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UTILITY WEEK | 22ND - 28TH SEPTEMBER 2017 | 19 Finance & Investment Project: Moray East CfD strike price: £57.50/MWh Developers: EDPR and Engie Location: Moray Firth, off the northeast coast of Scotland Capacity: 950MW Delivery year: 2022/23 Moray East achieved its low cost in large part because of improvements in turbine technol- ogy, in particular turbine capacity, according to a spokesperson for EDPR. A smaller number of turbines will be needed to produce the electricity than would previously have been the case, which has knock-on effects on the costs of installation, associated infrastructure and maintenance, he explained. He would not say what turbines will be used in the project, but this will be announced soon. Innovation and co-operation by the project's supply chain have also played a part in bringing costs down, he said. Project: Triton Knoll CfD strike price: £74.75/MWh Developers: Innogy (50 per cent) and Statkra (50 per cent) Location: 32km off the Lincolnshire coast and 50km off the coast of north Norfolk Capacity: 860MW Delivery year: 2021/2022 There are several influences driving the low strike price achieved by the project, according to James Cotter, project director at Triton Knoll. The offshore wind industry is now matur- ing, which has driven better understanding of costs at all points in the project's lifecycle from design to construction and operations and maintenance, he says. The Triton Knoll project will be using some of the latest offshore turbines on the market, the V164-9.5 MW turbine, launched two months ago. Manufacturer MHI Vestas claims that the turbines are the most powerful and efficient on the market. Cotter explains that the project will be located in a patch of relatively shallow sea, which means that the project can use monopile foundations – effectively giant steel pipes hammered into the seabed – which are the cheapest type of foundation to install. Collaborating with companies in the supply chain has also been key to finding new ways to keep the costs down, Cotter explains. For exam- ples, offshore wind turbines have traditionally needed a lot of maintenance due to conditions at sea. This is expensive because maintenance engineers have to be transported to remote locations, sometimes using helicopters and staying overnight in specially-designed ships. To reduce the cost of maintenance, the team working on Triton Knoll have carefully consid- ered exactly how much maintenance each piece of plant and equipment needs. "We've worked very closely with the supply chain to make sure that we can carry out the maintenance as efficiently as possible," Cotter says. But the nature of cost reduction will shi from physical equipment towards project management, he believes. "We can always become more efficient with foundations, which might cut costs by another 5-10 per cent. But it'll be more about how we work together, and how we apportion risk," he says. Risk typically used to be transferred to the operations and maintenance contractor, but it makes more sense cost-wise to instead work in partnership with them, as the oil industry did in the late 1990s, he says. Matthew Wright, managing director for Dong Energy UK, believes that although the dramatic cost reductions in recent years will be tough to replicate, there is no reason to believe the industry has achieved its full potential on costs. "Even mature technology continues to improve. So the pace of reduc- tion may slow but the supply chain and our- selves are constantly innovating," he says. However, lack of government policy on offshore wind could hamper further reduc- tions, some believe. In its 2015 manifesto, the Conservative party promised that there would be three CfD auction rounds before 2020, with £730 million support available. But the current government has not con- firmed when the second and third rounds will take place, if at all. Neither has it men- tioned how much financial support will be available. The publication of its clean growth strategy has been repeatedly delayed and nothing has been said about policy for aer 2021. There are still projects outstanding from the second and third offshore wind licens- ing rounds that have yet to receive support via auctions, without which they might not be built, says Robert Gross, director of the Centre for Energy Policy and Technology at Imperial College. "If you're looking at making an investment in wind, you'll be looking for long-term contracts, otherwise it's too risky. International investors have no shortage of opportunities for offshore projects all over the world, so the government needs to be clear that there will be a contractual offer if it wants to attract investment to the UK," he says. Jonathan Marshall, energy analyst at the Energy and Climate Intelligence Unit, warns: "It will be a lot more expensive to get access to finance if future revenues aren't certain. So unless the next two auctions are announced, the policy gaps will lead to higher finance costs, which will offset cost reductions from the industry becoming more mature."