Better estimates of LCOE from audited accounts – A new methodology with examples from United Kingdom offshore wind and CCGT. (May 2019)

• Record Type: Journal Article
• Authors: Aldersey-Williams, John; Broadbent, Ian D.; Strachan, Peter A.
• Is Part Of: Energy policy. Volume 128(2019)
• Page Start: 25
• Page End: 35
• Publication Date: 2019-05
• Subjects: LCOE -- Offshore wind -- Accounts; Energy policy -- Periodicals; Politique énergétique -- Périodiques; Electronic journals; 333.79
• DOI: 10.1016/j.enpol.2018.12.044
• Languages: English
• ISSNs: 0301-4215

Abstract

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. Highlights: LCOE estimates from public domain data can be unreliable. A new methodology is proposed, based on robust audited accounting information. This methodology is demonstrated for offshore wind and CCGT in the UK. The analysis shows that UK offshore wind LCOE remains higher than recent CfD bids. The analysis suggests that UK offshore wind LCOE is now falling gradually.