in the LCoE calculation. If the AEP drops because of unreliable production performance or unavailability of productive assets then the LCoE will rise.
THE LEVELISED COST OF ENERGY (LCOE) It is worth taking the time to understand how the LCoE is calculated so that you can identify the influence that an individual cost driver will have. This will help you to establish your priorities and offer value to your prospective clients.
The OPEX (operating expenditure) total includes the costs of operation, planned and unplanned maintenance, power transmission charges and operating insurance fees.
Once the cost has been annualised (A) it can be divided by the energy production (B) expressed in the MWh (megawatt hours) that each MW of installed capacity will deliver in a year. So, a 5MW turbine will produce (5 x 3,482) = 17,410 megawatt hours of energy/year.
The answer of A ÷ B is the Levelised Cost of Energy (LCoE) on which the whole performance management is focussed.
If whatever contribution you can make to the supply chain will demonstrably: • reduce any of the costs, or • increase the energy productivity of installed capacity
Then you will have customers knocking on your door.
www.windenergynetwork.co.uk
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