Frontpage LCOE Calculator Model

LCOE Calculator Model

New tool for cost calculation

A collaborative effort to cut 40% from the cost of offshore wind generation by 2020 is the promise made to governments by a broad wind industry platform. To fulfil that promise and avoid endless argument about which members of the supply chain are saving how much and where, the parties saw the development of an agreed methodology for calculating not only each element in the cost of producing one unit of electricity but also the cuts made, as an essential first step.
No sooner said than done, Megavind guided the birth of a unique offshore wind cost calculator. The calculator, which is a mathematical formula, allows users to enter data in a standardised way and to arrive at a Levelized Cost of Energy (LCOE) that everyone can agree on.
By definition, LCOE is an en expression of the production cost of each unit of electricity generated over the working life of the plant taking into account wind farm development costs, capital investment, financial costs and lifetime running costs.
"Depending on the methodology they use, two persons can reach very different estimates of LCOE for a planned wind farm simply due to differences in calculation method," says Megavind Liaison Officer, Jakob Holst. "There are many ways to model LCOE in a spreadsheet. When a turbine manufacturer negotiates terms with a utility customer and each applies a different model, reaching agreement on the finer details is much harder. As a result, both add a risk premium which pushes up the LCOE," he adds.
A common industry standard for LCOE modelling solves the problem. It facilitates like-for-like comparison of wind farm costs; it helps pave the way for common efforts to cut costs by identifying main cost drivers and their relative potential for LCOE reduction; and it provides a basis for benchmarking progress towards the minus 40% goal.
The cost calculator design mirrors methods already used by the offshore wind industry to evaluate the cost elements when deciding to invest in a project.
Hence, the LCOE model has been validated by the players who initiated it: Vattenfall, Siemens Wind Power, Vestas Wind Systems, MHI Vestas Offshore Wind, DONG Energy Wind Power, E.ON and DTU Wind Energy.
The group is strongly committed to lowering the LCOE for offshore wind and sees the calculator as a first step towards accurately measuring and monitoring the industry’s progress.
The calculator was created for Megavind by ESP Consulting, an energy consultancy firm operating out of London, Copenhagen and Amsterdam.

New accurate tool for cost calculation

Click here to try the Megavind LCOE model, which uses the same calculation methods as leaders in the offshore wind industry.

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