August 9, 2023
Between 2015 till 2021 there is a clear downward trend in the LCOE*, both onshore and offshore, driven by continued technology and process improvements.
In 2022, both onshore and offshore wind industry were hit by profit margin pressures as western markets grappled with a perfect storm of supply chain challenges and capex increases.
Heading into 2023, these issues persist and the LCOE continues to increase over the year, especially in the offshore segment.
Incorrys expects raw material prices for the offshore segment to return to pre-COVID levels post 2024. LCOE is expected to return to a downward trend after 2025 when new capacity comes onstream.
Incorrys expects the LCOE for the onshore segment to decrease to USD $30\MWh in 2030 and for offshore to $70\MWh. The lower costs may incent further development of the industry.
*The LCOE is the lifetime cost of an electricity plant, divided by the amount of electricity it is expected to generate over its lifetime.
Note: the LCOE is NOT at 100% Load Factor.
1.IRENA (2022), RENEWABLE POWER GENERATION COSTS IN 2021, retrieved from Renewable power generation costs in 2021 (irena.org)
2.IRENA (2020), Global LCOE and Auction values 2010-2023, retrieved from Global LCOE and Auction values (irena.org)
3.EIA (2022, March), Levelized Costs of New Generation Resources in the Annual Energy Outlook 2022, retrieved from https://www.eia.gov/outlooks/aeo/pdf/electricity_generation.pdf
4.Morten Kofoed Jensen (2022, August, 30), LCOE. Update of recent trends (Offshore), retrieved from https://www.nrel.gov/wind/assets/pdfs/engineering-wkshp2022-1-1-jensen.pdf