http://www.newenergyworldnetwork.com/renewable-energy-news/by-technology/wind/cost-barriers-still-hamper-the-offshore-wind-industry-report.html

Cost and technological track records remain major challenges for the offshore wind industry, according to a new study by accountancy firm PricewaterhouseCoopers (PwC).

The conclusion of PwC’s Offshore Proof survey of industry players and power companies was that the offshore wind industry has a way to go to prove it can take its place as a sustainable part of the energy mix.
The make or break issues for the offshore wind industry – according to the PwC study – are cost reduction, construction risk and financing, supply chain management, grid access, investment attractiveness and regulatory certainty.
The biggest challenge facing the industry is pushing costs down to a range where offshore wind can compete without subsidies. About 42 per cent of contractors expect costs in the industry will decrease, while one quarter predict cost increases, the PwC study shows.
A vast majority of developers, meanwhile, said supply chain capacity constraints are a significant problem for the construction industry, but two thirds were satisfied with how risk had been managed so far. The outlook is most positive in terms of risk attractiveness, as nearly two-thirds of the European financial institutions in the survey said wind power investment risk has reduced in the past two years.
One of the main hurdles the offshore wind industry faces is that government bodies are split between positive and negative sentiment about its development, despite support for major expansion in Europe’s North Sea.
Nearly two-thirds of government bodies expect technological breakthroughs in other renewable energy fields to overtake the offshore wind sector. Three-quarters are nonetheless reasonably confident that it will play an enduring part in the energy mix in the coming 20 years, and over half expect it to be economic without subsidies within 15 years.
The Fukushima nuclear emergency dramatically shifted perception of the offshore wind sector in comparison to nuclear in its favour. While only a tenth of financial institutions interviewed before the disaster favoured investment in wind energy, this rose to three-quarters after the incident.
The coming five years will be a critical time for offshore wind power to turn promise into performance, according to the PwC analysis. Early experience of offshore wind projects has given cause for optimism, with less than a fifth of developers reporting downtime as a hindrance.
Ronan O’Regan, PwC director for renewable energy, said, ‘The jury is still out on just how far offshore wind power can move down the cost curve. It is possible to envisage design and technological innovation reducing some aspects of cost significantly, including scale economies in turbine size.
‘But, unlike the dramatic reductions in small component electronics, much of the cost of offshore wind power comes from heavy engineering, steel and other raw materials inputs. Recent trends in commodity prices suggest that these cost components will remain volatile.’