Introduction to Offshore Wind Economics & Risks

Note: The course can be attended as a stand-alone session but also provides an excellent way to introduce yourself to or refresh your knowledge of Offshore Wind Power before attending the "Offshore Wind Power USA 2012" conference on the following days.

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Course highlights

• The cost structure of offshore wind projects, how these have evolved and the factors determining their future development
• Turbine, foundation and installation innovations; and how they enhance the economics of offshore wind
• Does “better wind” offshore balance its extra costs and risks?
• Calculating and critiquing “Levelized Cost” and other key metrics, including the sensitivities of project returns to key project variables

This unique, 1-day course, aimed specifically at business and commercially-focused people, will provide attendees with a stimulating introduction to the economics of offshore wind and the investment risks that it presents.

We explain the factors which most influence these economics, the competitive environment in which offshore wind must operate and the developments which may alter the financial returns and risks involved. As well as presenting the qualitative issues, we investigate the commonly used metric “levelized cost of electricity” (LCOE), its relation to cash flows and costs, and the sensitivity of LCOE and other key business metrics to variations in model input values.

Audience

The course is accessible to business people from various job functions and company types, including:

• Business & Strategy Development, Financial & Investment Planning, Policymaking, Product Planning, Project Management, Senior Corporate Management

from

• Utilities, Power Generating Companies, Government, Banks and other Investors, Grid Operators, Technology Supplies, Wind Developers

All Green Power Academy courses run in an informal and extremely interactive manner, encouraging discussion and questions, to ensure that participants get the most value from the day.

Level & Style

We assume no prior financial expertise for this course, which seeks to provide clarity to what can be a complex and interconnected series of economic influences.

The course runs in a friendly, informal manner, encouraging discussions and questions to ensure that participants get the most out of their time. In order to better understand and illustrate the various topics, some simple calculations and other explanatory exercises may be incorporated.

Approximate Timings    (include lunch plus morning and afternoon refreshment breaks):
 09:00 - 17:00  

 “Very solid introduction from a very knowledgeable instructor”

“Rich in discussion” 

“Good balance between theoretical and interactive”

Agenda Details

Offshore wind farm development and planning issues

• Wind Resources & Risk:
  • Measurements, estimates and uncertainties
  • The impact of wind risk on project economics and returns
• Siting issues and key stakeholder concerns:
  • Seabed surveys and their implications for installation cost/risk
  • Environmental surveys and impact studies, both offshore and coastal processes
  • Human, navigational, military and other limitations on wind farm footprint
• Technology trends and choices:
  • An overview of technology challenges offshore, addressing both key infrastructure and operational factors including supply chain constraints
  • Key trends in future offshore technology, including turbine design, foundations, installation and operation
  • Integrating offshore wind into the grid

The economics & competitive context of offshore wind:

• Wind resource size and energy production
• Wind variability and grid integration: what impact and at what cost?
• Government policies and incentives: both revenue opportunities and political/regulatory risks
• Electricity markets and pricing
• Available current data (and its uncertainties) on:
  • Capital and installation costs, including recent trends
  • Operations and maintenance costs, including availability and failure risks
  • Market contribution and pricing impacts of wind power, including curtailment risks
• Estimating lifecycle costs of offshore wind:
  • Levelised Cost of Electricity (LCOE) for offshore wind
  • Levelised vs. marginal cost in electricity pricing
  • The balancing costs of wind
• Relating LCOE to key financial metrics such as Net Present Value (NPV), Internal Rate of Returns (IRR), Returns on Equity, Financing costs and so on: cash flow planning
• Offshore wind in a competitive context:
  • Cost comparisons with other power producers, both fossil and renewable
  • A critique of metrics such as LCOE in comparing different power sources