NREL is a national laboratory of the U.S. Department of Energy Office of Energy Efficiency & Renewable Energy Operated by the Allia nce for Sustainable Energy, LLC

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.



### Contract No. DE

- AC36

- 08GO28308 

# 2013 Cost of Wind Energy Review

C. M on é , A. Smith

, B. Maples, and M. Hand National Renewable Energy Laboratory

Technical Report NREL/TP

- 5000

- 63267 February 2015NREL is a national laboratory of the U.S. Department of Energy Office of Energy Efficiency & Renewable Energy Operated by the Allia nce for Sustainable Energy, LLC

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.



### Contract No. DE

- AC36

- 08GO28308 National Renewable Energy Laboratory 15013 Denver West Parkway Golden, CO 80401 303

- 275

- 3000 • www.nrel.gov 

# 2013 Cost of Wind Energy Review

C. M on é , A. Smith

, B. Maples, and M. Hand National Renewable Energy Laboratory

Prepared under Task No. WE15

. CA03

Technical Report NREL/TP

- 5000

- 63267 February 2015NOTICE

This report was prepared as an account of work sponsored by an agency of the United States government. Neither the United States government nor any agency thereof, nor any of their employees, makes any warranty, express or implied, or assumes any legal liability or responsibility for the accuracy, completeness, or usefulness of any information, apparatus, product, or process disclosed, or represents that its use would not infringe privately owned rights. Reference herein to any specific commercial product, process, or service by trade name, trademark, manufacturer, or otherwise does not necessarily constitute or imply its endorsement, recommendation, or favoring by the United States government or any agency thereof. The views and opinions of authors expressed herein do not necessarily state or reflect those of the United States government or any agency thereof.

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

Available electronically at http://www.osti.gov/scitech

Available for a processing fee to U.S. Department of Energy and its contractors, in paper, from:

U.S. Department of Energy Office of Scientific and Technical Information P.O. Box 62 Oak Ridge, TN 37831

- 0062 phone: 865.576.8401 fax: 865.576.5728 email: mailto:reports@adonis.osti.gov

Available for sale to the public, in paper, from:

U.S. Department of Commerce National Technical Information S ervice 5285 Port Royal Road Springfield, VA 22161 phone: 800.553.6847 fax: 703.605.6900 email: orders@ntis.fedworld.gov online ordering: http://ww w.ntis.gov/help/ordermethods.aspx

Cover Photos: (left to right) photo by Pat Corkery, NREL 16416, photo from SunEdison, NREL 17423, photo by Pat Corkery, NREL 16560, photo by Dennis Schroeder, NREL 17613, photo by Dean Armstrong, NREL 17436, photo by Pat Corkery, NREL 17721.

NREL prints on paper that contains recycled content.

### 1

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

# Acknowledgments

This work was supported by the U.S. Department of Energy under Contract No. DE

- AC36

- 08GO28308 with the National Renewable Energy Laboratory. Funding for the work was provided by the DOE Office of Energy Efficiency and Renewable Energy, Wind and Water Power Technologies Office. The authors would like to extend thanks to Mark Higgins from the DOE Wind and Water Power Technologies Office for supporting this research. T hanks also to Jose Zayas, Rich Tusing

, and Dan Beals ( DOE contractor s ) of the DOE Wind and Water Power Technologies Office as well as Karlynn Cory, David Mooney , and David Corbus of NREL for reviewing and providing strategic guidance in the development of this work

. Thanks to Aaron Barr (MAKE Consulting), Aisma Vitina (Ea Energiana lyse), Carsten Westergaard (Texas Tech University), and David Weir (Norwegian Water Resources and Energy Directorate) for reviewing earlier versions of this report

. A ny remaining errors or omissions are the sole responsibility of the authors.

### 2

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

# List of Acro nyms

AEP Annual e nergy p roduction

AEP net 

### Net a nnual e nergy p roduction

AWEA American Wind Energy Association

BNEF Bloomberg New Energy Finance

BOEM Bureau of Ocean Energy Management

BOS Balance of system

C ap E x Capital e xpenditures

CF net 

### Net c apacity f actor

C p 

### Coefficient of Power

CRF Capital r ecovery f actor

DOE U.S. Department of Energy

DOI U.S. Department of the Interior

EIA U.S. Energy Information Administration

ENS Danish Ministry of Energy and Environment

EPRI Electric Powe r Research Institute

FCR Fixed c harge r ate

GWEC Global Wind Energy Council

JEDI Jobs and Economic Development Impact

kW K ilowatt

LCOE Levelized c ost of e nergy
LLC Land l ease c ost

MACRS Modified Accelerated Cost Recovery System

MAIN Maintenan ce
MW Megawatt

MWh Megawatt

- hour

NREL National Renewable Energy Laboratory

OP ER Operation

OCS Outer Continental Shelf

O p E x Operational e xpenditures

PPA Power p urchase a greement

PTC Production t ax c redit

PV dep Present v alue of d epreciation

SCBS System c ost b reakdown s tructure

TSR Tip

- s peed r atio

WACC Weighted a verage c ost of c apital

### 3

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

# Executive Summary

T his report uses representative commerical project types to estimate the levelized cost of energy (LCOE) for both land

- based and offshor e wind plants in the U nited S tates (U.S.) for 2013

. Scheduled to be p ublished on an annual basis, it relies on both market and modeled data t o maintain a n up

- to

- date understanding of wind generation cost trends and drivers

. It is intended to provide insigh t into current component

- level costs and a basis for understanding variability in the
LCOE across the industry. D ata and tools developed from this analysis are used to inform wind technology cost projections, goals, and improvement opportunities

.
The prim ary elements of the 2013 report include:

• Estimated LCOE for a reference land

- based wind project installed in the interior region of the U.S. in 2013

• Estimated cost of energy for a reference fixed

- bottom U.S. offshore wind project reflecting projects curre ntly in late

- stage development on the North Atlantic Coast

• Sensitivity analyses showing the range of effects that basic LCOE variables could have on the cost of wind energy for land

- based and offshore wind power plants

• Historical trends in the LCOE for lan d

- based and offshore wind plants.
The LCOE equation applied here is a standard method ology (Short et al. 1995, EPRI 2007) that includes four basic inputs: capital expenditure s , operational expenditure s , annual energy production, and the fixed charge rate ( a coefficient that captures the cost of financing the construction of a wind project and the entirety of the planned plant ’ s operational life ). Additional detail on the LCOE can be found in the 2010 Cost of Wind E nergy Review (Tegen et al. 2012)

. The LCOE values reported within the reviews are expected to be greater than negotiated contract prices for wind power, as reflected by recent power purchase agreements. This increase is because recent power purchase agreements incorporate the value of the producti on tax credit (PTC)

, accelerated depreciation, other Renewable Energy Credit s, or other applicable revenue streams.



## Key Inputs and Results
Throughout th is report , the representative land

- based and offshore project types are referred to as “reference projec ts.” Tables ES1 and ES2 summarize the four basic LCOE inputs for the reference land

- based and fixed

- bottom offshore wind projects

, with some additional detail around project capital expenditures and the respective turbine capacity factor associated with th e net annual energy prod u ction estimate. These are the assumptions used to calculate LCOE for the 2013 reference projects. In each table, the left

- hand column shows the data source. “Model” refers to the techno

- economic models used, such as the N ational R e newable E nergy L aboratory ’s (NREL ’s )
W ind T urbine D esign C ost and S caling M odel ( Fingersh et al. 2006 , Maples et al. 2010 ) . “Market” indicates that NREL used current market data

, with individual data sources listed in sections of this paper related to the specific cost components.

### 4

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. Table ES1. Summary Des cription of the Land

- Based Reference Project Using 1.91

- MW Turbines



### Data

Source 1.9 1

- MW
Land

- Based

Turbine $/k ilowatt (k W ) 1.9 1

- MW
Land

- Based

Turbine $/ Megawatt

hour ( MWh )

Model Turbine capital cost 1, 185 3 5
Model Balance of system 349 10
Model Financial costs 155 5
Market Market price adjustment * 39 1
Market CAPITAL EXPENDITURES 1,728 51

Market O perating exp enditures ($/k W /yr) 50 1 5
Market Fixed charge rate (%) 10. 2
Model Net annual energy pro duction ( MWh /MW/yr) 3, 410

Model Net c apacity factor (%) 38.5
Calculated TOTAL LCOE ($/MWh) 66
*The market price adjustment is the difference between the modeled cost and the market price paid for the typical

project i n 201 3

.

Table ES2. Summary Descript ion of the Fixed

- Bottom Offshore Reference Project Using 4.3

- MW Turbines



### Data 4.3

- MW 4.3

- MW

Source Offshore
Turbine Offshore
Turbine $/kW $/MWh

Model Turbine capital cost 1,660 56

Model Balance of system 2,697 91

Market Financial costs 830 28

Market CAPITAL EXPENDITURES 5,187 175

Market O perating exp enditures ($/k W /yr) 136 39

Market Fixed charge rate (%) 11.7

Model Net annual energy production ( MWh /MW/yr) 3,463

Model Net c apacity factor (%) 39

Calculated TOTAL LCOE ($/MWh) 215

### 5

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

### Land

- based wind project cost estimates were derived primarily from installed project data reported by Wiser and Bolinger ( 2014 ) and supplemented with outputs from NREL’s W ind T urbine Design
Co st and S caling M odel

. Because of the absence of installed or op erating offshore wind projects in the United States, the offshore reference project data were estimated from proposed U.S. projects and market data from the existing international offshore wind industry. The assumed wind resource regime for the offshore re ference plant is comparable to that of the U.S. North Atlantic Coast. The land

- based reference project was assumed to have a moderate wind resource regime and location with in the interior region of the U nited S tates

.
As domestic and global wind markets mat ure, information about component

- level costs are increasingly available. To manage and organize this component

- level cost data, NREL has developed a s ystem c ost b reakdown s tructure (SCBS) for land

- based and offshore wind projects. A
SCBS is able to break a n entire wind project into smaller, more specific component s (e.g., gearbox and generator )

. It provide s a standardized approach to characterizing total lifetime expenditures for wind projects at the component level, including both physical (e.g., materials , labor, and equipment) and financial (e.g., insurance, profit, and carrying charges) costs. Each level of the SCBS hierarchy represents an increasingly detailed look at the project components. The new SCBS is further described in Section 2 and the associa ted appendices

. M ore detailed breakdown s of capital expenditure s (C ap E x ) are shown in Figures ES1 and ES2.

The three major component cost categories and many subcategories are represented in these figures including wind turbine ( e.g., wind turbine compone nts), balance of system ( e.g., d evelopment

, e lectrical i nfrastructure, a ssembly and i nstallation )

, and financial costs ( e.g., insurance and construction finance). From these data, it is clear that the breakdown of wind turbine component and installation co sts var ies greatly between land

- based and offshore turbines. For example, the majority of the land

- based project cost (68%) is in the turbine itself

, whereas the turbine makes up only 32% of the offshore reference project cost

.

### 6

This report is available at no cost from the National Renewable Energy Laborator y (NREL) at www.nrel.gov/publications. Figure ES1. Capital expenditures for the land-based wind plant reference project



### Source: NREL

Figure ES2. Capital expenditures for the offshore wind plant reference project



### Source: NREL

### 7

This report is available at no cost from the National Renewable Energy Laborator y (NREL) at www.nrel.gov/publications. 

### Figures ES3 and ES4 define the LCOE associat ed with the land-based and offshore reference plants along with a range of sensitivity variables a ffecting cost and performance. Reference project values of $66/megawatt-hour (MWh) for land-ba sed wind and $215/MWh for offshore wind rely on inputs summarized in Tables ES1 and ES2 (and are identified by the vertical white line in these figures). Figures ES3 and ES4 also show the observed industry ranges for LCOE inputs and the resulting LCOE. To provide more detail on the fixe d charge rate, the authors divided it into two principal components: discountrate and economic operationa l life. Annual energy production (AEP) was converted to capacity f actor to help convey the full range of performance reflected by 2013 projects. As shown, the land-based net cap acity factors from 2013 projects range from 25% to 50% (Wiser and Bolinger 2014), with an assume d 38.5% for the 2013 reference project. Clearly, the ranges for land-based and offshore wind LCOE inputs vary significantly (note the different axes in these figures). For example, offshore wi nd net capacity factor ranges from 30% to 50%, with an assumption of 39% for the reference project . Both figures show the effect capacity factor and CapEx have on the LCOE for both land-based and offshore wind projects. More detailed descriptions of the ranges and assumptions are included in th e body of the report.

Figure ES3. Land-based wind assumptions and ranges for key LCOE input parameters



### Source: NREL

Note: The reference LCOE represents the esti mated LCOE for the NREL reference project. Changes in LCOE for a single variable can be understood by moving to th e left or right along a specific variable. Values on the X-axis indicate how the LCOE will change as a given variable is altered, and assuming that all others are consta nt. For example, as capacity factor decreases toward 25%, the LCOE shown on the X-axis will increase accordingly to more than $100/MWh. As the operational life for the reference project moves toward 30 years, the LCOE will decrease to nearly $58/MWh.

### 8

This report is available at no cost from the National Renewable Energy Laborator y (NREL) at www.nrel.gov/publications. Figure ES4. Offshore wind assumptions and ranges for key LCOE input parameters



### Source: NREL

Along with the reference LCOE estimates, NREL researchers created additional land-based wind project scenarios to demonstrate the impact of some project permutations: taller towers used on the project, larger rotors used to capture greater AEP, the combination of both a taller tower and larger rotor diameter, and higher average annual wind speed . Each of these scenarios resulted in a lower LCOE relative to the reference project, ranging from $63/MWh for a project with taller towers to $52/MWh combining all of the scenarios. The al tered variables and their resulting LCOE are summarized in Table ES3.

### 9

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. Table ES3. Land

- Based LCOE Cost Reduction Scenarios

Reference Taller

Tower Larger

Rotor Tower &

Rotor Higher
Wind Speed All
Scenarios
Combined

Nameplate c apacity (MW) 1.9 1 1.9 1 1.9 1 1.9 1 1.9 1 1.9 1

Rotor d iameter (m) 96.9 96.9 110 110 96.9 110

H ub h eight (m) 82.7 100 82.7 100 82.7 100
Average wind speed at 50 m (Average wind speed at h ub h eight) 7.25 (7.79) 7.25 (8.0) 7.25 (7.79) 7.25 (8.0) 8.0 (8.6) 8.0 (8.8 )

Net annual energy production (MWh/MW/yr) 3,410 3,536 3,796 3,918 3,866 4,345

LCOE ($/MWh) 66 63 59 57 58 52



### From these results, researchers came to the following key conclusions:

• Final LCOE estimates con tinue to show a downward trend from the 2010 Cost of Wind Energy Review (Tegen et al. 2012) to 2013. Offshore turbine costs have shown similar cost reductions ; h owever, the decrease in LCOE for the land

- based projects can be attributed more to the turbine technology

, and the offshore decreases to the b alance

- of

- s ystem costs.

• Although the reference project LCOE for land

- based installations was observed to be $ 66 /MWh, the full range of land

- based estimates from the sensitivity analysis covers $50

– $1 0 3 /MWh.

• T he reference project offshore estimate is $2 1 5/MWh, with a full range of $1 27

– $2 70 /MWh. This dramatic range is mostly caused by the large variation in capital expenditures ( $3,200

– $6,0 00/kW) reported by project developers.

• The s ensitivity analysis shows t hat LCOE can vary widely based on changes in any one of several key factors ; h owever, the variable with the most dramatic effect on LCOE is capacity factor

— which is the case for both land

- based and offshore projects.
Although LCOE calculations in this repo rt do not include policy factors, it should be noted that the number of commissioned U.S. land

- based wind projects was down significantly in 2013 , part ly because of policy uncertainty around the PTC in 2012. The expiration of the PTC forced a substantial d e celeration of wind development ; so much that, even with the January 1, 2013, extension of the PTC, demand for new wind projects proved to be weak. The American Wind Energy Association (2012) report ed that three past expirations of the PTC resulted in a dr op of
73%

− 93% for annual land

- based wind installation s in the year after expiration

, and 2013 saw a 92% drop in installations compared to 2012

, with the PTC expiration. The extension in 2013 that allowed for projects to meet PTC requirements is expected to bolster the industry and show an increase in land

- based installations in 2014 and 2015

. Observations made by Wiser and Bolinger (2014) support th ese expectations, showing early indications from the first quarter of 2014 which suggest a dramatic increase i n the number of land

- based projects installed in 2014 compared to
2013.

### 10

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

# Table of Contents

Acknowledgments

................................ ................................ ................................ ................................ ...... 1 List of Acronyms

................................ ................................ ................................ ................................ ......... 2 Executive Summary

................................ ................................ ................................ ................................ .... 3 

### Key Inputs and Results

................................ ................................ ................................ ........................... 3 Table of Contents

................................ ................................ ................................ ................................ ...... 10 List of Figures

................................ ................................ ................................ ................................ ........... 11 List of Tables

................................ ................................ ................................ ................................ ............. 11 1 Background

................................ ................................ ................................ ................................ ......... 13 2 Approach

................................ ................................ ................................ ................................ ............. 16 3 System Cost Breakdown Structure

................................ ................................ ................................ .. 18 

### 3.1 SCBS Description

................................ ................................ ................................ ....................... 18
3.2 Benefits

................................ ................................ ................................ ................................ ....... 19
3.3 Approach and Limitations

................................ ................................ ................................ ........... 19
4 Land

- Based Wind

................................ ................................ ................................ ............................... 23 

### 4.1 2012 Land

- Based Cost of Wind Energy

................................ ................................ ...................... 23
4.2 Compariso n of Two Different Cost of Wind Energy Methodologies

................................ ......... 24
4.3 2013 Land

- Based Cost of Wind Energy

................................ ................................ ...................... 24
4.4 Capital Expenditures for Land

- Based Wind

................................ ................................ ............... 25
4.5 Operating Expenditures for Land

- Based Wind

................................ ................................ ........... 28
4.6 Annual Energy Production and Capacity Factor for Land

- B ased Wind

................................ ..... 29
4.7 Land

- Based Wind Reference Project Summary

................................ ................................ .......... 31
4.8 Land

- Based Wind LCOE Calculation

................................ ................................ ......................... 32
4.9 LCOE Sensitivities

................................ ................................ ................................ ...................... 33
4.10 Cost Reduction Scenarios

................................ ................................ ................................ ............ 34
5 Offshore Wind

................................ ................................ ................................ ................................ ..... 37 

### 5.1 2013 Market Developments

................................ ................................ ................................ ........ 37
5.2 CapEx for Fixed

- Bottom Offshore Wind Reference Project

................................ ...................... 38
5.3 Operating Expenditures for Offshore Wind

................................ ................................ ................ 41
5.4 Offshore Annual Energy Production and Capacity Factor

................................ .......................... 41
5 .5 Financial Parameters for Offshore Wind

................................ ................................ ..................... 43
5.6 Offshore Wind Reference Project Summary

................................ ................................ ............... 43
5.7 Offshore Wind LCOE Calculation

................................ ................................ .............................. 44
5.8 Offshore Wind LCOE Sensitivities

................................ ................................ ............................. 46
6 Historical Levelized Cost of Wind Energy

................................ ................................ ....................... 47
7 Conclusions

................................ ................................ ................................ ................................ ........ 48 8 Related and Future Work

................................ ................................ ................................ ................... 49 References

................................ ................................ ................................ ................................ ................. 50 Appendix A. Present Value of Depreciation Calculations

................................ ................................ .... 53 

### Land

- Based Wind

................................ ................................ ................................ ................................ . 53 Offshore Wind

................................ ................................ ................................ ................................ ...... 53 Appendix B. Summary of Assumptions for 2013 Reference Projects

................................ ................. 54 

### Land

- Based Wind Project Assumptions

................................ ................................ ............................... 54 Offshore Wind Project Assumptions

................................ ................................ ................................ .... 55 Appendix C. Summary of Assumptions for 2012 Reference Projects

................................ ................. 56 

### Land

- Based Wind Project Assumptions

................................ ................................ ............................... 56 Offshore Wind Project Assumptions

................................ ................................ ................................ .... 57 Appendix D. Summary of Historical Levelized Cost o f Energy Using Reference Projects

............... 58 Appendix E. Summary of Land

- Based System Cost Breakdown Structure

................................ ....... 60 Appendix F. Summary of Offshore System Cost Breakdown Structure

................................ ............. 74

### 11

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

# List of Figures

Figure ES1. Capital expenditures for the land

- based wind plant reference project

............................ 6 Figure ES2. Capital expenditures for the offshore wind plant reference project

................................ . 6 Figure ES3. Land

- based wind assumptions and ranges f or key LCOE input parameters

.................. 7 Figure ES4. Offshore wind assumptions and ranges for key LCOE input parameters

....................... 8 Figure 1. Levels 1 and 2 of the SCBS

................................ ................................ ................................ ...... 18 Figure 2. Wind system cost breakdown structure: CapEx levels 1 to 3

................................ .............. 21 Figure 3. Wind system cost breakd own structure: OpEx levels 1 to 3

................................ ............... 22 Figure 4. Capital expenditures for the land

- based wind reference project

................................ ......... 26 Figure 5. Compo nent level cost breakdown for the 2013 land

- based wind reference project

......... 33 Figure 6. Sensitivity of land

- based wind LCOE to key input parameters

................................ ............... Figure 7. Reported capital costs for installe d, under construction, contracted, and approved offshore wind projects in $2012 (2000 to 2016)

................................ ................................ ............... 39 Figure 8. Capital expenditures for the 2013 offshore wind reference project

................................ ........ Figure 9. Cost br eakdown for the 2013 offshore wind reference project

................................ ............ 45 Figure 10. Sensitivity of offshore wind LCOE to key input parameters

................................ .............. 46 Figure D1. Historical land

- based wind plant levelized cost of energy (LCOE) as calculated by NREL including the U.S. Department of Energy’s LCOE goals

................................ ..................... 58



# List of Tables

Table ES1. Summary Description of the Land

- Based Reference Project Using 1.91

- MW Turbines

................................ ................................ ................................ ................................ ................. 4 Table ES2. Summary Descripti on of the Fixed

- Bottom Offshore Reference Project Using 4.3

- MW Turbines

................................ ................................ ................................ ................................ ... 4 Table ES3. Land

- Based LCOE Cost Reduction Scenarios

................................ ................................ ..... 9 Table 1. Resources Referenced Prior to Developing the SCBS

................................ ........................... 20 Table 2. Summary of Inputs and Reference Project 2012 LCOE for Land

- Based Installations

........ 23 Table 3. Comparison of Market

- Based Cost of Wind Energy, 2013 Projects to Combined 2013

- 2014 Projects

................................ ................................ ................................ ............................. 24 Table 4. Summary of Inputs and Reference Project LCOE for 2 013 Land

- Based Installations

........ 25 Table 5. Land

- Based LCOE and CapEx Breakdown

................................ ................................ .............. 27 Table 6. Land

- Based Wind Reference Project OpEx

................................ ................................ ............. 29 Table 7. Reference Land

- Based AEP Input Assumptions

................................ ................................ .... 29 Table 8. Land

- Based Wind Turbine AEP and Capacity Factor Summary

................................ ........... 30 Table 9. Land

- Based Reference Project Assumptions Summary

................................ ........................ 31 Table 10. Land

- Based Wind Reference Project LCOE Cost Breakdown

................................ ............. 32 Table 11. Example of Land

- Based LCOE Reduction Scenarios

................................ ........................... 36 Table 12. Summary of Inputs and Results for the Fixed

- Bottom Offshore Wind Project

.................. 37 Table 13. Fixed

- Bottom Offshore LCOE Component Cost Breakdown

................................ ............... 41 Table 14. Fixed

- Bottom Reference Offshore AEP I nput Assumptions

................................ ................ 42 Table 15. Offshore Wind Turbine AEP and Capacity Factor Summary

................................ ............... 43 Table 16. Fixed

- Bottom Offshore Reference Project Assumptions Summary

................................ ... 44 Table 17. Fixed

- Bottom Offshore Wind LCOE and Reference Project Cost Breakdown

................... 45 Table 18. Hist orical Land

- Based LCOE in Nominal Dollars

................................ ................................ .. 47 Table 19. Historical Offshore LCOE in Nominal Dollars

................................ ................................ ....... 47 Table 20. Ranges of LCOE a nd Elements for U.S. Land

- Based and Offshore Wind in 2013

............ 48 Table A1. Present Value of Depreciation Calculation for Land

- Based Wind Reference ( **d** = 8.8%)

................................ ................................ ................................ ................................ ............. 53 Table A2. Present Value of Depreciation Calculation for Offshore Wind Reference ( **d** = 10.5%)

..... 53 Table B1. Comprehensive List of Assumptions for 2013 Land

- Based Ref erence Project Cost of Energy

................................ ................................ ................................ ................................ .... 54

### 12

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. Table B2. Comprehensive List of Assumptions for 2013 Offshore Reference Project Cost of Energy

................................ ................................ ................................ ................................ ............. 55 Table C1. Comprehensive List of Assumptions for 2012 Land

- Based Reference Project Cost of Energy

................................ ................................ ................................ ................................ ............. 56 Table C2. Comprehensive List of Assumptions for 2012 Offshore Reference Project Cost o f Energy

................................ ................................ ................................ ................................ .................. 57 Table D1. Historical Land

- Based Wind Plant Levelized Cost of Energy as Calculated by NREL

..... 58 Table D2. Historical L and

- Based Average Wind Plant Turbine Specifications

................................ .. 58 Table D3. Historical Offshore Wind Plant Levelized Cost of Energy as Calculated by NREL

.......... 59 Table D4. Department of Energy’s Cost Goals for Land

- Based and Offshore Wind Power

............. 59 Table E1. Land

- Based Wind System Cost Breakdown Structure Terms and Definitions

................. 60 Table F1. Offshore Wind System Cost Breakdown Structure Terms and Definitions

....................... 74

### 13

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

# 1 Background

This report evaluates the l evelized cost of energy (LCOE) for land

- base d and offshore wind projects in the United States. LCOE is a m etric used to assess the cost of electricity generation and the total plant

- level impact from technology design changes . LCOE can be used to compare costs of all electricity generator types

, as long as the same formula and calculations are used for each type

. D ifferent methodologies have been developed to calculate LCOE; the one used for this analysis is fully described in A Manual for the Economic Evaluation of Energy Efficiency and Renewable En ergy Technologies (Short et al. 1995). 1 

### Use of LCOE is especially important for technologies

, where there is a constant tradeoff between maintaining or reducing capital investment and increasing energy capture , like wind and solar power

.

There are four bas ic inputs into the LCOE equation. The first three

— capital expenditures (C ap E x ), operati onal expenditures (O p E x ), and annual energy production (AEP)

— enable this equation to capture system

- level impacts from design changes (e.g., taller wind turbine towers)

. The total costs of financing are represented by the fourth basic input

— a fixed charge rate (FCR)

— that represents the amount of revenue required to pay the carrying charges 2 

### on an investment during the expected project life per year

. 3 

### For this analysis

, th e life of a wind project is assumed to be 20 years

. All analysis and LCOE results will be in constant $2013 throughout the report unless otherwise noted

.
This report provides an update to the 2010 Cost of Wind Energy Review (Tegen et al

. 2012) and an abbr eviated look at the 201 3 wind LCOE, turbine costs, financing, and market

. Four specific areas are addressed:

• Estimate the LCOE for the reference land

- based wind project located in a midwestern or

“ interior ” site in the United States (U.S.) in 2013

• Estima t e the LCOE for the reference fixed

- bottom U.S. offshore wind project reflecting projects currently in late

- stage development on the North Atlantic C oast

• Conduct s ensitivity analyses showing the range of effects basic LCOE variables could have on the level ized cost of wind energy for land

- based and offshore wind power plants

• Represent the N ational R enewable E nergy L aboratory ’s (NREL’s) c alculated historical
LCOE for land

- based and offshore wind plants.
Despite addressing a number of assumptions and cost var iables

, this report does not capture the full spectrum of drivers that affect wind energy prices

. For example, i t does not consider policy incentives (such as the production tax credit , or PTC )

, factors from underlying economic conditions (such as an econo mic recession)

, the cost of building long

- haul interstate transmission,

or potential integration costs . These important variables can significantly impact wind power costs by reducing total costs, adding expenditures , delaying projects, or halting projects altogether. Nevertheless

, their exclusion is consistent with past economic analysis conducted by NREL (Tegen et al. 2012, Lantz et al. 2012) and others (B loomberg N ew E nergy F inance 2012, Lazard

1 For an over view of cost

- of

- energy calculators and models, see Gifford et al

. (2011).

2 Carrying charges include the return on debt, return on equity, taxes, depreciation, and insurance.

3 The fixed charge rate does not allow for detailed analysis of specific financi ng structures ; however, these structures can be represented through the use of a weighted average cost of capital as the discount rate input.

### 14

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

### 20 08 )

, as LCOE is not traditionally defined as a measure of all societal costs and benefits associated with power generation resources

.

T he following equation is used to calculate LCOE :

LCOE = ( C ap E x × FCR ) + O p E x ( AEP net 

### / 1

, 000 )

Where:

LCOE = le velized cost of energy [ $/ megawatt

- hour ( MWh) ]

FCR = fixed c harge rate (%)

=

C ap E x = Capital e xpenditures ($/ kilowatt [ kW ] )

AEP net = net annual energy production (MWh/ MW/ yr)

=

O p E x = Operati onal e xpenditures ($/ k W/yr )

=

d = discount rate [Weight ed average cost of capital (WACC)] (%)

n = operation al life (years)

T = effective tax rate (%)

PVdep = present value of depreciation (%)

CF net 

### = net capacity factor (%)

LLC = land lease cost ($/kW/yr)

O

P

ER = pre tax levelized operation cost ( O&M ) ($/kW/yr)

MAIN = pretax levelized maintenance cost ( O&M ) ($/kW/yr)

The following sections of this report de fin e the approach to calculating the LCOE and introduc e the new s ystem c ost b reakdown s tructure s (SCBS) to organize data and provid e a common terminology a cross varying technologies. The report describe s ea ch component of the LCOE equation

 C ap E x , O p E x , AEP, and FCR

 market context, and range of data for typical U.S. wind projects in the year 201 3

. In t his 201 3 Cost of Wind Energy Review

, the authors first de fine the 201 3 LCOE components for a land

- based ref erence project using an installed weigh t ed average 

# ( ) ( ) ( ) ( ) T PVdep T

d d d

n n



### − ×

− ×

− + +

1 1

1 1 1

LLC + O PER + MAIN net 

### MW x 8760 x CF

### 15

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

### turbine sized at 1.9 1

- megawatt s (MW) , which was the average nameplate capacity installed in the United States in 2013

. Next

, the authors describe the 201 3 LCOE components for an offshore wind reference pro ject using 4.3

- MW offshore turbines , which is the average nameplate c apacity installed globally in 2013

.

### 16

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

# 2 Approach

The 201 3 Cost of Wind Energy Review applies the same approach as the 2010 and 2011 reports (Tegen et al

. 2012 , Tege n et al. 2013 ). The autho rs used a number of data sources and models in NREL’s estimation of the cost of wind energy. For land

- based wind technology calculations , the
U nited S tates had over 61 ,000 MW of capacity install ed and operating at the end of 2013. 4 

### The available data from the se wind projects provided a large sample of empirical data on plant costs and performance . By contrast, no commercial offshore wind technology wa s deployed in the United States at the time of this study , and the market data supporting offshore cost of w ind energy estimates are limited to international projects and proposed U.S. projects

.

In addition to historical market data, the authors employed mo dels to estimate disaggregated plant

level cost components. Therefore

, detailed data are provided on the in dividual components that make up capital expenditures , operating expenditures , and estimated annual energy production for the reference projects defined here. Given the market and model data available, t he general approach for estimating the levelized cost of wind energy include s :

1. Evaluating market conditions and data for projects that have been installed in the United
States in a given year, to understand total installed project cost, AEP, operating costs, and representative turbine technology. The primary source for these data is DOE ’s Annual Wind Technologies Market Report (Wiser and Bolinger 2014). Accordingly, LCOE estimates reflect market conditions to the extent possible. Because of the small sample size of the 2013 commissioned projects, the projects were combined with other s that were currently under construction in early 2014

, with anticipated completion in 2014 per Wiser and Bolinger. The capacity

- weighted averages of the U.S. installed projects were combined to yield 27 total projects, offering a larger sample size.

2. Evaluating market conditions and data for projects that have been installed in Europe and Asia when consi dering offshore wind technology in a given year, because no United States projects have been installed to date, to understand total installed project cost expenditures

, AEP, operating expenditures , and representative turbine technology. The primary source for these data is NREL’s internal Wind Database and DOE’s Offshore Wind Market and Economic Analysis (Hamilton et al. 2014).

3. Supple menting available m arket data with modeled data based on a representative or reference project that reflects technology and project parameters for a given

year. Principally, N REL’s W ind T urbine D esign C ost and S caling M odel ( Fingersh et al. 2006, Maples et al. 2010) is used to estimate the capital cost and AEP of a project based on turbine rated capacity, rotor diameter, hub height, and a representative wind resource. This model uses scaling relationships at the component level (e.g., blade, hub, generator, and tower) developed with curve

- fit industry data, published scaling models, and turbine models developed through the WindPACT studies (e.g., Malcolm and Hansen 2006) that reflect component

- specific and often nonlinear relationships between size and cost ( see Appendix C in Tegen et al

. 2012). The use of this model provides additional component

level details for turbines (with user

- defined parameters) and plants

.

4 Note that data for all of these projects is not publicly available.

### 17

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

### 4. Combin ing the market data and modeled data described above to estimate the primary elements ne cessary to calculate LCOE (i.e., C ap E x, O p E x , AEP, and FCR ) and provide details about wind technology costs and performance that are aligned with market data but reported at a more detailed resolution

. This approach is useful in that the reference project is described with a level of detail that is based on technology specifications, wh ereas market conditions are preserved ; h owever, reliance on modeled data for disaggregated component

- level and energy production estimates also introduces a degree of uncerta inty in some LCOE input variables. Model uncertainty is introduced principally in two areas:

• M odeled installed capital cost tends to underestimate market data that are influenced by factors not captured by the model (e.g., the relative value of the U.S. do llar, industry profit margins , foreign labor costs, underlying market conditions, and changes in warranty terms or servicing agreements that are wrapped into turbine supply agreements) that are included in the market

- based CapEx that would be included in a commercial wind project

.

• The modeled AEP net 

### estimate relies on estimated total losses across the reference project ; h owever, production l osses are , in reality, site

- and technology

- dependent, and measurements for individual projects are not available

. To address these two sources of uncertainty, model estimate s for capital expenditures and capacity factor are adjusted to reflect market data by applying two terms: a “market price adjustment” factor and a generic “loss es ” term. These terms apply global adjus tment factors (coefficients) to cost and production estimates that account for the myriad of factors that are not explicitly modeled, but that

can have a significant cumulative effect. Continued efforts to improve the fidelity of NREL’s bottom

- up model s ar e expected to result in greater confidence associated with individual component estimates and plant

- level production ; however, it is unlikely that differences between market and modeled data will ever be fully resolved

.

### 18

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications. 

# 3 System Cost Breakdown Structure

As domestic and global wind markets mature, data for component- level costs are increasingly available. To manage and organize this component- level cost data, NREL has developed a s ystem cost breakdown s tructure (SCBS) for land -based and offshore wind projects. An SCBS provides the ability to view the components of a wind plant at varying degrees of cost detail. From the top down, a broad overview of plant costs is shown. From the bottom up, one can see how individual component costs are grouped into systems, and how their costs roll up to higher- level costs until reaching the plant level. The SCBS deconstructs the total expenditures of a wind project down to six levels and includes more than 300 components.



## 3.1 SCBS Description

The wind SCBS provides structured and consistent breakdowns of a wind project into smaller, more specific components. 5 

### It provide s a standardized approach to characterizing total lifetime expenditures for wind projects at the component level, including both physical (e.g., mat erials, labor, and equipment) and financial (e.g., insurance during construction, profit, and carrying charges) costs. Each descending level of the SCBS hierarchy represents an increasingly detailed look at the project components. For example, total lifeti me expenditures can be deconstructed into two “level 1” components: C ap Ex and O pEx. C ap Ex can be further deconstructed into three “level 2” components: turbine, balance-of- system (BOS), and financial costs (see Figure 1). The sum of the costs across all co mponents at a given level should equal the cost of the components in the level above them provided that all fields have data. For example, the sum of turbine costs, BOS costs, and financial costs ( level 2 ), should equal the CapEx for a given project ( level 1).

Figure 1. Level s 1 and 2 of the SCBS



### Source: NREL

5 Although the SCBS is similar to a w ork b reakdown s tructure, they serve different purposes. A work breakdown

structure is typically process or product oriented, whereas the SCBS is cost oriented with a focus on representing the components of a project that contribute to the capital and operational expenditures.

### 19

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

### The wind SCBS is hierarchical and define s both the position of a component within the system and its relationship to other components. In this way

, the SCBS effectively defines the bounds for the categories of d ata

, reduces the chance of double counting or making inappropriate comparisons

, and standardizes terminology to improve communication

.

T o be applicable and useful across a broad r ange of wind projects, an SCBS is designed to represent a generic project wit h line items to capture many possible technology configurations. Despite best efforts to define a generic SCBS , there are several reasons to expect it will not apply perfectly to any si ngle project in the real world:

• Projects have different components depe nding on technical specification (e.g., a direct

drive wind t urbine will not have a gearbox)

• There are many permutations of possible contractual relationships for a project, ranging from a single Engineering, Procurement, and Construction (EPC) contract to a full multi

contract approach, where a sponsor might manage all contracts internally

• Based on previous experience in collecting data from industry, various entities use different approaches for tracking the expenditures involved in a given wind project. The SCBS provides a consistent approach to organize the industry data and eliminate variations in how the industry groups its subcomponent data

.



## 3.2 Benefits

The wind SCBS specif ies well

- defined categories to organize wind project expenditures and define hier archical relationships between those ca tegories. In this way, the SCBS provide s a natural foundation for the design of the NREL wind plant d atabase and provide s s everal secondary benefits a s well . Th e SCBS will s implify the collection, organization, and an alysis of component

level data for projects because it :

• Offer s a standard template that can be used for data collection

• Accommodate s data required for both top

- down and bottom

- up analysis

• Enable s accurate comparisons across different data sources

• Facilitat e s the definition of a standard approach for reporting analysis results.

The wind SCBS is also expected to enable improved analytical consistency across DOE’s W ind and W ater P ower T echnologies O ffice portfolio by identifying the full range of system costs for a technology and highlighting elements that might be common across similar technologie s.



## 3.3 Approach and Limitations

The first step in develop ing the SCBS was to review literature describing databases, taxonomies, and models related to land

- based and offs hore wind projects ( Table 1 ). The guiding documents for the definition of SCBS elements related to the wind turbine included the ReliaWind Wind Turbine Reliability Taxonomy (Tavner 2010) a nd the Sandia National Laboratory Reliabil ity Database ( Hill et al. 2009 )

. The guiding documents for the definition of SCBS elements related to the BOS included BVG Associates ’ Guide to an Offshore Wind Farm, NREL ’s Offshore Wind BOS Model

, NREL ’s Land

- B ased BOS Mode l , and NREL ’s Wind Deployment B arriers Project

. T he guiding

### 20

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

### documents for the definition of SCBS elements related to O p E x included Netherlands Energy Research Foundation Offshore O&M Tool and NREL ’s Land

- B ased O&M Project

.

Table 1. Resources R eferenced P rior to D evelop ing the SCBS



### Land

- Based Wind Offshore Wind
Capital Expenditures Capital Expenditures
Wind Turbine Reliability Taxonomy Guide to an Offshore Wind Farm (Tavner 2010) (BVG Associates 2010)

Reliability Databas e (Hill et al. 2009) Cost Reduction Pathways Stu dy (Crown Estate 2012)

Land

- Based BOS Model (NREL) Offshore BOS Model (NREL)

Wind Turbine Design Cost and Scaling Model (Fingersh et al. 2006) Offshore JEDI Model (NREL)

Wind Deployment Barriers Project (NREL) Operational Expenditure s Operational Expenditures Offshore O&M Tool

Land

- Based O&M data collection (Rademaker et al. 2009)
([DNV GL Report] Internal Only)
Wind Turbine Design Cost and Scaling Model (Fingersh et al. 2006)

In addition to the information pr ovided in the literature review, the following set of basic requirements and criteria were developed to guide the development of the SCBS:

• Components in the SCBS are first grouped based on contractual relationship, then function/process, then proximity. It is clear, however, that a variety of contractual arrangements are used in the industry and the wind SCBS cannot capture them all (e.g., turbine supply agreements can include delivery of the turbine either with or without installation)

• The SCBS reflect s wi nd project components from the perspective of the project sponsor 6



### for l evel 3 categories, and from the perspective of o riginal e quipment m anufacturers (OEM s ) or EPC contractors at lower , more detailed levels of the hierarchy

• The SCBS includes wind project components through level 5; additional detail may be captured through the description of level 5 components

• The wind SCBS is flexible enough to describe projects that u s e many possible technology configurations (e.g., a high

- voltage alternating current [ HV AC ] or high

- voltage direct current [ HVDC ] export system). A consequence of this variation is that a given project will not have all possible components listed in the SCBS

— nor would this be expected

.

6 To ensure that the SCBS is a relatively generic structure that can be applied broadly across all wind projects, NREL has to account for the different ownership scenarios that are possible during the project lifetime. The project could be developed, owned, or operated by the same entity

, or ownership could be transferred at any point in the lifecycle.

### 21

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

### An SCBS deconstructs the total expenditures of a wind p roject down to five levels and includes more than 300 components. Figure 2 and Figure 3 depict the structure of the hierarchy to l evel 3 for capital and operat ional expenditures, respectively. The full wind SCBS, including descriptions of each component ca tegory, is included in Appendix E for land

- based wind plants and Appendix F for offshore wind plants

.

Figure 2. Wind system cost breakdown structure: CapEx l evels 1 to 3



### Source: NREL

### 22

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. Figure 3

. Wind s ys tem cost breakdown s tructure: OpEx l evels 1 to 3



### Source: NREL

Although there are many possible methods for organizing the hundreds of cost elements that make up a wind project, this structure strives to be consistent with the way that a project developer and operator might see or incur costs. That is, th e authors prioritize the contractual relationships of cost elements above process or functional relationships. For example, wind turbine tower modules are often grouped with substructures and foundations as these three elements provide the same functionali ty

. T ogether, they prov id e structural support for the wind turbine. Wind t urbine supply agreements , however, have historically included the tower (the turbine manufacturer supplies both the turbine elements and the tower), making it difficult to distinguis h the price of the individual components. Aligning the organizational structure of the SCBS with the way that project sponsors incur costs is expected to greatly simplify data collection and facilitate effective communication with commercial stakeholders.

The wind SCBS is not likely to perfectly capture the elements of a specific, real

- world wind project. Invariably, at a very detailed level (i.e., level 4 or 5), wind projects may utilize different component breakdown s when compared to one another. Even at a less detailed level (i.e., level 3) the manner in which one sponsor tracks costs might differ from another. The guiding principl e for the wind SCBS was to develop a systematic approach for organizing component information, with the flexibility to accommo date a wide variety of projects, and the specificity to clearly indicate the composition of each component line item. This approach removes uncertainty about where each component belongs and will minimize the possibility of counting components twice or mak ing incorrect or inconsistent comparisons across different projects.

Upon completion of a preliminary wind SCBS, collaborators from NREL

, DOE

, and industry provide d feedback on the structure to identify any gaps or redundancies and discuss ed suggestions fo r modifications and improvements.

### 23

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. 

# 4 Land

- B ased Wind

The land

- based wind reference project wa s derived from representative characte ristics of wind plants in DOE ’s Wind Technology Market Reports and summarized in Table 6

. Reference project

w ind turbine and component costs are based on the most common turbine design installed in the United States in 2013, which is a three

- stage planetary/helical gearbox feeding a hig h

- speed asynchronous generator and a standard spread

- foot foundation design. O perating expendi ture s for this project , which are considered on an annual basis, reflect estimates from 94 projects built since 2000 (Wiser and Bolinger 201 4 )

. T he reference project wind regime is generally equivalent to a moderate wind resource si te in the interior regio n of the United States, generally considered Minnesota to Oklahoma

.



## 4.1 2012 Land

- Based Cost of Wind Energy
For the year 2012, no annual c ost of w ind e nergy r eview was published

. H owever, according to the
201 3 Wind Technology Market Re port (Wiser and Bolinger 201 4 )

, the U nited S tates installed a record amount of new capacity totalling 13.1 gigawatts ( GW ) w ith an average installed cost of $1,940/kW

. Using the reported average nameplate capacity, rotor diameter, and tower heights for the interior project , NREL c alculated an AEP of 3,284 MWh/MW /yr using a 200

- MW project size

. Given these inputs as well as the additional variables considered to reflect the reference project, details of which are located in Appendix C and summarized in Table 2 , the resulting LCOE fo r 2012 wa s $ 73 /MWh

.

Table 2 . Summary of Inputs and Reference Project 2012 LCOE for Land

- Based Installations



### Data Source 1.94

- MW
Land

- Based Turbine $/kW 1.94

- MW
Land

- Based Turbine $/MWh



### Model Turbine capital cost 1,279 37

Model Balance of system 365 11

Model Financial costs 7 

### 1 62 3

Market Market price adjustment 8 

### 135 4

Market CAPITAL EXPENDITURES 1,940 5 6

Market Annual OpEx ($/kilowatt/yr) 55 17

Market Real f ixed charge rate (%) 9.5

Model Net annual energy production ( MWh /MW/yr) 3,284

Model Net c apacity factor (%) 37.5

Calculated TOTAL LCOE ($/MWh) 73

7 Financial costs are incurred before project commissioning, primarily related to the costs that are not part of construction.

8 The market p rice adjustment is the difference between the modeled cost and the price paid for the typical project in the 2013 market.

### 24

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

## 4.2 Comparison of Two Different Cost of Wind Energy Methodologies
In 2013, the U nited S tates installed 1,087 MW of wind energy, a 92% drop from the previous year. As reported in the 2013 Wind Tech nologies Market Report (Wiser and Bolinger 2014), the capacity

- weighted average cost for installation was $1,630/kW

. The report also states that the average nameplate capacity was 1.87 MW, the average rotor diameter was 97 meters (m) , and the average hub h eight was 80 m

, resulting in an AEP of 3,424 MWh/MW/yr

. The 2013 sample size

wa s limited

, with only 11 projects accounting for almost 60% of the installed projects, which could disproportionately influence the weighted averages and costs

.
Early indications from a larger sample ( 16 projects total ing over 2 GW ) at the time of writing this report that were currently under construction or antici pated completion in the first part of 2014 suggest that the capacity

- weighte d average was closer to $1,750 /kW (Wiser a nd Bolinger 2014)

. Because of the small 2013 completed project sample size, it was determined that to better represent the market

, a capacity

- weighted average of the 11 pr ojects in 2013 and the 16 antici p a ted commissioned projects in 2014 would be combined t o yield 27 projects for the land

- based wind plant cost of energy analysis for the 2013 year review

. Table 3 presents a side

- by

- side comparison of the LCOE analysis for 2013 and the combined 2013

- 2014 analysis

.

Table 3

. Comparison of Market

- B ased Cost of Wind Energy , 2013 Projects to Combined 2013

- 2014 Projects



### Parameters ( C apacity

- weighted averages) 2013 Projects 2013

‒ 2014 Projects Nameplate c apacity (MW) 1.87 1.9 1

Rotor d iameter (m) 97 96.7
Hub h eight (m) 80 82
Modeled n et c apacity f actor 38.5% 38. 5 %

C ap E x ($/kW) 1

, 630 1

, 728 FCR (%) 10. 2 % 10. 2 %

O p E x ($/kW) 50 50 AEP (MWh/MW/yr) 3

, 425 3

, 386

N umber of p rojects in s ample 11 2 7
Total c apacity (MW) in s ample 650 1

, 919

TOTAL LCOE ($/MWh) 63 66

For t he remainder of this report (and for greater clarity in presenting data ) the 2013

‒ 2014 combined capacity

- weighted averages will be labeled “ 2 013

, ” providing the basis for the 2013 reference project analysis and reporting.



## 4.3 2013 Land

- Based Cost of Wind Energy

The land

- based wind reference project wa s derived from representative characteristics of 2013 wind projects consisting of 105 1.9 1

- MW turbi nes (200 MW total installed capacity)

. The

### 25

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

### c apacity

- weighted average of 2013 C ap E x 9 

### costs was calculated to be $ 1,728 /kW

, with total pretax O p E x reported at $ 50 /kW/yr

. Accordingly

, these values were ascribed to the land

- based reference project

. Given thes e inputs

, as well as the additional variables considered to reflect the reference project and summarized in Table 4 below, t he resulting LCOE is $ 66 /MWh.

Table 4 . Summary of Inputs and Reference Project LCOE for 2013 Land

- Based In stallations



### Data

Source 1.9 1

- MW
Land

- Based

Turbine

$/kW 1.9 1

- MW
Land

- Based

Turbine $/MWh

Model Turbine capital cost 1,185 35

Model Balance of system 349 10

Model Financial costs 10 

### 155 5

Market Market price adjustment 11 

### 39 1

Market CAPITAL EXPENDITURE S 1,728 51

Market Annual OpEx ($/kilowatt/yr) 50 15

Market Real FCR (%) 10. 2

Model Net annual energy production ( MWh /MW/yr) 3,410

Model Net c apacity factor (%) 38.5

Calculated TOTAL LCOE ($/MWh ) 66



## 4.4 Capital Expenditures f or Land

- B ased Wind

The w eighted

- average C ap E x and O p E x data are published annually by DOE in the Wind Technologies Market Report (Wiser and Bolinger 201 4 )

. The a nalysis conducted here applies the
N REL W ind T urbine D esign C ost and S caling M odel to estimate component

- level costs th at were calibrated to the market

- based total cost estimates from Wiser and Bolinger ( 2014 ) . This calibration wa s necessary because recent trends have been influenced by variables that are not captured in the current modeling approach of using national aver ages in a project

- specific site analysis. NREL has developed a bottom

- up model that associates physical parameters with cost estimates. Although this approach still under predicts the total cost , it can provide greater fidelity in component cost and relati ve component cost change with the size of the turbine.

9 CapEx costs represent the cost of building a plant and do not include financing or escalation costs that can vary with risk percepti on, construction schedules, inflation expectations

, and other factors

. 10 Financial costs are non

- construction costs incurred before project commissioning, primarily related to the cost of financing.

11 The market price adjustment is the difference betwee n the modeled cost and the price paid for the average project in the 201 3 market.

### 26

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

### Figure 4 illustrates the breakdown of C ap E x for the NREL land

- based reference project. In the figure, t he C ap E x component percentages highlighted in shades of green capture t he turbine capital

cost ; percentages highlighted in blue capture the BOS share of capital costs ; and components highlighted in purple captur e the financial capital costs. For information on the assumptions and inclusions of the individual components, see T egen et al. (2012), Maples et al. (2010), and Fingersh et al. ( 2006 )

.

Figure 4

. Capital e xpenditures for the land

- based wind reference project



### Source: NREL

Table 5 summarizes the costs for individual components (including their c ontribution to LCOE) for average turbine characteristics used in the reference project

, based on a project that uses 1. 9 1

- MW turbine s . Data sources for this table are described in Appendix B

.

### 27

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. Table 5 . Land

- Based LCOE and C a p E x Breakdown



### 1.9 1

- MW Land

Based Turbine 1.9 1

- MW Land

Based Turbine $/kW $/MWh

Rotor Module 282 8

Blades 169 5

Pitch a ssembly 65 2

Hub a ssembly 48 1

Nacelle Module 695 21

Nacelle s tructural a ssembly 139 4

Drivetrain a ssembly 235 7

Nacel le e lectrical a ssembly 283 8

Yaw a ssembly 38 1

Tower Module 208 6

TURBINE CAPITAL COST 1,185 35

Development Cost 32 1 Engineering Management 19 1

Foundation 58 2

Site Access and Staging 48 1 Assembly and Installation 43 1

Electrical Infrastruc ture 15 0 4

BALANCE OF SYSTEM 349 10

Market P rice A djustment 39 1 Construction Financing Cost 50 2 Contingency F und 105 3

FINANCIAL COSTS 194 6

TOTAL CAPITAL EXPENDITURES 1,728 51

Wind t urbine costs for projects installed in 201 3 range d from $ 900 /kW to $ 1,300 /kW for utility

scale wind projects (Wiser and Bolinger 201 4 ) , with many factors driving these differences (such as terrain, site access

, and regional labor costs) . Because of CapEx v ariability

, estimates for the component costs wer e established using the NREL W ind T urbine D esign C ost and S caling M odel

, and a market price adjustment was added to bring the CapEx cost in line with the industry average. The market price adjustment accounts for fluctuations in component costs, profit mar gins, foreign exchange rates, supply chain constraints, and other market conditions. This analysis does not attempt to predict which capital cost components are influenced by the market price adjustment, as these impacts can vary from project to project

.

### 28

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. 

### BOS costs were estimated using new scaling relationships and costs from detailed data obtained through a major EPC firm active in the wind industry. These new relationships provided a basis for understanding the underlying impacts of turbine component desi gns on the BOS costs as well as the impacts of innovative BOS concepts. This additional cost information enabled a more detailed breakdown of BOS categories than was available in previous years

. C onstruction financing was estimated at 3% of hard costs, whi ch is consistent with industry reporting

.



## 4.5 Operating Expen ditures for Land

- Based Wind

O p E x typically include land lease costs (LLC) , operations wages and materials (OPER) , and maintenance (MAIN ). O pEx costs are generally expressed in two categories: f ixed o perations

, which includes discre te

, known operations costs (e.g., scheduled maintenance, rent, land leasing,
taxes, utilities, and insurance payments) and typically do es not change depending on how much electricity is generated (called OPER in this report) , and v ariable OpEx , which includes unplanned maintenance and other costs that may vary throughout the project life depending on how much electricity is generated (called MAIN in this report) . For simplicity, annual O p E x can be converted to a sing le term a nd expressed as either dollars per kilowatt per year ( $ /kW / yr ) or dollars per megawatt

- hour ( $/MWh ) . This analysis u ses the $ / kW/ yr convention

.

Annual MAIN estimates are calculated from recent estimates of operating costs for projects built since 2000. Wis er and Bolinger ( 2014 ) reported a pretax average MAIN value of $28 / kW/ yr that generally incorporates the costs of wages and materials associated with m aintaining the turbines of

a facility, but likely excludes other elements such as general operations, ins urance, taxes

, or depreciation. 12



### The O p E x values reported here include the average estimated property tax payments from NREL’s Jobs and Economic Development Impact (JEDI) model and the MAIN for major turbine components from Cohen et al. (2008) , which are referred to as levelized replacement costs (LRC)

. Property tax costs and MAIN bring the total pre tax O p E x to $ 50 /kW / yr and are summarized in Table 6 . It should be noted that

, given the scarcity and unpredictable quality of the data, O p E x can vary substanti ally among projects (Wiser and Bolinger 2014 ), and the data presented here may not fully represent the challenges that operating expenditures present to the wind power industry. In addition, researchers across NREL and other laboratories in the wind indust ry have worked together over the past year to validate the $50/k W/yr calculation and support these pricing levels.

12 Alternatively, if expressed in $/ kWh terms, O&M estimates in 2013 ranged from $5 to $20/MWh (based on plants with a commercial operation date of 2010)

, with the 201 3 O&M bas eline estimate of $9/MWh (Wiser and Bolinger
201 4 ).

### 29

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications. Table 6 . Land

- Based Wind Reference Project OpEx



### 1.9 1

- MW
Land

- Based

Turbine 1.9 1

- MW
Land

- Based

Turbine Operations (OPER) $14/kW/yr $4 /MWh

Maintenance (MAIN) $28/kW/yr $9 /MWh

Land lease cost $8/kW/yr $2 /MWh

OPERATI O N AL EXPENDITURES $ 50 /kW /yr $15/MWh



## 4.6 Annual Energy Production and Capacity Factor for Land

- Based Wind
Annual energy p roduction (AEP) for this analysis is computed using the NREL wind turbine design c ost and scaling model. The model computes annual energy capture and other related factors

, such as capacity factor , for a wind project that is specified by generic input parameters, presented in Table 7. T hese input parameters have been chosen as default values to be held constant for the annual LCOE calculations, allowing the differences in turbines and financing to influence the results and not project variability. The input parameters can be grouped into three general categories: turbine parameters, wind resource characteristics, and losses

.

Table 7

. Reference Land -B ased AEP Input Assumptions



### Turbine Parameters
Turbine rated power (MW) 1.9 1 Turbine rotor diameter (m) 96.7 Turbine hub height (m) 82.5
Maximum rotor tip speed ( meters per second [ m/s ]) 80

Tip

- speed ratio at max imum coefficient of p ower (C p 

### ) 8
Drivetrain design Geared
Rotor peak power coefficient ( C p 

### ) 0.47

Wind Resource Characteristics
Annual average wind speed at 50

- m height (m/s) 7.25

Weibull K 2
Shear exponent 0.143

Elevation ( above sea level [ m] ) 450

Losses Losses ( i.e., array, energy conversion, and line) 15%
Availability 98%

**4.6.1 Turbine Parameters**  Turbine parameters are characteristics that are specific to the turbine and independent of the wind characteristics. These parameters consist not only of turbine size ( such as rated power, rotor

### 30

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

### diameter, and hub height)

, but also of turbine operating characteristics such as c oefficient of p ower [ C p 

### ] , max imum tip speed, m aximum tip

- speed ratio ( TSR )

, and drivetrain design )

. Because the geared drivetrain topology dominates the U

. S

. market, a geared drivetrain was selected for the baseline turbines used in this analysis

. For specific approach es used regarding additional turb ine parameters (e.g., power curves), see the 2010 Cost of Wind Energy Review

.

**4.6.2 Wind Resource**  The annual average wind speed chosen for the reference project analysis wa s 7.25 meters per second ( m/s ) at 50 m above ground level (7.75 m/s at hub height of 80 m ) . This wind speed is representative of a C lass 4 wind resource (7

− 7.5 m/s) and is intended to be generally indicative of the wind regime for projects installed in moderate quality sites in the “ interior ” region of the United States (Minnesota to Oklahoma)

. An elevation above sea level of 450 m wa s used based on the representative “ interior ” site. The elevation above sea level coupled with a hub height of 80 m result s in an average air density of 1.163 kg/m 3



### .

**4.6.3 Losses** 

Alt hough some losses can be affected by tu rbine design or wind characteristics, losses a re treated as independent of any other input in this simplified analysis

. Type s of l osses accounted for in this analysis include array wake losses, electric collection and transmission losses (from the substati on to the point of interconnection)

, and blade soiling losses

, totaling 15%. An availability of 98% was used, indicating that the wind farm is ready to produce power between wind turbine cut

- in and cut

out wind speeds 98% of the time

. Net annual energy pro duction ( AEP net 

### ) i s calculated by applying all losses to the gross AEP. Table 8 shows the AEP, capacity factors, losses

, and availability for the land

- based reference turbine operating in 201 3

.

Table 8 . Land

- B ased Wind Turbine AEP and C apacity F actor Summary



### 1.9 1

- MW Land

- B ased Turbine

Gross AEP (MWh/MW /yr ) 4,094

Gross capacity factor (%) 46.1

Losses and availability (%) 17

AEP net 

### (MWh/MW /yr ) 3, 410

Net capacity factor (%) 3 8. 5

**4.6.4 Land** 

**- B**  **ased Wind Finance**  Throughout the majority of 201 3

, the financing environment was not conducive for installing land

based wind projects. The 92% drop in projects completed in 2013 compared to 2012 can be directly attributed to the expiration of the production t ax credit (PTC) , which required proje cts to be completed by December 31, 2012. The PTC, under the American Taxpayer Relief Act of 2012, was reinstated in January 2013. This reinstatement allows projects to be eligible as long as they meet the I nternal R evenue S ervice’s designation of “ Physica l Works ” and “ under construction ” before January 1, 2014 ; h owever, the delay in the PTC enactment had already negatively affected financing and discouraged project s from being completed in 2013.

### 31

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

### The cost of capital for both term debt and tax equity invest ment in 2013 depar t ed slightly from 2010 and 2011 levels as the benchmark interest rates in the United States rose. The 20

- year
treas uries that closely approximated the lifetime of a modeled wind project rose from 2.67% in December 2011 to 3.63% in Decembe r 2013. Similarly, 30

- year treasuries rose from 2.98% in December 2011 to 3.89% in December 2013. With a rise in benchmark interest rates

, the authors would expect to see higher debt interest rates for wind energy projects generally as well as the associat ed required rate of return.

In 2013, both the tax equity and term debt yields were relatively ste ady with tax equity on an after

tax

, unlevered basis of 8%, wh ereas the 15

- year C ap E x , pretax basis, debt interest rates held below 6% (Wiser and Bolinger 2014 ). For this analysis, the discount rate wa s calculated as the after

- tax weighted average cost of capital (WACC) for land

- based wind energy projects. The base

- case assumptions used in estimating the WACC include a debt ratio of 50%, an after tax

, levered ta x equity yield of 11.5%, a pre tax debt interest rate of 6.5%, and an effective marginal corporate tax rate of 38.9%. Under these assumptions, the nominal, after tax WACC for land

- based wind energy projects in 2013 wa s estimated at approximately 8.8% (nomin al) . Assuming a 2.2% rate of inflation in 2013, the real after tax discount rate wa s estimated at 6.5 %. 13



## 4.7 Land

- B ased Wind Reference Project Summary

Table 9 captures the full array of variables that reflect the land

- based reference project as well as the val ues (for each variable ) that underlay the basic LCOE inputs. T h e C ap E x for the project wa s assumed to be nearly $ 345 million, or $ 1,728 /kW. A $ 20.9 million contingency fund wa s assumed to cover any possible increases in capital costs

, and O p E x wa s estimate d at $1 5 /MWh. A 20

- year project operational economic life wa s assumed

, with a nominal discount rate of 8 .8 %.

Table 9 . Land

- Based Reference Project Assumptions Summary



### General Assumptions Project capacity (MW) 200
Number of turbines 105 Turbine capacity (MW) 1.9 1
Site
Location U.S. Interior Elevation (m eters above sea level) 450 Layout Grid Wind speed (m/s at 50

- m height above ground) 7.25 Wind speed (m/s at 80

- m height above ground) 7.75 Net capacity factor 38.9 % Technology Rotor diameter (m) 9 6.7 Hub height (m) 82.5
Gearbox Three stage
Generator Asynchronous
Foundation Spread foot

13 Converted using the standard Fisher equation. The 2.2% rate of inflation is based on the 2014 Annual Energy Outlook by the Energy Information Administration (EIA 2014).

### 32

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

### Cost Capital cost (millions) $ 345
Contingency ( 6 %) (millions) $20.9

O p E x ($/MWh) $15 Discount rate (real) 6.5 %
Discount rate (nominal) 8 .8 %

Economic o perating life (years) 20

FCR (real) 10.2 % Note: The nominal discount rate may be generally equated with the weighted average cost of capital and is distinguished from the real discount rate in that it includes an inflation factor. The discount rate cons titutes a principal input into the FCR

, which allows for the estimat ion of capital recovery on an annualized basis

.


## 4.8 L and

- B ased Wind L COE Calculation

Based on the NREL land

- based baseline project inputs

 C ap E x , AEP, O p E x , and FCR

 and using the LCOE equation, a land

- based wind LCOE i s computed to reflect the 2013 reference wind plant described above

. Table 10 summarizes the costs for the primary components (including their contribution to LCOE). Data sources for this table are located in Appendix B

. Figure 5 provides a graphical representation of the land

- based reference project LCOE by line item

.

Table 10 . Land

- Based Wind Reference Project LCOE Cost Breakdown



### 1. 9 1

- MW
Land

- Based

Turbine 1. 9 1

- MW
Land

- Based Turbine

CAPITAL EXPENDITURES $ 1,728 /kW $5 1 /MWh

O PERATI ONAL EXPEN DITURES $ 50 /kW /yr $15 /MWh

Net 7.25 m/s AEP (MWh/MW /yr ) 3,410 Net capacity factor 38.5 %

F CR (real, after tax) 10. 2 %

LEVELIZED COST OF ENERGY ($/MWh) $ 66

### 33

This report is available at no cost from the National Renewable Energy Laborator y (NREL) at www.nrel.gov/publications. Figure 5. Component level cost breakdown for the 2013 land-based wind reference project



### Source: NREL



## 4.9 LCOE Sensitivities
The input parameters described above reflect the land-based reference wind project; however, input parameters for a near-term, land-based wind project are subj ect to considerable uncertainty. As a result, it is beneficial to investigate how this variability may impact LCOE. The sensitivity analysis shown in Figure 3 focuses on the basic LCOE inputs: 1) CapEx, 2) OpEx, 3) capacity factor (a surrogate for AEP), and 4) FCR, alt hough in Figure 6, FCR is broken into its principal
elements

⎯ discount rate and economic operational lifetim e. Sensitivities to these variables are tested across the ranges of market da ta reported in previous sections.

### 34

This report is available at no cost from the National Renewable Energy Laborator y (NREL) at www.nrel.gov/publications. Figure 6. Sensitivity of land-based wind LCOE to key input parameters



### Source: NREL

Note: The reference LCOE reflects a representati ve industry LCOE. Changes in LCOE for a single variable can be understood by moving to the left or right along a specific variable. Values on the X-axis indicate how the LCOE will change as a given variable is altered and all others are assumed constant (i.e., remain re flective of the reference project).

Sensitivity analyses were conducted by holding all reference project assumptions constant and altering only the variable in question. Sensitivity ranges were selected to represent the highs and lows observed in the industry. This selection of ranges provides insight into how real-world ranges influence LCOE. The sensitivity analysis yields ranges in LCOE from a low of $50/MWh to a high of $103/MWh—a low-to-high incr ease of nearly double the lowe r bound. Within the ranges shown, CapEx and capacity factor are the two factor s that appear to have the greatest impact on LCOE; however, the capacity factor and discount rate appear to ha ve the greatest influence with respect to decreasing the LCOE relative to the reference project.

Although the ranges provided here for the select ed variables are grounded in actual 2013 plant costs and performance data; the high and low LCOE ranges should not be taken as absolute. These variables are generally not independent, and it is unlikely for changes to occur only in a single variable. Moreover, each individual wind project ha s a unique set of characteristics. Accordingly, the sensitivities shown here are not universal.



## 4.10 Cost Reduction Scenarios
For the 2013 reference project installations, additi onal scenarios were modeled: 1) increasing the hub height, 2) increasing th e rotor diameter, 3) combining the t echnology changes of taller towers

### 35

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

### and larger rotors, 4) in creasing annual average wind speed , and 5) combining all three independent scenarios

. Although there is a link between changes in cost and energy production, this analysis was performed by holding all reference project assumptions constant and changing onl y the necessary variables to demonstrate the relative impacts of isolated changes for illustrative

purposes.

**4.10.1 Increas**  **ing Turbine Characteristics**  Wiser and Bolinger ( 2014 ) not e d that average wind turbine characteristics , nameplate capacity, rotor diameter, a nd hub height, ha ve been increasing. The industry is trending toward taller towers, with many geographic areas preferring 100

- m

- tall towers to increase AEP. Assuming the CapEx remains constant, the reference project LCOE with a 100

- m

- tall tower would be ex pected to decrease to $ 64/MWh ( Table 9 )

. In addition, the increase in rotor diameter has outpaced all other technological advancements

, increasing up to 103% in size since 1998

‒ 1999 (Wiser and Bolinger 2014). Similar to the findings for taller towers , if the project costs remain constant, the 11% increase in AEP resulting from the increased rotor diameter would amount to an LCOE of $60/MWh.

Both of these advancements impact the capacity factor and AEP of projects. By c ombining both technology changes

— increasing the hub height and rotor diameter

— the LCOE would decrease to $ 58 /MWh for the reference project ( assuming constant capital costs )

.

**4.10.2 Increas**  **ing Annual Average Wind Speed** 

A nu mber of factors, such as policy influences, siting impacts

, and technology change s , have led to the recent trend in siting wind projects in areas with lower wind resource quality (Wiser and Bolinger 2014 ). There is still a surplus of high

- quality wind reso urce project sites that are undeveloped in the United States and an effort to place more projects in these areas could lower the project LCOE. Table 1 1 presents the change in LCOE that is a direct result of switching from a Class 4 wind resource (annual average hub

- height wind speed of 7. 79 m/s) to a Class 5 wind resource (annual average hub

- height wind speed of 8. 6 m/s) , thereby decreasing the LCOE to $59/MWh . It is important to note that the decrease in LCOE resulting from the be tter wind resource is approximately equivalent to the LCOE reductions achieved with a taller tower or a larger rotor for the s ame turbine power rating ($59/MW h v ersu s $58/MWh, respectively). If both of these technological advances can be implemented withou t a concurrent increase in either C ap E x or O p E x (using advanced controls or design innovations), in combination with a higher average wind speed, the net effect would be to reduce the LCOE to $52/MWh in the reference project
scenarios

.

### 36

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. Table 1 1

. Example of Land

- Based LCOE Reduction Scenarios



### Parameters Reference Project Taller

Tower Larger

Rotor Taller

Tower and Larger

Rotor Higher
Wind Speed Scenario
Combination

Nameplate (MW) 1.9 1 1.91 1.91 1.91 1.91 1.91

Rotor d iameter (m) 96.9 96.9 110 110 96.9 110
Hub h eight (HH) (m) 82.7 100 82.7 100 82.7 100 Avg

. speed at 50 m (Avg

. speed at HH) (m/s) 7.25 (7.79) 7.25 (8.0) 7.25 (7.79) 7.25 (8.0) 8.0 (8.6) 8.0 (8.8)

AEP (MWh/MW/yr) 3,410 3,536 3,796 3,918 3,866 4,345

Net c apacity f actor 38.5% 40.4% 43.3% 44. 7% 44.1% 49.6%

C ap E x ($/kW) 1,728 1,728 1,728 1,728 1,728 1,728

O p E x ($/MW/yr) 50 50 50 50 50 50

Tax r ate ( % ) 39 39 39 39 39 39

FCR (real, after tax) 10. 2 % 10. 2 % 10. 2 % 10. 2 % 10. 2 % 10. 2 %
LCOE ($/MWh) 66 6 4 60 5 8 5 9 52

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This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

# 5 Offshore Wind

Although there is much enthusiasm about the potential of offshore wind development in the United States, no projects have been installed to date . The lack of domestic experience with offshore wind technology has contributed to considerable uncertainty in estimates of the potential cost of domestic offshore wind energy. The 2010 Cost of Wind Energy Review (Tegen et al

. 2012) offers a detailed analysis of offshore wind cost trends in Europe as well as projections for the United States to develop input assumptions for a refe rence project based on commercial

- scale

, fixed

- bottom offshore wind technology

.
This report provides an update to the 2010 report including trends in capital costs observed outside of the country as well as recent market conditions ; h owever, as no major di fferences from the 2010 report have been observed in offshore costs for projects under development in the United States

, the cost estimates utilized in this report are a result of the annual Offshore Wind Market and Economic Analysis (Hamilton et al

. 2014) completed by Navigant Consulting, Inc. ( Table 1 2 )

. The offshore wind reference project uses the average global turbine characteristics from the Navigant report including 4.3 MW of capacity, a rotor diameter of 119.4 m, and an 89. 5

- m

- tall tower. Although information on floating offshore wind projects is not included here, it is planned to be covered in future iterations of this report

.

Table 1 2 . Summary of Inputs and Results for the Fixed

- Bottom Offshore Wind Project



### Data

Source 4.3 MW
Offshore Turbine $/kW 4.3 MW
Offshore Turbine $/MWh

Model Turbine capital cost 1, 660 56

Model Balance

- of

- system costs 2,697 9 1

Model Financial costs 8 30 28

Market CAPITAL EXPENDITURES 5, 187 1 75

Market O pEx ($/kW/yr) 136 39

M arket F CR (%) 11. 7

Model AEP n et 

### (MWh/MW/yr) 3,406

Model Capacity factor (%) 39 .0

Calculated TOTAL LCOE ($/MWh) 21 5



## 5.1 201 3 Market Developments

In 201 3

, 1,567 MW of offshore wind capacity were installed worldwide ( GWEC 2014 )

. To date,

o ffshore wi nd development has been highly concentrated geographically , with over 93% of cumulative capacity installed in Europe and 56% located in the United Kingdom (GWEC 2014 )

. Installations in Asia are starting to accelerate

, with two commercial

- scale projects ins talled in

### 38

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

### China and three demonstration projects installed in South Korea and Japan. Global markets are poised for growth with aggressive goals in both Europe and Asia ; h owever, deployments have been affected by uncertainty in the form and value of incenti ves (U nited K ingdom ), delays in grid development (Germany), a nd local and national government concerns (China ). In the United States, the three principle hurdles are:

• An uncertain timeline for permitting . The Bureau of Ocean Energy Management (BOEM) has ma de considerable progress in leasing and permitting projects since the

‘ Smart from the Start ’ initiative was announced in 2010. BOEM has awarded commercial leases in three w ind e nergy a reas and is moving forward with an additional four, as well as two unsol icited lease request areas. Despite this progress, the duration of the timeline for permitting still remains to be seen

.

• The scheduled expiration of federal tax credit incentives . The PTC and investment tax credit ( ITC )

, the principle federal incentives fo r wind energy generation, expired at the end of 2013. 14 

### Uncertainty over the availability of these incentive programs creates significant market risk and makes investors hesitant to commit capital for essential activities in the development phase. Furthermo re, t his uncertainty is likely to slow the development of the offshore wind industry because the multiyear development horizons for projects tend to exceed the typical periods when the PTC/ITC are active

.

• The lack of a defined market for offshore wind powe r

. The biggest near

- term challenge for the offshore wind energy industry is the lack of a defined market. Federal incentives are generally not sufficient enough to attract investment in offshore wind projects by themselves given the current cost structure

, and there is significant ambiguity as to the continued availability of these incentives. Developers are therefore working through state representative s to augment the federal incentives and achieve financial viability; either through offshore wind

- specifi c revenue streams (Offshore Renewable Energy Credits) or by negotiating long

- term power purchase agreements. Although this approach is allowing a number of projects to move forward, it is very complicated and resource intensive for developers.



## 5.2 C ap E x for Fi xed

- Bottom Offshore Wind Reference Project

For the 2011 Cost of Wind Energy Review (Tegen el al

. 2013)

, NREL developed the offshore
C ap E x estimate by conducting several parallel assessments: 1) analy zing global market data

, 2) review ing published literatur e, and 3) interview ing active offshore wind developers in the United States. This m ultipronged approach yielded a n average capital cost of $5,120/kW across the industry (for operational and proposed plants worldwide )

, and resulted in a U.S. reference cost estimate of $5,600/kW (cons istent with the expected C ap E x reported by the proposed Cape Wind offshore project located off Cape Cod in Nantucket Sound ). The 2011 reported range of installed capital costs (again for operational and proposed projects) varied from $2,500/kW to $6,500/kW. 15

14 Offshore wind projects that st arted construction before the expiration of the tax credits

— the 468

- MW Cape Wind project and the 30

- MW Block Island wind farm

— have announced that they have met the ‘safe harbor’ criteria defined by the U.S. Internal Revenue Serv ice and expect to qualify for the investment tax credit (Broehl and Ernst 2014).

15 Offshore wind capital costs may vary widely as a result of water depth, distance from shore, turbine size, and other factors.

### 39

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

### In 2012, a D O E analysis of LCOE for offshore wind plant technology use d the average global installed cost from the Offshore Wind Market and Economic Analysis report

, which was $5,384/kW ( Hamilton et al

. 2014). For the LCOE ana lysis, the same technology was used in the
2012 analysis as in the 2010 and 2011 c ost of w ind e nergy r eviews . D etails on the 2012 analysis are located in Appendix C and resulted in an LCOE of $ 22 5 /MWh.

According to t he 2013 Offshore Wind Market and Economi c Analysis report (Hamilton et al

. 2014), the global offshore C ap E x may be stabilizing ; h owever, there is little data on projects to be installed after 2016. Figure 7 shows the capital cost trends since 1994 inflated to 2012 curr ency and converted to U.S. dollars using 2012 average exchange rates

. Globally, projects commissioned in 2013 had a capacity

- wei ghted average capital cost of $5,187 /kW, almost $ 200 /kW lowe r than the average cost of a project installed in 201 2

.

Figure 7

. Reported capital costs for installed, under construction, contracted, and approved offshore wind projects in $2012 (2000 to 2016)



### Source: Hamilton et al. 2014

Figure 8 shows the percentage contribution of each component to total capital cost for the reference offshore wind project. Percentage estimates wer e based on the N REL Wind Turbine Design Cost and Scaling Model (Fingersh et al. 2006, Maples et al. 2010) ; several recent publications (Douglas

- Westwood 2010, BVG Associates 2011 , Deloitte 2011) ; and conversations with U.S. offshore wind project developers. I n Figure 8 , t he segment in g reen represents the turbine cost, shades of blue represent BOS costs, and shades of purple represent financial costs

.

### 40

This report is available at no cost from the National Renewable Energy Laborator y (NREL) at www.nrel.gov/publications. Figure 8. Capital expenditures for the 2013 offshore wind reference project



### Source: NREL

The percentage estimates in Figure 8 were applie d to the global industry average CapEx estimate of $5,187/kW to generate individual component co sts in dollars per kilo watt for the 2013 reference project. This dollar-value compone nt cost breakdown is shown in Table 13. As stated, there is a notable difference between the cost components that make up the land-based and offshore projects. In the land-based project, 68% of the cost is related to the turb ine, whereas the turbine makes up only 32% of the CapEx for the offshore project.

### 41

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. Table 1 3 . Fixed

- Bottom Offshore LCOE Component Cost Breakdown



### 4.3 MW Offshore
Turbine

$/kW 4.3 MW Offshore
Turbine $/MWh

TURBINE CAPITAL COST 1,600 5 6

Development Cost 149 5
Engineering M anagement 90 3

Substructure and Foundation 730 25
Site Access, Staging, and Port 128 4

Electrical I nfrastructure 546 18
Assembly and I nstallation 1,053 36

BALANCE OF SYSTEM 2,697 91

Insurance 87 3

D ecommissioning ( s urety bond ) 11 5 5

Construction F inancing C ost 156 5
Contingency 432 15

FINANCIAL COSTS 830 2 8

CAPITAL EXPENDITURES 5,187 175



## 5.3 Operating Expenditures for Offshore Wind

There has been no indication that expected o perating e xpe nditures for offshore wind p rojects have shifted between 2010 and 201 3

. The O p E x baseline fo r 201 3 was assumed to be $ 40 /MWh

, equivalent to $1 36 /kW /yr

, with a range exten ding from $ 20 /MWh to $ 70 /MWh . The equivalent range on a $/kW/yr basis extends from $68/kW/yr to $239/kW/yr. Operat ing costs are broken down into MAIN , O P ER c ost, 16 

### and the Outer Continental Shelf (OCS) l ease p ayments

. 17



## 5.4 Offshore Annual Energy Production and Capacity Factor

Hamilton et al. (201 4 ) report ed that installed European offshore wind projects typically achieve capacity factors between 35% and 50 %

. Rødsand II , a Danish project installed in 2010, reported a capacity factor of 55% in its first year of operation. U.S. d evelopers have announced capacity factor expectations for nine project sites currently under devel opment. Data collected by NREL suggests that n et capacity factors at these projects may range from 32% to 50 %

, with a capacity

weighted average of 38% (NREL 2013 ).

16 O&M cost for offshore wind projects is assum ed to include labor, vessels, equipment, scheduled maintenance, unscheduled maintenance, land

- based support, and project administration

. 17 Lease payments are expected to range between 2% and 7% of operational revenue. Cape Wind will pay 2% of operational revenue in years 1 to 15. The lease payment increases to 7% of operational revenue from year 16 until the plant is decommissioned (BOEMRE 2010).

### 42

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

### Because net AEP and the corresponding net capacity factor will vary with the wind resource a nd project design, the authors assume d specific site characteristics that are common to the North Atlantic C oast for the reference offshore wind project

. AEP for this analysis wa s calculated using the NREL Wind Turbine Design Cost and Scaling Model and a C lass 6 wind resource. Table 1 4 shows the assumptions used to calculate the net AEP for the reference project.

Table 1 4 . Fixed

- Bottom Reference Offshore AEP Input Assumptions



### Turbine Parameters

Turbine r ated p ower (MW) 4.3

Turb ine rotor diameter (m) 119.4

Turbine hub height (m) 90
Maximum rotor tip speed (m/s) 90

Tip

- speed ratio at peak coefficient of p ower (C p 

### ) 8

Drivetrain design Geared

Rotor peak power coefficient Cp 0.47

Wind Resource Characteristics

Annual average wind speed at 50 m (m/s) 8.4

Weibull K 2.1

Shear exponent 0.1

Losses

Losses (array, energy conversion, line) 15%

Availability 96%

For this report, the authors assume d that offshore wind projects will experience losses from array wake impacts, av ailability, and inefficiencies in power collection and transmission. Assuming 19 % total losses

, AEP net 

### wa s estimated for offshore wind projects using commercially available technology and the NREL wind turbine design cost and scaling model

. Table 1 5 shows the impact of losses on AEP and c apacity f actor.

### 43

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. Table 1 5 . Offshore Wind Turbine AEP and Capacity Factor Summary



### 4.3

- MW Offshore Turbine Gross AEP (MWh/MW/yr) 4,241
Gross capacity factor (%) 45
Losses and availability (%) 19 Net AEP (MWh/MW/yr) 3,463
Net capacity factor (%) 39 .5

These data show that the 201 3 baseline project will deliver 3,4 63 MWh /MW of installed capacity annually, which is equivalent to a net capacity factor of 39 .5 %. The range of AEP estimates around this baseline extends from 2,600 to 4,820 MWh/ MW/ year, which correspond s to the r ange of capacity factors (30%

– 50 %) observed in Europe and for planned projects in the United States.



## 5.5 Financial Parameters for Offshore Wind

There has been no indication that financial parameters for domestic offshore wind projects have changed between 2010 and 201 3 . The reference project discount rate for 201 3 is assumed to be
10. 5 %

, with a range extending from 8% to 15%

, based on data reported by Tegen et al

. ( 2012 )

.



## 5.6 Offshor e Wind Reference P roject Summary
The databases and analysis described above informed the creation of the reference project shown
in Table 1 6 . The 201 3 reference project i s defined with 1 16 turbines on monopile foundations and

an average water depth of 15 m. Reference project costs for 2013 we re based on estimates for a site located 20 km from shore. In addition, t urbines rated at 4.3 MW

, with a 1 19

- m rotor diameter and a 90

- m hub height we re assumed

. The a verage wind speed at the project site wa s assumed to
be 8.4 m/s at 50 m and 8.9 m/s at the 90

- m hub height ( C lass 6 wind regime). 18 

### In the reference project layout, the turbines ar e spaced in a grid formation at 8 rotor diameters apart and connected to the substation using a radial 33

- kil ovolt (kV) collection syst em design

.

The capital expenditures of the project were assumed to be $2. 6 billion, or about $5, 187 /kW, including a contingency estimated at 10 % of hard costs. After tax, annual operati onal expen ditures

ar e equivalent to $ 3 9 /MWh, or $ 577,6 00 per turbine per year.

The weighted average cost of capital (WACC), or discount rate, used to finance the project wa s estimated to be 10. 5 % nominal ( equivalent to 8. 3 % real ) . Although this discount rate could represent a number of diffe rent financial structures, the specific financial structures we re not examined in this analysis. The reference project wa s assumed to have an operating life of 20 years from the date of commissioning ; t he FCR under these assumptions i s 11. 7 %.

18 Average wind speed based on a Weibull (k = 2.1) probability distribution.

### 44

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. Table 1 6

. Fixed

- Bottom Offshore Reference Project Assumptions Summary



### General Assumptions Project capacity (MW) 500
Number of turbines 1 16 Turbine capacity (MW) 4.3

Site

Location North Atlantic Coast ( U.S. ) Depth (m) 15 Distance from shore (km) 20 Wind speed (m/s at a 50 meters above mean sea level [MASML]) 8.4 Wind speed (m/s at a 90 MASML ) 8.9 Net capacity factor 39 .5 % Technology Rotor diameter (m) 119 Tower height (m) 90
Gearbox Three

- stage

Generator Asynchronous

Foundation Monopile

Cost Capital cost (millions) $2, 6 00 Contingency [ 6.5 % of hard costs ] (millions) $2 17

O p E x ($/MWh) $ 39 Discount rate (real) 8. 3 % Discount rate (nominal) 10. 5 % Operating life (years) 20 Fixed charge rate (real) 11. 7 %



## 5.7 Offshore Wind LCOE Calculation

Table 1 7 summarizes the offshore wind technology reference project by providing the component cost categories for the 4.3

- MW turbines in the project as well as the LCOE calculation results. A comprehensive summary of assumptions can be found in Appendix B . Estimates of the percentage contribution of individual project comp onents to total capital costs we re developed for each component based on the aforementioned publications and c onversations. These estimates we re applied to the total capital expenditure estimate to generate individual component costs. NREL plans to continue to collect market data and develop bottom

- up cost models in 201 4 . These data and models will enable the development of an improved understandi ng of scaling relationships and opportunities for technology improvement

, and reflect current market data in 201 4

.

### 45

This report is available at no cost from the National Renewable Energy Laborator y (NREL) at www.nrel.gov/publications. Table 17. Fixed-Bottom Offshore Wind LC OE and Reference Project Cost Breakdown



### 4.3-MW Offshore
Turbine 4.3-MW Offshore
Turbine

CAPITAL EXPENDITURES $5,187/kW $175/MWh

Operations (OPER) $45/kW/yr $13/MWh Maintenance (MAIN) $85/kW/yr $24/MWh

OCS lease cost $6/kW/yr $2/MWh

OPERATING EXPENDITURES $136/kW/yr $39/MWh

Net 8.0 m/s AEP (MWh/MW/yr) 3,463 Net capacity factor 39.5% FCR (real, after tax) 11.7%

LEVELIZED COST OF ENERGY ($/MWh) 215

The 2013 NREL reference offshore wind project has an LCOE of $215/MWh. Figure 9 shows the cost breakdown for the project.

Figure 9. Cost breakdown for the 2013 offshore wind reference project



### Source: NREL

### 46

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

## 5.8 Offshore Wind LCOE Sensitivities
Although the input parameters used for the LCOE calculation in the reference project represent reasonable estimates for the costs and operational parameters of a near

- term offshor e wind project, as was the case for land -based projects, these inputs are subject to considerable uncertainty. The sensitivity analysis shown in Figure 10 focuses on the basic LCOE inputs: 1) capital expenditures, 2) operating expenditures, 3) capacity fac tor (a surrogate for AEP)

, and 4) FCR , although in Figure 10, discount rate and operational lifetime represent FCR . Sensitivities we re tested using the observed ranges described above and by holding all other variables constant. In Figure 10, the reference estimate for each parameter is represented by t he vertical white line within each bar, and

s pecific h igh and low values are shown within each colored bar.

Figure 10 . Sensitivity of offshore wind LCOE to key input parameters



### Source: NREL

No te: The r eference LCOE provide s a representative estimate of the offshore wind LCOE

, assuming commercial

- scale fixed -bottom technology. Changes in LCOE for a single variable can be understood by moving to the left or right along a specific variable. Values on the X

- axis indicate how the LCOE will change as a given variable is altered and assuming that all others are constant (i.e., the variables remain reflective of the reference project).

During the analysis, s ensitivity ranges we re selected to represent t he highs and lows seen in the industry. This selection of ranges provides insight into how real-world ranges influence LCOE. Figure 10 shows a very wide range of LCOE outcomes, extending from $147 to $28 2/MWh ; however, as noted above in the discussion of land- based sensitivi ti es, the high and low LCOE ranges should not be taken as absolute because these variab les are not typically independent. For offshore wind projects, c ost of energy is most sensitive to capital expenditures, capacity factors

, and discoun t rate, and appears to be less sensitive to op erating life and operating expenditures.

### 47

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

# 6 Historical Levelized Cost of Wind Energy

D O E set goals in 2010 for LC O E for 2020 and 2030

. NREL has been assessing the L COE since
that time

. Table 1 8 and Table 1 9 summ arize the trends of land

- based LCOE and offshore LCOE

, respectively

, in nominal dollars, over time and include the primary LCOE inputs driving these results

.

In Table 1 8

, LCOE results in 2010 and 2011 differ from the official reports for the given year s be cause of the changes in methodology for Op Ex . In the previous c ost of w ind e nergy r eview s, the authors used an after

- tax operational expenditure that affected the l abor, e quipment, and f acilities portion of the O p E x . The methodology of using only a pretax value was established in 2012 because rules and regulations differ based on the specific project location. To compare the historical LCOE values and represent the trends, the 2010 and 2011 O p E x were modified to align with the current methodology. Appendix D provide s additional detail on the historical LCOE,
DOE ’s LCOE goals in 2010 dollars, and a graph showing the historical land

- based LCOE in constant 2010 dollars with the DOE goals.

Table 1 8

. Historical Land

- Based LCOE in Nominal Dollars



### Parameters 2010 COE 2011 COE 2012 COE 2013 COE

Nameplate c apacity (MW) 1.5 1.5 1.94 1.9

Rotor d iameter (m) 82.5 82.5 93.5 96.9
Hub h eight (m) 80 80 80 82.7
Modeled n et c apacity f actor 38.0% 37.0% 37.5% 38.5% CapEx ($/kW) 2

, 155 2

, 098 1

, 940 1

, 728 FCR (%) 9.5% 9.5% 9.5% 10. 2 % OpEx ($/kW) 55 55 55 50 AEP (MWh/MW/yr) 3

, 345 3

, 263 3

, 284 3

, 410

LCOE ($/MWh) 78 78 73 66

Table 1 9

. Historical Offshore LCOE in Nominal Dollars



### Parameters 2010 COE 2011 COE 2012 COE 2013 COE
Nameplate c apacity (MW) 3.6 3.6 3.6 4.3

Rotor d iameter (m) 107 107 107 119.4
Hub h eight (m) 90 90 90 89.5
Modeled n et c apacity f actor 39.0% 39.0% 39.0% 39.0% CapEx ($/kW) 5

, 600 5

, 600 5

, 384 5

, 187 FCR (%) 11.7% 11.7% 11.7% 11.7% OpEx ($/kW) 136 136 136 136 AEP (MWh/MW/yr) 3

, 406 3

, 406 3

, 406 3

, 463

L COE ($/MWh) 232 232 225 215

### 48

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

# 7 Conclusion s
The results and analysis in this technical report lead to the following conclusions:

• Final LCOE estimates continue to show a downward trend from the 2010 Cost of Wind Energy Review to 2013. Offshore turbine costs h ave shown similar cost reductions; however, the decrease in LCOE for the land

- based projects can be attributed more to the turbine technology, and the offshore decreases to the balance

- of

- system costs.

• Although the reference project LCOE for land

- based ins tallations was observed to be $66/MWh, the full range of land

- based estimates covers $50

– $10 3 /MWh.

• The reference project offshore estimate is $215/MWh, with a full range of $ 14 7

– $2 82 /MWh. This dramatic range is mostly caused by the large variation in capi tal expenditures ( $3,200

– $6,000/kW) reported by project developers.

• The sensitivity analysis shows that LCOE can vary widely based on changes in any one of several key factors ; h owever, the variable with the most dramatic effect on LCOE is capacity factor

— which is the case for both land

- based and offshore projects.

This analysis presents a picture of the levelized cost of land

- based and offshore wind energy using real and modeled data that represent s 201 3 market conditions. Scenario planning and modeling

a ctivities often focus on one number ( or cost) for land

- based LCOE and one for offshore LCOE

. I n reality

, the cost of land

- based wind energy varies greatly across the United States and offshore wind LCOE varies significantly across Europe and Asia ( Table 20 )

.

T he LCOE analysis presented in this report is only one way to measure the cost of wind energy and it does not include other costs and price issues that influence a given wind project’s viability

, such as transmission , environm ental impacts, military constraints

, or other areas of consideration (e.g., public policy, consumer costs, energy prices

, or public acceptance). In addition, these LCOE estimates do not reflect the value of electricity, incentives, or other policy mechanis ms ( such as production tax credits or investment tax credits ) that affect the sales price of electricity produced from wind projects.

Table 20 . Ranges of LCOE and Elements for U.S. Land

- Based and Offshore Wind in 201 3



### Land

- B ased Wind Projects Offshore Wi nd Projects Capital e xpenditures $1,4 47

– $ 3,000 /kW $3,2 00

– $6, 0 00/kW
Operational e xpenditures $ 4

– $3 0 /MWh $ 20

– $5 9 /MWh
Capacity factor 2 5 %

– 5 0 % 30%

– 50 %

Discount rate 6%

– 1 1 % 8%

– 15% Operational life 20

– 30 years 20

– 30 years Range of LCOE <$5 0

− >$10 3 /MWh <$1 4 7

− >$282 /MWh

### 49

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

# 8 Related and Future Work

NREL continues to work to gain a better understanding of costs associated with many components of land

- based wind turbines and systems

. Ongoing collaboration with industry c ould lead to better data , enhanced modeling capabilities, and increased awareness of current and future wind power system component cost s . For offshore wind, this analysis provide s a best estimate for potentia l domestic wind power projects.

NREL intends to update this review of wind energy costs on an annual basis. Th ese update s are intended to help maintain a perspective on costs that is grounded in real

- time market changes as well as offer greater insight into the costs and performance of individual components related to the wind generation system. In addition , these reports are intended to provide greater clarity regarding wind energy costs and the effects of changes in specific variables on the LCOE. The data and tools developed from this work will be used to help inform projections, goals, and im provement opportunities. A s the industry evolves and matures

, NREL will continue to publish current representative project data and LCOE estimates for scenario planning, modeling, and goal setting.

Future work entails three primary objectives: 1) continue to enhance data representing market

based costs, performance, and technology trends to reflect actual wind industry experience

, 2) enhance the fidelity of bottom

- up cost and performance estimation for individual wind plant components

, and 3) understand sen sitivities to factors such as regional differences, site characteristics, and technology choices

. In 201 5 and going forward, NREL will continue to work with industry and national laboratory partners to obtain project

- specific data to validate and improve m odels

. NREL’s ongoing wind analysis efforts include:

• Creating a m odel to better represent offshore non

- turbine project costs

, such as foundations, electrical cabling, and installation, across a range of turbine and project s izes

• Develop ing a w ind e nergy s y stems e ngineering model to conduct enhanced analysis of new innovation impacts on turbine cost and performance

. In addition, NREL plans to :

• Update the NREL c ost and s caling model with improved

, turbine

- specific data

• E stimate the effect on LCOE from anticip ated improvements to O&M in both land

- b ased and offshore wind projects

• Continue work on c omputational f luid d ynamic s m odels to determine the magnitude and impact of wake losses

• Q uantify the effect of potential technology pathways on system LCOE for land

- ba sed and offshore wind technology

• Collect data and e xamine key issues involved in wind power deployment

, such as transmission, radar, wildlife issues, and public acceptance

, to better understand their impacts on the cost of wind energy and potentially devel opable land

• Investigate and estimate the cost of of fshore wind energy on floating platforms and compare to fixed

- bottom foundation substructures

.

### 50

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

# References

American Wind Energy Association (AWEA) . ( 201 2 ). Federal Production Tax Credit for Wind Energy. Wa shington. http://www.awea.org/issues/federal_policy/upload/PTC

- Fact

- Sheet.pdf

. Accessed August 2012.

Bloomberg N ew Energy Finance BNEF. (2012b). Levelized Cost of Electrici ty Update: Q3 2012. Energy

– Research Note. July 18, 2012.

Bureau of Ocean Energy Management (BOEM). (2011). Renewable Energy Program State Activities Web Resources. Washington, DC: U.S. Department of the Interior (DOI) BOEM. http://www.boem.gov/Renewable

- Energy

- Program/State

- Activities/Index.aspx . Accessed August
2012.

BVG Associates. (2011). Guide to an offshore wind farm . The Crown Estate. http://www.thecrownestate.co.uk/media/211144/guide_to_offshore_windfarm.pdf . Accessed August 2013.

Cohen, J.; Schweizer, T.; Laxson, A.; Butterfield, S.; Schreck, S.; Fingersh, L.; Veers, P.; Ashwill, T. (2008). Te c hnology Improvement Opportunities for Low Wind Speed Turbines and Implications for Cost of Energy Reduction. NREL/TP

- 500

- 41036. Golden, CO: National Renewable Energy Laboratory

.
Deloitte. (2011). Analysis on the F urthering of C ompet ition in R elation to the E stablishment of
L arge O ffshore W ind F arms in Denmark . The Danish Ministry of Climate and Energy (ENS). http://www.ens.dk/da

DK/UndergrundOgForsyning/VedvarendeEnergi/Vindkraft/Havvindmoeller/Fremtidens%20havm oellepar ker/Documents/Deloitte%20Background%20report%202%20

- %20Analysis%20of%20competitive%20conditions%20within%20the%20offshore%20wind%20se ctor.pdf

. Accessed August 2012.

Douglas

- Westwood. (2010). Offshore Wind Assessment for Norway . The Research Council of
Nor way. http://www.nve.no/Global/Energi/Havvind/Vedlegg/Annet/Offshore%20Wind%20Asessment%20
For%2 0Norway%20

- %20Final%20Report%20

- %20190510%20with%20dc.pdf

. Accessed August
2012.

Electric Power Research Institute (EPRI). ( 2007 )

. Renewable Energy Technical Assessment Guide

— TAG

- RE: 2006.

E nergy Information Administration (EIA). (2011). Assumptions to t he 2011 Annual Energy Outlook

. ftp://ftp.eia.doe.gov/forecasting/0554(2011).pdf

. Accessed February 2013.

Fingersh, L.; Hand, M.; Laxson, A. (2006). W ind Turbine Design Cost and Scaling Model. NREL/TP

- 500

- 40566. Golden, CO: National Renewable Energy Laboratory. http://www.nrel.gov/docs/fy07osti/40566.pdf . Accessed August 2012

.

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. 

### Gifford

, Jason S.; Grace , R. ; Rickerson, W. (2011). Renewable Energy Cost Modeling: A Toolkit for Establishing Cost

- Based Incentives in the United States March 2010

— March 2011

, NREL/SR

- 6A20

- 51093. Golden, CO: National Renewable Energy Laboratory. http://www.nrel.gov/docs/fy11osti/51093.pdf. Accessed August 2012

.

G lobal W ind E nergy C ouncil (GWEC) . (2012). Global Wind R eport: Annual Market Update 2013

. Brussels. http://www.gwec.net/wp

- content/uploads/2014/04/GWEC

- Global

- Wind

- Report_9

- April

2014.pdf . Accessed June 2014

.
Hamilton, B.; Bielecki, M.; Bloch, C.; Decker, T.; Frantzis, L.; Midura, K.; Pai dipati, J.; Zhao, F. (2014). Offshore Wind Market and Economic Analysis 2014 Annual Market Assessment. Burlington, MA

. http://energy.gov/sites/prod/files/2014/09/f18/2014%20Navigant%20Offshore%20Wind%20Mark et%20%26%20Economic%20Analysis.pdf

. Accessed August 2014.

Lantz, E.; Wiser, R. ; Hand, M. (2012). The Past and Future Cost of Wind Energy . National Renewable Energy Labo ratory. NREL/TP

- 6A20

- 53510. Golden, CO. http://www.nrel.gov/docs/fy12osti/53510.pdf . Accessed February 2013.

Lazard

. (20 08 )

. Levelized Cost of Energy Analysis

– Version 2.0. Lazard Ltd. June 2008

.
Malcom, D. ; Hansen , A . (2006). “WindPACT Turbine Rotor Design Study.” NREL/SR

- 500

- 32495. Golden, CO: National Renewable Energy Laboratory. http://www.nrel.gov/docs/fy06osti/32495.pdf

. Accessed F ebruary 2013.

Maples, B.; Hand, M.; Musial, W. (2010). Comparative Assessment of Direct Drive High Temperature Superconducting Generators in Multi

- Megawatt Class Wind Turbines. 40 pp.; NREL Report No. TP

- 5000

- 49086.

N ational R enewable E nergy L aboratory (NR EL) . (2013). Internal Offshore Wind Project Database . The National Renewable Energy Laboratory. Unpublished.

Short, W.; Packey, D.J.; Holt, T. (1995). A Manual for the Economic Evaluation of Energy Efficiency and Renewable Energy Technologies . Golden, C O

, National Renewable Energy Laboratory. March 1995. http://www.nrel.gov/docs/legosti/old/5173.pdf . Accessed February 2013.

T egen , S

. ; Hand

, M

. ; Maples

, B

. ; Lantz

, E

. ; Schwabe

, P

. ; Smith

, A

. (2012) ; 2010 Cost of Wind Energy Review

. National Renewable Energy Laboratory

. April 2012. http://www.nrel.gov/docs/fy12osti/52920.pdf. Accessed February 2013

.

T egen , S

. ; H and

, M

. ; Maples

, B

. ; Lantz

, E

. ; Schwabe

, P

. ; Smith

, A . (2013 ); 2011 Cost of Wind Energy Review

. National Renewable Energy Laboratory

. Mach 2013

. http://www.nrel.gov/docs/ fy12osti/56266.pdf. Accessed March 2014

.
Wiser, R.; Boling er, M. (2014 ). 201 3 Wind Technologies Market Report

. U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, August 2014

. http://emp.lbl.gov/sites/all/files/2013_Wind_Technologies_Market_Report_Final3.pdf

. Accessed August 2014

.

### 52

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. 

### Wiser, R.; Bolinger, M

. (2012). 2011 Wind Technologies Market Report

. U.S. Department of Energy, Office o f Energy Efficiency and Renewable Energy, August 2012. http://eetd.lbl.gov/ea/emp/reports/lbnl

- 5559e.pdf . Accessed September 2012

.
Wiser, R. ; Yang, Z.; Hand, M.; Hohmeyer, O.; Infield, D.; J ensen, P.H.; Nikolaev, V.; O’Malley, M.; Sinden, G.; Zervos , A . ( 2011 ). Wind Energy. In IPCC Special Report on Renewable Energy Sources and Climate Change Mitigation [O. Edenhofer, R. Pichs

‐ Madruga, Y. Sokona, K. Seyboth, P. Matschoss, S. Kadner, T. Zwickel, P. Eickemeier, G. Hansen, S. Schlömer, C. von Stechow (eds)]

. Cambridge, UK

, and New York, NY, USA : Cambridge University Press

.

### 53

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

# Appendix A. Present Value of Depreciation Calculations

L and

- B ased Wind

Table A1. Present Value of Depreciation Calculation for Land

- Based Wind Reference ( **d** = 8 .8 %)



### Year Net Book
Value 5

- Year

MACRS Depreciation

Schedule Depreciation Present
Value Depreciation Accumulated

Present

Value Depreciation

1 100 20.00 % 20 18.4 18.4

2 80 32.00% 32 27.0 45.4

3 48 19.20% 19.2 14.9 60.3

4 28.8 11.52% 11.52 8.2 68.5

5 17.28 11.52% 11.52 7.6 76.1

6 5.76 5.76% 5.76 3.5 79.6 MACRS: Modified Accelerated Cost Recovery System



## Offshore Wind

Table A 2. Present Value of Deprec iation Calculation for Offshore Wind Reference ( **d** = 10. 5 %)



### Year Net Book
Value 5

- Year

MACRS Depreciation

Schedule Depreciation Present Value Depreciation Accumulated
Present Value Depreciation

1 100 20.00% 20 18.1 18.1

2 80 32.00% 32 26.2 44.3

3 48 19.2 0% 19.2 14.2 58.5

4 28.8 11.52% 11.52 7.7 66.3

5 17.28 11.52% 11.52 7 73.3

6 5.76 5.76% 5.76 3.2 76.4 MACRS: Modified Accelerated Cost Recovery System

### 54

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications. 

# Appendix B. Summary of Assumptions for 201 3 Reference Projects

Land

- Based Wind Project Assumptions

Table B 1. Comprehensive List of Assumptions for 2013 Land

- B ased Reference Project Cost of Energy

Assumption Units Value Notes Project Information

Capacity m egawatts (M W ) 200 Calculation

Number of turbines # 105 Representative of commercial

- scale projec ts Turbine capacity MW 1.9 1 Average turbine size installed in United States

Net capacity factor % 38.6 Class 4 wind resource [ 7.25 meters per second ( m/s ) at 50

m ] , assumed losses (17%)

Rotor diameter meters ( m ) 96.7 Average rotor size installed in Unit ed States Tower height m 82.5 Average hub height installed in United States Operational life years 20 Standard business case assumption Capital Expenditures (C ap E x )

C ap E x (million) $ 344.7 Calculation

Capital e xpenditures $/ kilowatt ( kW ) 1, 728 Average C ap E x of 2013 U.S. projects

Market price adjustment $/kW 39 Calculated to bring C ap E x in line with market conditions

Hard costs Estimated based on the National Renewable Energy Laboratory’s ( NREL ’s ) Wind Turbine Design Cost and Scaling Model (Fingersh et al. 2006, Maples et al. 2010),
NREL’s new balance

- of

- system model, and NREL’s conversations with developers of land

- based wind projects in the United States Turbine $/kW 1, 185 Balance of system $/kW 3 49

Soft costs

Construction fina nce $/kW 5 0 Contingency $/kW 1 05 Operating Expenditures (O p E x )

O p E x costs $/ megawatt

hour ( MWh) 1 5

Representative of published literature and NREL’s
conversations with U.S. land

- based wind developers O p E x costs (pretax) $/kW/yr 50

O peration (O PER ) $/kW/yr 14

Maintenance ( MAIN ) $/kW/yr 28

Land lease $/kW/yr 8 Financing Costs [ d, F ixed C harge R ate (FCR)]

Inflation rate % 2.2 Assumption in the Annual Energy Outlook 2013 (E nergy I nformation A dministration [EIA] 2013 ) Discount rate (nominal) % 8 .8 201 3 land

- based weighted average cost of capital averages Discount rate (real) % 6.5 FCR (nominal) % 12.2

Calculation FCR (real) % 10.2

C ost r ecovery f actor (CRF) (nominal) % 10.8 CRF (real) % 9.0 Taxes (T)

Effective % 38.9 Calculation

Feder al % 35 Standard federal corporate tax rate

State % 6 Representative state tax rate
Present Value Depreciation (PVDep) Depreciable basis % 100 Simplified depreciation schedule

Depreciation schedule 5

- yr M odified A ccelerated C ost R ecovery S ystem (MACRS) Standard for choice for renewable energy projects

PV D ep % 79.6 Calculation

L evelized cost of energy $/MWh 66 Calculation

### 55

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications. 

## Offshore Wind Project Assumptions

Table B 2. Comprehensive List o f Assumptions for 2013 Offshore Reference Project Cost of Energy

As sumption Units Value Notes Project Information

Capacity megawatts ( MW ) 500 Representative of commercial

- scale projects

Number of turbines # 116 Calculation Turbine capacity MW 4.3 Average turbine size installed globally Depth meters ( m ) 15 Representat ive of proposed U.S. projects
Distance from shore (kilometers ( km ) 20 Representative of proposed U.S. projects

Net capacity factor % 39 Class 6 wind resource (8.4 m/s at 50 m), assumed losses (18%)

Rotor diameter m 119.4 Average rotor size installed glo bally Tower height m 89.5 Average hub height size installed globally Operational life years 20 Standard business case assumption Capital Expenditures (C ap E x )

C ap E x ($) $ millions 2,587.3 Calculation

C ap E x $/ kilowatt ( kW ) 5,187 Average global installed c apital expenditures (Hamilton et al. 2014)

Hard Costs

Values estimated based on the NREL Wind Turbine Design Cost and Scaling Model (Fingersh et al. 2006, Maples et al. 2010), new balance

- of

- system model, several recent publications (Douglas

- Westwood 2010, BVG Associates 2011, Hamilton et al. 2014 ), and NREL’s conversations with developers of offshore wind projects in the United States; percentage estimates applied to C ap E x estimate to obtain
dollar

- per

- kilowatt values Turbine $/kW 1, 660 Developmen t $/kW 149 Engineer and m anagement $/kW 90
Substructure and f oundation $/kW 730

Port and s taging $/kW 128
Electrical i nfrastructure $/kW 546 Transportation and i nstallation $/kW 1,053
Soft Costs

Insurance during construction $/kW 87

Decom missioning bond $/kW 155
Construction finance $/kW 156 Contingency $/kW 432 Operating Expenditures ( O p E x )

O p E x $/ megawatt

hour ( MWh) 39 Representative of published literature and NREL’s conversations with U.S. offshore wind developers OpEx costs (p retax) $/kW/yr 136

OPER (pretax) $/kW/yr 40 Representative of published literature and NREL’s conversations with U.S. offshore wind developers MAIN $/kW/yr 75

Outer Continental Shelf (OCS) Lease $/kW/yr 21 Cape Wind OCS lease



2% operational revenue in years 1

– 15, 7% of operational revenue in years 15

– 20 Financing Costs (d, FCR)

Inflation rate % 2.2 A ssumption in Annual Energy Outlook 2010 (EIA 2010) Discount rate (nominal) % 10.5 Approximate weighted average cost of capital for Cape
Wind and Block I sland wind projects Discount rate (real) % 8.1 FCR (nominal) % 13.9

Calculation FCR (real) % 11.7

C ost R ecovery F actor (CRF)/ nominal % 12.2 CRF (real) % 10.3

Taxes
Effective % 38.9 Calculation

Federal % 35 Standard federal corporate tax rate

S tate % 6 Representative state tax rate
Present Value Depreciation (PVDep) Depreciable basis % 100 Simplified depreciation schedule

Depreciation schedule 5

- yr M odified A ccelerated C ost R ecovery S ystem Standard choice for renewable energy projects

PV D ep % 76.4 Calculation

L evelized cost of energy $/MWh 2 1 5 Calculation

### 56

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications. 

# Appendix C. Summary of Assumptions for 2012 Reference Projects

Land

- Based Wind Project Assumptions

Table C 1. Comprehensive List of Assumptions for 2012 Land

- Based Reference Project Cost of Energy

Assumption Units Value Notes Project Information

Capacity m egawatts (MW) 200 Calculation

Number of turbines # 103 Representative of commercial

- scale projects Turbine capacity MW 1.94 Most common turbine size in the United States

Net capacity factor % 37.5 Class 4 wind resource [7.25 meters per second (m/s) at 50 m], assumed losses (17%)

Rotor diameter meters ( m ) 93.5 Most common rotor size of GE

- 1.5 Tower height m 83.8 Average U.S. hub height Operational life years 20 Standard business cas e assumption Capital Expenditures (C ap E x )

C ap E x (million) $ 387.7 Calculation

C ap Ex $/ kilowatt ( kW ) 1,940 Average C ap E x of 2012 U.S. projects

Market price adjustment $/kW 195 Calculated to bring C ap E x in line with market conditions

Hard costs Estima ted based on the NREL Wind Turbine Design Cost and Scaling Model (Fingersh et al. 2006, Maples et al. 2010), NREL’s new balance

- of

- system model, and NREL’s conversations with developers of land

- based wind projects in the United States Turbine $/kW 1,279 Balance of system $/kW 365

Soft costs

Construction finance $/kW 54 Contingency $/kW 108 Operating Expenditures (O p E x )

O p E x costs $/ megawatt

hour ( MWh) 17

Representative of published literature and NREL’s
conversations with U.S. land

- based wind developers O p E x costs (pretax) $/kW/yr 55

OPER (pretax) $/kW/yr 14

MAIN $/kW/yr 33

Land lease $/kW/yr 8 Financing Costs [ d, F ixed C harge R ate (FCR)]

Inflation rate % 2.2 Assumption in the Annual Energy Outlook 2012 (EIA 2012 ) Discount rate (nom inal) % 8 2010 land

- based weighted average cost of capital averages Discount rate (real) % 5.7 FCR (nominal) % 11.4

Calculation FCR (real) % 9.5

Cost r ecovery f actor (CRF) (nominal) % 10.2 CRF (real) % 8.5 Taxes (T)

Effective % 38.9 Calculation

Federal % 35 Standard federal corporate tax rate

State % 6 Representative state tax rate
Present Value Depreciation (PVDep) Depreciable basis % 100 Simplified depreciation schedule

Depreciation schedule 5

- yr M odified A ccelerated C ost R ecovery S ystem S tandard for choice for renewable energy projects

PV D ep % 81.1 Calculation

L evelized cost of energy $/MWh 73 Calculation

### 57

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications. 

## Offshore Wind Project Assumptions

Table C2. Comprehensive List of Assumptions for 2012 Offshore R eference Project Cost of Energy

As sumption Units Value Notes Project Information

Capacity megawatts ( MW ) 500 Representative of commercial

- scale projects

Number of turbines # 139 Calculation Turbine capacity MW 3.6 Representative of turbine size planned for Cape Wind Depth Meters ( m ) 1 5 Representative of proposed U.S. projects
Distance from shore kilometers ( km ) 20 Representative of proposed U.S. projects

Net capacity factor % 39 Class 6 wind resource (8.4 m eters per second at 50 m), assumed losses (18%)

Rotor diameter m 107 Represe ntative of turbine size planned for Cape Wind Tower height m 90 Representative of turbine size planned for Cape Wind Operational life years 20 Standard business case assumption Capital Expenditures (C ap E x )

C ap E x ($) $ millions 2,694.2 Calculation

C ap E x $/kW 5,384 Average global installed c apital expenditures (Hamilton 2013)

Hard Costs

Values estimated based on the NREL Wind Turbine Design Cost and Scaling Model (Fingersh et al. 2006, Maples et al.

2010), several recent publications (Douglas

- Westwood

2010, BVG Associates 2011, Deloitte 2011 , Hamilton

2013 ), and NREL’s conversations with developers of offshore wind projects in the United States; percentage estimates applied to the total C ap E x estimate to obtain
dollar

- per

- kilowatt values Turbine $/kW 1,723 Development $/kW 155 Engineer and m anagement $/kW 94
Substructure and f oundation $/kW 758

Port and s taging $/kW 133
Electrical i nfrastructure $/kW 566 Transportation and i nstallation $/kW 1,093
Soft Costs

Insurance during construct ion $/kW 90 Decommissioning bond $/kW 161
Construction finance $/kW 162 Contingency $/kW 448 Operating Expenditures (O p E x )

O p E x $/MWh 39 Representative of published literature and NREL’s conversations with U.S. offshore wind developers OpEx costs (pretax) $/kW/yr 136

MAIN $/kW/yr 40 Representative of published literature and NREL’s conversations with U.S. offshore wind developers OPER (pretax) $/kW/yr 75

Outer Continental Shelf (OCS) Lease $/kW/yr 21 Cape Wind OCS lease



2% operational revenu e in years

1

– 15, 7% of operational revenue in years 15

– 20 Financing Costs (d, FCR)

Inflation rate % 2.2 Assumption in Annual Energy Outlook 2010 (EIA 2010) Discount rate (nominal) % 10.5 Approximate weighted average cost of capital for Cape
Wind and Blo ck Island wind projects Discount rate (real) % 8.1 FCR (nominal) % 13.9

Calculation FCR (real) % 11.7

C ost recovery factor (C RF )/ nominal % 12.2 CRF (real) % 10.3 Taxes (T)

Effective % 38.9 Calculation

Federal % 35 Standard federal corporate ta x rate

State % 6 Representative state tax rate
Present Value Depreciation (PVDep) Depreciable basis % 100 Simplified depreciation schedule

Depreciation schedule 5

- yr M odified A ccelerated C ost R ecovery S ystem Standard choice for renewable energy project s

PV D ep % 76.4 Calculation

L evel ized cost of energy $/MWh 225 Calculation

### 58

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications. 

# Appendix D. Summary of Historical Levelized Cost of Energy Using Reference Projects

Table D1

. Historical Land

- Based Wind Plant Levelized Cost of Energy as Calculated by NREL



### Par ameters 2010 COE 2011 COE 2012 COE 2013 COE

Nameplate c apacity ( megawatts [ MW ] ) 1.5 1.5 1.94 1.9 1

Rotor d iameter ( meters [ m ] ) 82.5 82.5 93.5 96.9
Hub h eight (m) 80 80 80 82.7
Modeled n et c apacity f actor 38.0% 37.0% 37.5% 38.5%
Cap ital expenditures ($ / kilowatt [ kW ] ) 2

, 155 2

, 098 1

, 940 1

, 728

F ixed charge rate (%) 9.5% 9.5% 9.5% 10. 2 % Op erational e x penditures ($/kW) 55 55 55 50

A nnual e nergy p roduction ( megawatt

hour ( MWh ) /MW/yr) 3

, 345 3

, 263 3

, 284 3

, 410

L evelized cost of energy ($/MWh) 78 78 73 66

T able D2

. Historical Land

- Based Average Wind Plant Turbine Specifications



### Respective Market Turbine Parameter Averages 2010 2011 2012 2013 Nameplate Capacity (MW) 1.79 1.97 1.94 1.9 1 Rotor Diameter (m) 79.8 89 93.5 96.9 Hub Height (m) 84.3 81 83.8 82.7

Figure D1

. Historical land

- based wind plant levelized cost of energy (LCOE) as calculated by NREL including the U.S. Department of Energy’s LCOE goals

### 59

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. Table D3. Historical Offshore Wind Plant Levelized Cost of Energy as Calculated by NREL



### Parameters 2010 COE 2011 COE 2012 COE 2013 COE
Nameplate c apacity ( megawatts [ MW ] ) 3.6 3.6 3.6 4.3

Rotor d iameter ( meters [ m ] ) 107 107 107 119.4
Hub h eight (m) 90 90 90 89.5
Modeled n et c apacity f actor 39.0% 39.0% 39.0% 39.0% CapEx ($/ kilowatt [ kW ] ) 5

, 600 5

, 600 5

, 384 5

, 187 FCR (%) 11.7% 11.7% 11.7% 11.7% OpEx ($/kW) 136 136 136 136

A nnual energy production (MWh/MW/yr) 3

, 406 3

, 406 3

, 406 3

, 463

L evelized cost of energy ($/MWh) 232 232 225 215

Table D 4

. Department of Energy’s Cost Goals for Land

- Based and Offsh ore Wind Power



### DOE Goals 2020 2030

Land

- Based LCOE ($/MWh) 57 42 Offshore LCOE ($/MWh) 167 136

### 60

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. 

# Appendix E. Summary of Land

- Based System Cost Breakdown Structure

Table E1

. Land

- Based Wind System Cost Breakdown Structure Terms and Definitions

Level 

### Ter m Definition

1 Capital e xpenditures (CapEx) Includes a ll installed costs incurred prior to the commercial operations date (COD). CapEx components include turbine, balance

- of

- station ( BOS ) , and soft costs.

2 Wind t urbine Converts kinetic energy from wind into three

- phase AC electrical energy

3 Nacelle m odule Provides structural interface between tower module, drivetrain module, and rotor
module ; p rovides housing for sensitive electrical and mechanical components and equipment ; enables access by maintenanc e personnel

4 Nacelle s tructural a ssembly P rovides the structure interface between the tower, drivetrain, and rotor and shelters sensitive equipment

5 Enclosure Includes the f iberglass shell, hatches, latches, anchors, and venting

5 Drivetrain and g e nerator s upport

s tructures Contains the b edplate, framing, flooring, and anchors, including welded steel and
fasteners

5 Coatings Provides c oatings to protect from weather

4 Drivetrain a ssembly Includes the m ain power conversion system in the wind turbi ne, where energy captured by the rotor is transferred to drive the generator via the main shaft system, with or without a gearbox

5 Gearbox Provides speed and torque conversion between the rotor (low speed) and the generator (high speed) ; o nly applicabl e for geared designs

6 Gears Include the p lanet carrier, planet gear, ring gear, sun gear, spur gear, and hollow
shaft

6 Bearings Include the p lanet bearing, carrier bearing, and shaft bearing

6 Housing Contains the b ushing, case, mounting, and torque a rm system

6 Sensors Include debris sensors, oil level sensors, pressure 1 and pressure 2 sensors, and
temperature sensor s

6 Lube s ystem Contains the p rimary filter, secondary filter, primary motor, primary pump, hose/fitting, seal, and reservoir

6 Cooli ng s ystem Consists of the p ump, radiator, and hoses

5 Low

- s peed s haft and m ain
b earing s ystem Transfers torque from the rotor to the gearbox (if applicable) or generator ( if direct
drive )

6 Low

- s peed s haft Contains the l ow

- speed shaft, compression coup ling, rotor lock, connector plate, and slip ring assembly

6 Main b earing Consists of the m ain bearing upwind, main bearing downwind, and main bearing
seals

6 Sensors Include the m ain bearing temperature sensor s , low

- speed shaft rpm, and position

sensor s

5 High

- s peed s haft and b raking

s ystem Contains the h igh

- speed shaft, coupling, rotor lock, and transmission shaft

### 61

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. Level 

### Ter m Definition

6 High

- s peed s haft Includes the h igh

- speed shaft, coupling, rotor lock, and transmission shaft

6 Braking s ystem Consists of the b rake di sc, brake calipers, brake pads, and transmission lock

6 Sensors Include h igh

- speed shaft rpm sensor s and position sensor s

4 Nacelle e lectrical a ssembly Contains the p ower off

- take system elements located in the nacelle

5 Generator Converts mechanical e nergy to electrical energy ( b ased on the g earbox

- g enerator system)

6 Cooling s ystem Includes h oses, the filter, cooling fan, motor, pump, and radiator

6 Lubrication s ystem Consists of the p ump, pump motor, and the reservoir

6 Rotor Includes the commenta tor, exciter, resistance controller, rotor lamination, rotor winding, slip ring, rotor magnets, and brush

6 Sensors Include c ore temperature sensor s , encoder s , and watt meter s

6 Stator Contains s tator magnets, stator lamination, and stator windings

6 St ructural and m echanical Includes the f ront bearing, rear bearing, silent block, housing, and shaft

5 Frequency c onverter Co n verts variable frequency from an asynchronous generator to grid

- compliant power of the right ‘quality .’ and with a stable frequenc y of either 50 hertz ( Hz ) or 60

Hz

6 Converter a uxiliaries Include the p ower supply, cabinet, heating system, cabinet sensor, communication
and interface unit, control board, generator side fan, grid side fan, measurement unit, power supply, power supply ( 24 volts [ V ]) , tachometer adapter, and
thermostat

6 Converter p ower b us Contains the b ranching unit, capacitors, contactors, generator side converter, generator side power module, grid side converter, grid side power module, inductor, load switch, and p recharge unit

6 Power c onditioning Includes the c ommon mode filter, crowbar system, DC chopper, generator side filter, line filter assembly, and voltage limit unit

5 Power e lectrical s ystem C o n vert s generator voltage to array cable system voltage for c ollection

6 Power c ircuit I ncludes the insulated

- gate bipolar transistor (I GBT ) module, rectifier bridge, crowbar system, driver/control board, cables, machine contractor,

M b usbar/ i solator/ c ircuit b reaker, M s witchgear/ d isconnect, motor contractor, soft

s tarter, and grounding system

6 Main t ransformer ( n acelle) Main transformer when located in the nacelle (also located on the ground outside tower)

6 Measurements Equipment to measure the function of the power electric system

6 Switchgear Located in the b ase of a tower ( t ransformer up tower) or as part of a ground

- based
transformer external to the tower

5 Control and c ommunication

s ystem ( supervisory control and data acquisition [S CADA ] ) Connects the wind turbines with the operations center and utility of f taker ; provides
the wind project operator with information about the status of wind turbine
systems ; and allows remote control of some functions

6 Wind t urbine c ontroller Includes the r otor controller, nacelle controller, tower controller (all comprised of numerous level 6 components)

### 62

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. Level 

### Ter m Definition

6 Communication s ystem Contains the a nalog I/O unit, digital I/O unit, Ethernet module, field bus master, field bus slave, frequency unit, and the controller internal communication system

6 Condition m onitoring s ystem Comprises s ensors, cables, data logger, and the protocol adapter card for the data logger

6 Ancillary e quipment Includes c ables, connectors, and the contactor/circuit breaker fuse s

6 Wind p lant c ontrol e quipment Includes any advanced wind plant control e quipment installed on the turbines (e.g.,
nacelle

- mounted lidar) or distributed throughout a wind plant (e.g., ground

mounted lidar)

5 Auxiliary n acelle e lectrical s ystem Other equipment necessary for the function of the nacelle electrical system

6 Nacel le e lectrical s ervices Include a 24

- DC feeder, the auxiliary transformer, breaker, cabinet, fan, fuse, grid protection relay, light, mechanical switch, power point/supply, protection cabinet, push button, relay, space heater, surge arrester, thermal protec tion, and Uninterruptible Power Supply (UPS)

6 Nacelle l ightning p rotection

s ystem Contains a ir termination, the bonding element, earth connector and termination, sliding contact, spark gap system, and the surge arrester

4 Yaw a ssembly P rovides the stru cture interface between the tower, drivetrain, and rotor and shelters sensitive equipment

5 Brake Comprises y aw brake calipers, the disc, path, and hoses

5 Drives and b earings Include the m otor, gear, pinion, bearing, and damper

5 Hydraulics Contain the a ccumulator, pump, hoses

, valves, and motor

5 Yaw s ensors Include the w ind

- up counter, yaw encoder, and position sensor

4 Nacelle a uxiliaries Consist of the o ther equipment within the nacelle necessary for the necessary for
the function of the wind turb ine

5 Nacelle s ensors Includes the a nemometer, wind vane, and temperature sensors

5 Internal e nvironment Consists of high

- voltage alternating current ( HVAC ) , nacelle vent, and nacelle lighting

5 F ederal A viation A dministration (FAA) l ighting Comprises n avigational lights (requirements set by FAA in the United States)

5 Walking/ c limbing i nfrastructure Includes c at walks, cables, ladders, people hatch, crane hatch, and anchors

5 Safety s ystem Consists of the t ie

- off system, firefighting system, fall arr ester, down conductor, service crate, beacon, nacelle cover metallic mesh, and lighting protection

5 Lightning p rotection s ystem P rotects the turbine from damage resulting from lightning strikes by passing

currents to the ground and includes air terminati on, the bonding element, earth

connector and termination, sliding contact, spark gap system, and surge arrester

5 External m aintenance c rane L ift s small components (<2 mT) from the ground into the n acelle or vi c e versa and
includ es tools, supplies, and re placement equipment

4 Nacelle t ransportation Includes the c osts of transporting the nacelle components from the manufacturing facility to the staging area

### 63

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. Level 

### Ter m Definition

3 Tower m odule Provides a s upport structure element that connects the nacelle, drivetrain and rotor
modules with the substructure and foundation, and has the ability to house electrical conversion equipment and provide emergency shelter

4 Tower s ystem Provides the primary structural component

5 Tower s tructure Includes t ower sections that generally co nsist of rolled steel sections ( though other options are being considered )

5 Fasteners Connect individual tower elements (e.g., bolts) to other tower elements, the nacelle module, and substructure

5 Coating s P rotect from corrosion

4 Tower e lectrical a ss embly Consists of the e lectrical s ystem

, from the n acelle to the s witchgear/ t ransformer

connection to the a rray

5 Drop c ables O ff

- take power from the drivetrain (or main transformer, if located up tower) and
transport it down tower to the main transformer (if located at the tower base) or switchgear

5 Frequency c onverter Co n verts variable frequency from thee asynchronous generator to grid

- compliant power of the right ‘quality ’ and with a stable frequency of either 50 or 60 Hz

6 Converter a uxiliaries Inc lude the p ower supply, cabinet, heating system, cabinet sensor, communication
and interface unit, control board, generator side fan, grid side fan, measurement unit, power supply, power supply ( 24 V ) , tachometer adapter, and thermostat

6 Converter p ower b us Includes the b ranching unit, capacitors, contactors, generator side converter, generator side power module, grid side converter, grid side power module, inductor, load switch, and precharge unit

6 Power c onditioning Consists of the c ommon mode filter, crowbar system, DC chopper, generator side filter, line filter assembly, and voltage limit unit

5 Power e lectrical s ystem C o n vert s generator voltage to array cable system voltage for collection

6 Power c ircuit Comprises the IGBT module, rectifier bridg e, crowbar system, driver/control board, cables, machine contractor, M Busbar/Isolator/Circuit Breaker, M Switchgear/Disconnect, motor contractor, soft starter, and grounding system

6 Main t ransformer ( t ower) Main transformer when located in the tower bas e (can also be mounted in the nacelle)

6 Measurements Includes e quipment t hat measure s the function of the power electric system

5 Auxiliary t ower e lectrical s ystem Includes o ther equipment necessary for the function of the nacelle ’s electrical
system

6 Tower e lectrical s ervices Include the 24

- DC feeder, auxiliary transformer, breaker, cabinet, fan, fuse, grid protection relay, light, mechanical switch, power point/supply, protection cabinet, push button, relay, space heater, surge arrester, thermal prot ection, and UPS

### 64

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

. Level 

### Ter m Definition

6 Tower l ightning p rotection

s ystem Consists of a ir termination, the bonding element, earth connector and termination, sliding contact, spark gap system, and surge arrester

4 Ancillary e quipment Includes o ther equipment within the tower necessary for the function of the wind
turbine

5 Personnel a ccess and s urvival

e quipment Includes c limb assist, elevators, hatches, ladders, landings, lighting, and doors

5 Electrical s ystem Comprises w iring to support tower auxiliaries

5 Tower i nternal l ighting P rovide s a safe working environment

5 Equipment s upport Includes o ther equipment necessary for the function of the wind turbine

5 Aerodynamic a ccessories Consist of p assive accessories on the tower to improve energy capture (likely applicable for downwind designs only )

5 Tower

- mounted d amping s ystem R educe s the transfer of unwanted torque from the nacelle through the tower

5 Internal h oist/ l ifting
d evice/ e levator Consists of a h oisting system ( e.g., hoist, other lifting device, and internal elevator/lift system) within the tower used to lift tools and supplies during

maintenance activities

4 Tower t ransportation Includes the c osts of transporting the tower components from the manufacturing facility to the staging area

3 Rotor m odule C apture s wind energy and transfer s it to the drivetrain (through the low

- speed shaft)

4 Blade Captures the kinetic energy in the wind and transfer s the torque and other
unwanted loads to the drivetrain module and rest of the turbine

5 Root s tructure Provides the i nterface between the main composite section of the blade and the blade bearing

5 Sandwich c ore Consists of the l ow

- density core material between laminates

5 Spar/ s par b ox Includes the s par cap and spar web

5 Bond Provides the b onds for leading edg e and trailing edge

5 Fasteners Include the T

- bolt/ r oot i nsert and others

5 Laminates Consist of i nternal structural laminates and skin laminates

5 Paint and coatings P rotect the outside of the turbine and its components from erosion

5 Lightening prot ection Includes t ermination and down

- conductor

5 De

- icing system Consists of s ensors, heaters, wiring, and thermal conductors

5 Ballast Adjusts the c enter of g ravity and weight of the blades to make matching sets for a
wind turbine

5 Aerodynamic a cces sories Include a ctive and passive blade accessories such as aileron, tip b r akes, and so on

4 Pitch a ssembly Adjusts the pitch angle of the blades to control power output from the turbine, minimize loads, and start/stop turbine as needed ; b lades are attach ed to the hub through the pitch systems

### 65

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. Level 

### Ter m Definition

5 Pitch d rive Includes the m otor, motor cooling fan, pitch bearing, motor brake, pitch gear, gear reducer, pinion, power electronics/drive, cabling, contractor/circuit breaker fuse, encoder, power supply, heater, a ccumulator, and pump

5 Pitch c abinet Consists of the s witchboard/limit switch, battery, battery charger, heater, position controller, and load controller

5 Sensors Include the t emperature sensor, voltmeter, and position sensor

5 Miscellaneous Includes s eals, auto lube system, pitch cylinder linkage, bushing, proportional valve,
and hose/fitting

Hub a ssembly C onnects the blades and pitch system to the low

- speed shaft within the drivetrain
module

5 Hub Connects the blades and pitch system to the low

- s peed shaft within the drivetrain
module

5 Nose c one Consists of a p rotective cap fitted on the hub, largely aesthetic

5 Exit h atch Provides access to and exit from the hub system

4 Rotor t ransportation Includes the c osts of transporting the rotor compon ents from the manufacturing facility to the staging area

2 Balance of s tation Consists of the b alance of equipment, labor, and material costs (other than wind turbine) incurred prior to COD

3 Development Includes a ll activities from project inception to financial close (where financial close
is the date in which project and financing agreements have been signed and all required conditions have been met)

4 Permitting and l easing Consists of a cquisition of permits and leases required for site assessment, construction, and operation at the project site

5 Permit a cquisition a ctivities Include the a ctivities necessary to obtain permits from relevant authorities

5 Lease a cquisition a ctivities Include the a ctivities necessary to obtain a commercial or rese arch lease to operate the project from relevant authorities

5 Public o utreach Consists of s takeholder education, marketing, and other efforts to facilitate public acceptance of a project

4 Professional a dvisory s ervices Include l egal support, external co nsultants, accounting, and so on during development

4 Engineering Includes e ngineering studies to specify the design of the project (e.g., technology
and layout) and better understand economics and risks associated with the design

5 Pre Front End Engineer ing Design ( FEED ) Includes p reliminary engineering design studies to develop the general design of project, identify a short list of technologies for further evaluation, and identify fatal
flaws

5 FEED Consists of e ngineering activities to develop final design specification, address areas of risk/uncertainty, determine technical and economic feasibility, and develop necessary specifications to begin the procurement process

5 Engineering c ertification Consists of a r eview by a third party, independent ver ification agent to assess the feasibility of the design basis, resulting in a c ertification r eport

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. Level 

### Ter m Definition

4 Site c haracterization Includes the e quipment, material and labor costs required for collecting/ana lyzing a wind resource, ocean conditions, and geological data at a project site ; d efines parameters for engineering assessments as data becomes available

5 Siting and s coping Consists of the i nitial desktop

- level studies to select a project location, develop a conceptual design, identify regulatory requirement s, and create a preliminary
business case

5 Studies and s urveys Include the c limatic, environmental, and social surveys/studies required by regulators or that are otherwise necessary for the project

5 Met eorological (met) s tation and
installation Consist s of the met tower, instrumentation, data acquisition system, and associated equipment rental and installation

5 Wind r esource a nalysis Includes the c ollection, cleaning, and analysis of data to develop a wind resource profile and power production estima tes for a selection of turbine types at a project

site ; m ight include array layout optimization surveys

5 Geotechnical and g eophysical

s urveys Perform surveys for project site and each turbine location

4 Interconnection and p ower

m arketing Includes a ctiv ities that are intended to gain access to the transmission grid and negotiate contracts to sell or otherwise market power

5 Interconnection s tudies and f ees Include the a ctivities required to obtain a Large Generator Interconnection Agreement from the Fe deral Energy Regulatory Commission ( FERC ) , prepared in
coordination with the transmission system operator. Studies cover the technical
considerations of an interconnecting project with the grid while maintaining system
balance and will operate within grid operating limits

5 Transmission rights of way Includes the c osts of obtaining or expanding transmission rights of way for any land

based electric infrastructure (e.g., overhead transmission lines), as well as any costs to permit land

- based transmission

5 Power m arketing Includes e fforts to develop power marketing strateg ies and forecast pricing and negotiate p ower p urchase a greements

4 Project m anagement during
d evelopment Consists of managing the project from the start of the d evelopment p hase t o the
f inancial c lose

5 Procurement Consists of the p reparation of tenders for each work package, evaluation of bids,
and negotiation with suppliers

5 Salaries Include s alaries for management and support staff on the developer’s payroll ; some overlap with the c ategories above is expected, depending on the amount of work that is completed internally v ersu s through a contract

5 Sales, g eneral, and a dministrative Include the o verhead for the project company including administrative salaries and benefits, rent, uti lities, depreciation, insurance, and so on

5 Profit (if private developer) Consists of a ny margin earned by the developer upon the sale of the project at
financial close ; does not include the cost to a new owner of any stake that a developer might retain in the project

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. Level 

### Ter m Definition

4 Financing and i ncentives Consists of f ees, closing costs, and staff and consultant efforts to arrange and secure equity, debt financing, and government incentives

5 Due d iligence Includes a ctivities performed by potential investors to i nvestigate the technical and economic aspects of the project and estimate its value prior to executing a financial

commitment (t ypically conducted by thi rd party technical consultant [ s ] hired by

investor [ s ] )

5 Incentives Include e fforts performed by the d eveloper to secure and demonstrate qualification for local, state, and federal incentives

5 Closing c osts Consist of a dministrative costs incurred by investors (debt and equity) during the
evaluation of the investment

5 Legal s upport Consists of legal su pport provided to d eveloper s during financial negotiations

3 Engineering m anagement Includes management activities from the f inancial c lose t o the COD

4 Detailed d esign and c onstruction

e ngineering Includes costs related to d etailed design and construct ion engineering activitie s for the project

4 Procurement m anagement Includes b id management, purchasing, negotiations, and contract management

4 Construction m anagement Includes q uality control and assurance

5 Salaries Include s alaries for management an d support staff on the project owner’s and/or construction manager’s payroll

5 Sales : g eneral and a dministrative Consist of o verhead for the project company and/or construction manager including administrative salaries and benefits, rent, utilities, depre ciation, insurance, and so

on

5 Profit Includes a ny margin earned by an independent construction management firm

4 Project c ertification Consists of r eview by a thi rd party, independent verification agent to assure that a project is in compliance with t he design basis as well as technical standards and regulatory requirements, result ing in a p roject c ertificate

4 Health, s afety, and e nvironmental

m onitoring Includes c oordination and monitoring activities to ensure compliance with health, safety, and env ironment ( HSE ) requirements during construction

5 Health and s afety m onitoring Includes c oordination and monitoring activities to ensure compliance with health and safety requirements during construction

5 Environmental m onitoring Includes c oordination a nd monitoring activities to ensure compliance with environmental requirement s during construction

3 Electrical i nfrastructure Includes e quipment and system i nstallation to extract power from turbines via the

array and transfers that power to the substatio n and then to the grid

4 Array c able s ystem Collects power generated by the turbines and transports it to the substation

5 M edium V oltage (MV) p ower

c ables Provide the MV c ollection system that is buried within the project boundaries

5 Grounding t ransfo rmer Includes the s upply, Dissolved Gas Analysis ( DGA ) t esting, and i nstallation of the grounding transformer at the substation

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. Level 

### Ter m Definition

5 Pad mount t ransformer Includes the s upply, DGA t esting, i nstallation, and River Interference Voltage ( RIV ) testing of the tra nsformer at the turbine (if applicable)

5 Switchgear Provides the t ermination point between the c ollection s ystem and the t urbine

5 Low Voltage ( LV ) c ables Provide the LV c ollection system buried within the project boundaries

5 Backfill Includes the e ng ineered backfill to cover up the c ollection system and communication cabling system

5 Ground system Includes the l ightening protection and grounding system supplied by the original equipment manufacturer ( OEM ) to be installed with the foundation

5 Ancil lary e quipment Includes o ther elements that provid e necessary functions to the export cable system

6 Termination k it Consists of the n ecessary components to connect the cable to substation and electric infrastructure for communication, LV, and MV systems

6 Connectors C onnect individual sections of cable together, in the event of long cable runs or damage

5 Array c able s ystem

c ommissioning A ssur es that all array cable systems and components are operational through a predefined series of tests and checks

5 Array c able s ystem t ransportation Includes the c osts of transporting the array cable components from the manufacturing facility to the staging area

4 Ancillary s ystems Include o ther optional elements that provid e functions to a project

5 Diesel g ener ator b ack u p P rovide power to the substation if the grid connection is lost

5 Fuel t anks Consist of the f uel tanks and pumping equip ment for the generator

5 Safety and s ecurity s ystems I nclud e access control, to safeguard personnel from hazards arising from the installation, maintenance, or operation of substation equipment

5 Spare p arts Include s pares for the substation

4 Transmission i nfrastructure Connect s the onsite substation to the utility substation

5 Land l eases/R ight

- of

- Way Consist of the l an d l ease or r ight

- of

- w ay payments for the transmission corridor

5 Transmission l ines and poles Include the o verhead t ransmission l ine s

5 Switchyard Interconnect s witchyard at the utility substation

5 Land

- based t ransmission

i nfrastructure t ransportation Includes the c osts of transporting the land

- based transmission infrastructure components from the manufacturing facility to the staging area

4 Underground c able s ystem Include a ny underground cables required for connect ing export cables to the land

based substation

5 Underground c ables Connect export cables to the land

- based substation directly or via overhead lines

5 Ancillary equipment Includes the equipment required for the underground cable system including ducts

4 Substations H ouse the electric conversion equipment to transform or convert power from the export voltage to the grid voltage

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. Level 

### Ter m Definition

5 Buildings/ f acilities Consist of climate

- controlled s tructures t hat house electric conversion equipment

5 Civil i nfrastructure Provides i mprovements to a con struction site (e.g., roads) necessary for substation construction and operation

5 Electric c onversion e quipment T ransform s generated power from the export cable voltage to the interconnection voltage and/or convert s that power from DC to AC (e.g., AC tr ansformers, switchgears, shunt reactors, and DC convert e rs)

5 Ancillary s ystems Consist of o ther elements that provid e necessary functions to the substation during operations (e.g., metering equipment, s afety and s ecurity s ystems, fire protection,
and gas detection )

5 AC t ransformers Consist of p ower convertors that step up generated power from the array cable voltage to the export voltage

5 High

- v oltage s witchgear C ontrol s , protect s, and disconnect s the high

- voltage connection

5 Medium

- v oltage s witch gear C ontrol s , protect s, and disconnect s the medium

- voltage connection

5 Shunt r eactors Consist of o nboard reactive compensation equipment

5 DC c onvert e r C onvert s power from high

- voltage AC ( HVAC ) to high

- voltage DC ( HVDC ) for export
to shore

5 Filteri ng s ystem Uses f ilters to address harmonics generated by HVDC convert e rs

5 Substation Integration, Assembly, Test and Checkout ( IATC ) Consists of a ctivities performed by the turbine manufacturer to integrate, assemble, test, and verify the s ubstation s ubs tructure and f oundation before deliver ing to the customer (does not include commissioning activities)

5 Substation t ransportation Includes c osts of transporting the substation components from the manufacturing facility to the staging area

3 Plant c ommiss ioning Includes the c ost incurred by the owner or prime contractor to test and commission the integrated power plant

3 Site a ccess, p orts, and s taging Includes the a ctivities and physical aspects of a staging area; elements needed to support the delivery, installation, storage, handling, and deployment of wind plant
components

4 Facilities Consist of t emporary facilities (trailers) supplied by subcontractors for supporting
the construction of a wind plant ; area needs to be leveled and compacted

5 Laydown a rea Includes the s pace at the staging area used to store turbine components and
conduct any pre

- assembly work on the ground; also stores other subcontractor components prior to deliver ing to the pad

5 Utilities Include the t emporary power, restrooms, an d water located at a f acilit y to be used by subcontractors during the construction phase

3 Assembly and i nstallation Include a ssembly and installation activities conducted at the project site ; a ssume that financial costs related to warranties, contractor insurance, SG&A, profit margin,
and so on are loaded in rates for labor and equipment

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. Level 

### Ter m Definition

4 Roads Includes modifying public roads as required, creati ng site entrances, and constructing site roads per the layout, OEM transportation guidelines, and engineering drawings

4 Erection Includes c osts of equipment and labor to assemble wind turbines on individual pads

5 Cranage Includes c ranage fees to use and operate crawler cranes, topping cranes, and stabilizing cranes used for the assembly of a wind turbine ; i ncl udes the number of cranes, day rates, mobilization and demobilization on site, and breakdowns as required for relocating crawler crane s over long distances

5 Fasteners Provides h ardware to secure connections between the foundation structure, tower

compone nts, nacelle, and rotor elements

5 Grout, g rout l ines, and s eals Consist of g rout and ancillary equipment to secure connections between foundation
elements

4 Commissioning Process of testing the mechanical components of a turbine and commissioning it for energy production; complete when 100 k ilowatts per turbine are supplied to the grid

3 Foundation Provides the s tructural foundation for a wind turbine

4 Excavation Creating wind turbine pads and locati ng the structural foundation

4 Primary s tructure Consists of r ebar and c oncrete ( s pread foot, P&H, or modified P&H)

4 Batch p lant Provides a t emporary onsite facility to create concrete for a project

4 Foundation t ransportation Involves the t ransportation of foundation materials to the staging area

3 Operations and m aintenance (O&M) i nfrastructure Includes the c apital investment in facilities, equipment, and other assets required
for O&M

4 Permanent f acilities Include O&M facilities, offices, warehouse, parking, the SCADA server, restrooms,
and so on

4 O&M e quipment p urchases Include o ther purchases necessary for operati ng the wind project after COD ;

e xamples include: safety equipment (e.g., harnesses), equipment to store replacement parts (e.g., climate control for spare electric cables), and vehicl es to support operations (e.g., fork trucks)

2 Financial c osts Consist of f inancial expenditures for which the project owner is responsible prior to COD, related to either payments for financial products, carrying charges on loans, or setting up financial instruments

3 Project c ontingency b udget Provides a l iquid financial instrument set up to respond to "known unknown" costs that arise during construction ; does not include contingences set by manufacture r s and contractors as part of supply contract pric ing

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. Level 

### Ter m Definition

3 Insurance d uring c onstruction (IDC) Consists of i nsurance policies held by the owner during the construction period, which may include construction all risk, cargo, commercial general liability, workers compensation, environmental site liability, po llution liability, and so on; d oes not include insurance held by contractors

3 Carrying c harges d uring

c onstruction ( c onstruction
f inancing c osts) Include c arrying charges of expenditures on equipment and services incurred before

COD

3 Reserve a ccounts ( maintenance expenditures [ MRA s]

, debt service expenditures [ DSRA s] ) Provide financial arrangements in which p ayments (before commissioning) are deposited into reserve accounts; generally required by either financiers or regulators

4 Maintenance r eserve a c counts Include p ayments (before commissioning) into reserve accounts set up to cover major MRAs, often required by debt service providers

4 Debt s ervice r eserve a ccounts Include p ayments (before commissioning) into reserve accounts set up to cover DSRAs, often required by debt service providers

4 Decommissioning r eserve

a ccount Include p ayments (before commissioning) into reserve accounts to fund project decommissioning obligations (e.g., surety bonds)

1 Operational e xpenditures Consist of e xpenditure s required to operate the project and maintain availability, generally annualized

2 Operations Include nonequipment costs of operations for a project

3 Environmental, h ealth

, and s afety Includes c oordination and monitoring activities to ensure compliance with HSE requirements during construction

4 Health and s afety m onitoring Includes c oordination and monitoring activities to ensure compliance with health and safety requirements during operations

4 Environmental m onitoring Includes c oordination and moni toring activities to ensure compliance with environmental requirement s during operations

3 Business

- related a nnual l eases, f ees, and c osts Consist of p ayments for permission to operate at a project site, terms defined within

a lease, any payments to t rans mission s ystem o perators for rights to transport generated power, any payments to infrastructure owners for the right to operate power facilities, and

4 Land leases Consist of p ayments to land owners for rights to operate transmission lines, the
substatio n, or other facilities

4 Transmission c harges/ r ights Include a ny payments to t ransmission s ystem o perators or t ransmission a sset

o wners for rights to transport generated power

4 FERC f ees Include f ees paid to FERC during operations

3 Insurance Consist o f i nsurance policies held by the project company or operations manager during the operational period

3 Operation, m anagement

, and

g eneral a dministration Consist of a ctivities necessary to determine, dispatch, sell, and manage the plant’s

power production ; i ncludes staff and equipment both on and off site

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. Level 

### Ter m Definition

4 Generation p lanning and

i ntegration Includes e fforts spent on forecast ing , sell ing , and dispatch ing the power generated by the facility

4 Operating f acilities Include c o

- located offices, parts store, m aintenance sheds, and so on

4 Operating e quipment Includes l ease payments for operating equipment held by the project to support operations (e.g., cranes and fork trucks)

4 Sales : g eneral, and a dministrative Includes financial reporting, public relations , procurement, parts and stock management, HSE management, training, subcontracts

, and general administration of project site

4 Turbine p ower c onsumption Consists of c harges for power drawn from the grid by the wind project (e.g., turbine
and substation) during operation

4 Weather f orecasting Provides a d aily 96

- hour forecast of wind conditions that is used to plan maintenance visits and project power production

4 Operations m anagement Includes c oordination of equipment and personnel to carry out mainten ance and inspections of generation and transmission equipment

4 Condition m onitoring Consists of m onitoring SCADA data from wind turbine components to optimize performance and identify component faults

4 Operating m argin Includes a ny margin earned by an independent operations management company

4 Professional a dvisory s ervices Consist of l egal support, external consultants, accounting, and so on during operation

2 Maintenance Includes l abor and equipment costs of operations for the project

3 Long

- t erm s ervice a greement Consists of the a nnualized cost of a contract between the project owner and a third party to maintain the project at a guaranteed level of availability for a defined period ; w ill likely replace scheduled and unscheduled maintenance categ ories below
for the duration of the contract

3 Scheduled m aintenance Consists of p lanned, routine activities to ensure that equipment, systems, and structures are operating correctly and at optimal efficiency, and to minimize unscheduled breakdowns/ downt ime ; i ncludes cost of labor, equipment, spare
parts

, and consumables

4 Wind turbine scheduled

maintenance Consists of p lanned maintenance activities for turbine systems

5 Nacelle m odule Includes p lanned maintenance related to the d rivetrain m odules

5 Ro tor m odule Includes p lanned maintenance related to the r otor m odules

5 Tower m odule Includes p lanned maintenance related to the t ower m odules

4 BOS scheduled maintenance Includes p lanned maintenance activities for BOS

5 Electrical transforming equipment inspection Consists of i nspecti ng the switchgears, transformers

, and back

- up power supply

5 DC convert e r inspection Consists of i nspecti ng the DC convert e r equipment and filtering equipment

5 Land

- based e lectric i nfrastructure Includes i nspections of t he switchgear, transformers

, and any connections

3 Unscheduled m aintenance Involves i nterventions and other activities to respond to random failures ; c osts include equipment, labor, replacement parts, and consumables (a lso known as

corrective maintenance )

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. Level 

### Ter m Definition

4 Wind turbine unscheduled

maintenance Consists of performing u nscheduled maintenance for turbine systems

5 Nacelle m odule Includes c orrective maintenance related to the d rivetrain m odules

5 Rotor m odule Includes c orrective maintenance related to the r otor m odules

5 Tower m odule Includes c orrective maintenance related to the t ower m odules

4 BOS unscheduled maintenance Includes u nscheduled maintenance for BOS

5 Foundation Includes c orrective maintenance related to the s ubstructure and f oundations

5 E lectrical i nfrastructure Includes the c orrective maintenance related to the e lectric i nfrastructure

5 Other i nfrastructure Includes the c orrective maintenance related to o ther i nfrastructure

5 Electric i nfrastructure Includes s ervicing and repairs to th e switchgear, transformers

, and any connections (infrequent)

4 U nscheduled maintenance contingency Consists of a l iquid financial instrument set up to respond to ‟ known unknown ” costs that arise during maintenance

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. 

# Appendix F. Summary of Offshore System Cost Breakdown Structure

Table F1

. O ffshore Wind System Cost Breakdown Structure Terms and Definitions

Level Term Definition

1 Capital e xpenditures (CapEx) C onsist of a ll installed costs incurred prior to the COD ; CapEx components
include the turbine, BOS, and soft costs

2 Wind t urbine Converts kinetic energy from wind into three

- phase AC electrical energy

3 Nacelle m odule Provides a structural interface bet ween the tower module, drivetrain module,
and rotor module ; Also p rovides housing for sensitive electrical and mechanical components and equipment, and enables access by maintenance personnel

4 Nacelle s tructural a ssembly P rovides the structur al interface between the tower, drivetrain, and rotor

, and shelters sensitive equipment

5 Enclosure Includes the s tructure, e xit hatch, hatch, latches, and helicopter landing pad

5 Drivetrain and g enerator s upport

s tructures Include the b edplate and generator frame (can be a single unit), including welded
steel and fasteners

5 Coatings P rotect the outside of the wind turbine from corrosion in a marine environment

4 Drivetrain a ssembly Consists of the m ain power conversion system in the wind turbine, where energy
that is captured by the rotor is transferred and drive s the generator via the main shaft system, with or without a gearbox

5 Gearbox Provides speed and torque conversion between the rotor and the generator (o nly applicable for geared designs )

6 Gears I nclude the p lanet carrier, planet gear, ring gear, sun gear, spur gear, and hollow
shaft

6 Bearings Include the p lanet bearing, carrier bearing, and shaft bearing

6 Housing Consists of the b ushing, case, mounting, and torque arm system

6 Sensors Include the d ebris sensors, oil level sensors, pressure 1 and pressure 2 sensors, and temperature sensor

6 Lube s ystem Consists of the p rimary filter, secondary filter, primary motor, primary pump, hose/fitting, seal, and reservoir

6 Cooling s ystem Includes th e p ump, radiator, and hoses

5 Low

- s peed s haft and m ain b earing

s ystem Transfers torque from the rotor to the gearbox (if applicable) or generator if
direct drive

6 Low

- s peed s haft Includes the l ow

- speed shaft, compression coupling, rotor lock, connecto r plate, and slip ring assembly

6 Main b earing Includes the m ain bearing upwind, main bearing downwind, and main bearing
seals

6 Sensors Include the m ain bearing temperature sensor, low

- speed shaft rpm, and position

sensor

5 High

- s peed s haft and b raki ng

s ystem Consists of the h igh

- speed shaft, coupling, rotor lock, and transmission shaft

6 High

- s peed s haft Includes the h igh

- speed shaft, coupling, rotor lock, and transmission shaft

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Level Term Definition

6 Braking s ystem Consists of the b rake disc, brake calipers, brake pa ds, and transmission lock

6 Sensors Include the h igh

- speed shaft rpm sensor and position sensor

4 Nacelle e lectrical a ssembly Consists of the p ower off

- take system elements located in the nacelle

5 Generator Converts mechanical energy to electrical ene rgy

6 Cooling s ystem Includes the h oses, filter, cooling fan, motor, and radiator

6 Lubrication s ystem Includes the p ump, pump motor, and reservoir

6 Rotor C onsists of the c ommentator, exciter, resistance controller, rotor lamination, rotor winding, sli p ring, rotor magnets, and brush

6 Sensors Include the c ore temperature sensor, encoder, and watt meter

6 Stator Include s tator magnets, stator lamination, and stator windings

6 Structural and m echanical Consist of the f ront bearing, rear bearing, sile nt block, housing, and shaft

5 Frequency c onverter Co n verts the variable frequency from the asynchronous generator to grid

compliant power of the right ‘quality ’ and with a stable frequency of either 50 or

60 Hz

6 Converter a uxiliaries Consist of the p o wer supply, cabinet, heating system, cabinet sensor,

communication and interface unit, control board, generator side fan, grid side fan, measurement unit, power supply, power supply ( 24 V ) , tachometer adapter,
and thermostat

6 Converter p ower b us Includes the b ranching unit, capacitors, contactors, generator side converter, generator side power module, grid side converter, grid side power module, inductor, load switch, and precharge unit

6 Power c onditioning System Consists of the c ommon mode filter, cro wbar system, DC chopper, generator side filter, line filter assembly, and voltage limit unit

5 Power e lectrical s ystem C o n vert s the generator voltage to the array cable system voltage for collection

6 Power c ircuit Consists of the IGBT module, rectifier bridge, crowbar system, driver/control board, cables, machine contractor, M b usbar/ i solator/ c ircuit b reaker, M

s witchgear/ d isconnect, motor contractor, soft starter, and grounding system

6 Main t ransformer ( n acelle) Consists of the m ain transformer when located in the nacelle (can also be
mounted in the tower)

6 Measurements Use e quipment to measure the function of the power electric system

6 Switchgear Provides the termination point between the collection system and the turbine

. It
is either located in the base of the tower (transformer up tower) or or as part of a ground

- based transformer that is external to the tower

5 Control and c ommunication

s ystem (SCADA) Connects wind turbines with a land

- based operations center, provid ing wind project operator s with information about the status of wind turbine systems and
allow ing for the remote control of some functions

6 Wind t urbine c ontroller Consists of the r otor controller, nacelle controller, and tower controller (all comprised of numerous level 6 compo nents)

6 Communication s ystem Consists of the a nalog I/O unit, digital I/O unit, Ethernet module, field bus master, field bus slave, frequency unit, and controller internal communication
system

6 Condition m onitoring s ystem Includes s ensors, cables, a data logger, and protocol adapter card for the data

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Level Term Definition logger

6 Ancillary e quipment C onsists of c ables, connectors, and the contactor/circuit breaker fuse

6 Wind p lant c ontrol e quipment Includes any advanced wind plant control equipment installed on the tu rbines (e.g., nacelle

- mounted lidar) or distributed throughout the plant (e.g., ground

mounted lidar)

5 Auxiliary n acelle e lectrical s ystem Includes the o ther equipment necessary for the function of the nacelle electrical
system

6 Nacelle e lectrical s erv ices Consist of the 24

- DC feeder, auxiliary transformer, breaker, cabinet, fan, fuse, grid protection relay, light, mechanical switch, power point/supply, protection cabinet, push button, relay, space heater, surge arrester, thermal protection, and

UPS

6 Nacelle l ightning p rotection s ystem Consists of a ir termination, bonding element, earth connector and termination, sliding contact, spark gap system, and surge arrester

4 Yaw a ssembly P rovides the structure that interface s between the tower, drivetrain, and rotor

, and shelters sensitive equipment

5 Brake Includes the y aw brake calipers, disc, path, and hoses

5 Drives and b earings Consist of the m otor, gear, pinion, bearing, and damper

5 Hydraulics Include the a ccumulator, pump, hoses and valves, and m otor

5 Yaw s ensors Include the w ind

- up counter, yaw encoder, and position sensor

4 Nacelle a uxiliaries Consist of the o ther equipment within the nacelle necessary for the function of
the wind turbine

5 Nacelle s ensors Include the a nemometer, wind vane

, and temperature sensors

5 Internal e nvironment Consists of the HVAC, nacelle vent, and nacelle lighting

5 FAA l ighting Consists of the n avigational lighting lights (requirements set by the FAA in the United States)

5 Walking/ c limbing i nfrastructure C o nsists of the c at walks, cables, ladders, landing, people hatch, crane hatch, and
anchors within the turbine tower

5 Safety s ystem Consists of the t ie

- off system, firefighting system, fall arrester, down conductor, service crate, beacon, metallic mesh nac elle cover, and lighting protection

5 Lightning p rotection s ystem P rotects the turbine from damage caused by lightning strikes by passing currents

to the ground ; includes the air termination, bonding element, earth connector
and termination, sliding conta ct, spark gap system, and surge arrester

5 External maintenance crane (Davit) L ift s small components (e.g., <2 m etric T ons (mT) ) from the support structure or maintenance vessel into the nacelle

4 Nacelle t ransportation Includes the c osts of transporting the nacelle components from the manufacturing facility to the staging area

3 Tower m odule Consists of a s upport structure element that connects the nacelle with the
substructure and foundation, and can house electrical conversion equipment and provide em ergency shelter

4 Tower s ystem Consists of the primary structural component

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Level Term Definition

5 Tower s tructure Includes the t ower sections, generally consist ing of rolled steel sections ( though other options are being considered )

5 Fasteners Consist of b olts the connect individual tower elements to other tower elements,
the nacelle module, and the substructure

5 Coating P rotect from corrosion in the marine environment

4 Tower e lectrical a ssembly

5 Drop c ables C onsist of c ables to off

- take power from the drivetrain ( or main transformer, if located up tower) and transport down tower to the main transformer (if located at tower base) or the array cable interface

5 Frequency c onverter Co n verts variable frequency from the asynchronous generator to grid

- compliant power of the right ‘quality ’ and with a stable frequency of either 50 or 60 Hz

6 Converter a uxiliaries Consist of the p ower supply, cabinet, heating system, cabinet sensor,

communication and interface unit, control board, generator side fan, grid side fan, measu rement unit, power supply, power supply ( 24 V ) , tachometer adapter,
and thermostat

6 Converter p ower b us Includes the b ranching unit, capacitors, contactors, generator side converter, generator side power module, grid side converter, grid side power modul e, inductor, load switch, and precharge unit

6 Power c onditioning system C onsists of the c ommon mode filter, crowbar system, DC chopper, generator side filter, line filter assembly, and voltage limit unit

5 Power e lectrical s ystem C o n vert s the generator voltage to the array cable system voltage for collection

6 Power c ircuit Includes the IGBT module, rectifier bridge, crowbar system, driver/control board, cables, machine contractor, M b usbar/ i solator/ c ircuit b reaker, M

s witchgear/ d isconnect, motor contr actor, soft starter, and grounding system

6 Main t ransformer ( t ower) Consists of the m ain transformer when located in the tower base (can also be
mounted in the nacelle)

6 Measurements Use e quipment to measure the function of the power electric system

5 Auxiliary t ower e lectrical s ystem Includes o ther equipment necessary for the function of the nacelle ’s electrical
system

6 Tower e lectrical s ervices Include the 24

- DC feeder, auxiliary transformer, breaker, cabinet, fan, fuse, grid protection relay, ligh t, mechanical switch, power point/supply, protection cabinet, push button, relay, space heater, surge arrester, thermal protection, and

UPS

6 Tower l ightning p rotection s ystem Consists of the a ir termination, bonding element, earth connector and

terminat ion, sliding contact, spark gap system, and surge arrester

4 Ancillary e quipment Other equipment within the tower necessary for the function of the wind turbine

5 Personnel a ccess and s urvival

e quipment Includes the c limb assist, elevators, hatches, ladd ers, landings, lighting, doors, food and fresh water storage

5 Electrical s ystem Consists of the w iring needed to support tower auxiliaries

5 Tower i nternal l ighting Consists of the l ighting within the tower to provide a safe working environment

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Level Term Definition

5 Equip ment s upport Includes the o ther equipment necessary for the function of the wind turbine

5 Aerodynamic a ccessories Include the p assive accessories on the tower to improve energy capture (likely applicable only for downwind deigns)

5 Damping s ystem (tow er mounted) R educe s the transfer of unwanted torque from the nacelle through the tower

5 Internal h oist/ l ifting
d evice/ e levator Consists of the h oisting system ( e.g., the hoist, other lifting device, and internal elevator/lift system) within the tower use d to lift tools and supplies during

maintenance activities

4 Tower t ransportation Includes the c osts of transporting the tower components from the manufacturing facility to the staging area

3 Rotor m odule C apture s wind energy and transfer s it to the driv etrain (through the low

- speed shaft)

4 Blade Captures the kinetic energy in the wind and transfer s torque and other unwanted
loads to the drivetrain module and rest of the turbine

5 Root s tructure Provides the i nterface between the main composite sect ion of the blade and the blade bearing

5 Sandwich c ore Consists of the l ow

- density core material between laminates

5 Spar/ s par b ox Includes the s par cap and spar web

5 Bond Provides the b ond for the leading edge and trailing edge

5 Fasteners Includes t he T

- bolt/ r oot i nsert and others

5 Laminates I nclude the i nternal structural laminates and skin laminates

5 Paint and coatings P rotect the outside of the turbine and its components from erosion

5 Lightening protection Consists of t ermination and the d own conductor

5 De

- icing system Includes s ensors, heaters, wiring, and thermal conductors

5 Ballast Adjusts the c enter of g ravity and weight of the blades to make matching sets for
a wind turbine

5 Aerodynamic a ccessories Include a ctive and passive bla de accessories such as aileron, tip b r akes, and so on

4 Pitch a ssembly Adjusts the pitch angle of the blades to control power output from the turbine, minimize loads, and start/stop the turbine as needed ; b lades are attached to the hub through the pitch s ystems

5 Pitch d rive Includes the m otor, motor cooling fan, pitch bearing, motor brake, pitch gear, gear reducer, pinion, power electronics/drive, cabling, contractor/circuit breaker fuse, encoder, power supply, heater, accumulator, and pump

5 Pitch c ab inet Consists of the s witchboard/limit switch, battery, battery charger, heater, position controller, and load controller

5 Sensors Includes the t emperature sensor, voltmeter, and position sensor

5 Miscellaneous Include the s eals, auto lube system, pitc h cylinder linkage, bushing, proportional valve, and hose/fitting

4 Hub a ssembly C onnects the blades and pitch system to the low

- speed shaft within the
drivetrain module

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Level Term Definition

5 Hub Connects the blades and pitch system to the low

- speed shaft within the
drivetr ain module

5 Nose c one Consists of a p rotective cap fitted on the hub that is largely aesthetic

5 Exit h atch Provides access to and from the hub system

4 Rotor t ransportation Includes the c osts of transporting the rotor components from the manufacturing facility to the staging area

2 Balance of s ystem Consists of the b alance of equipment, labor, and material costs (other than the wind turbine) incurred prior to COD

3 Development Includes a ll activities from project inception to financial close (financi al close is
the date in which the project and financing agreements have been signed and all the required conditions have been met)

4 Permitting and l easing Involves the a cquisition of permits and leases required for site assessment, construction, and ope ration at the project site

5 Permit a cquisition a ctivities Includes the a ctivities necessary to obtain permits from relevant authorities

5 Lease a cquisition a ctivities Include the a ctivities necessary to obtain a commercial or research lease (from
rele vant authorities) to operate the project

5 Public o utreach Includes s takeholder education, marketing, and other efforts to facilitate public acceptance of a project

4 Professional a dvisory s ervices Consist of l egal support, external consultants, accounti ng, and so on during project development

4 Initial e ngineering Consist of e ngineering studies to specify the design of the project (e.g., technology and layout) and understand the economics and risks associated with the design

5 Pre

- FEED Consist of p reli minary engineering design studies to develop the general design
of a project, identify a short list of technologies for further evaluation, and identify fatal flaws

5 FEED Include e ngineering activities to develop final design specification, address area s of risk/uncertainty, determine technical and economic feasibility, and develop
the necessary specifications to begin the procurement process (20% to 30% design level) ; a dditional engineering activities ( e.g., preliminary, detailed, and final) are covered in e ngineering and m anagement

5 Engineering c ertification Includes the r eview by a thi rd

- party, independent verification agent to assess the feasibility of design basis, resulting in a c ertification r eport

4 Site c haracterization Consists of the e quipme nt, material

, and labor costs required for the collecting/analysis of wind resource, ocean conditions, and geological data at a project site ; d efines parameters for engineering assessments as data becomes
available

5 Siting and s coping Consist of the i nit ial desktop

- level studies to select the project location, develop a conceptual design, identify regulatory requirements, and create the preliminary
business case

5 Studies and s urveys Include the e nvironmental and social surveys/studies required by regula tors or
that are otherwise necessary for the project

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Level Term Definition

5 Met and o cean m onitoring s tations Includes the meteorological tower and the substructure (fixed or floating), buoys, benthic node, a coustic Doppler c urrent p rofilers, instrumentation (meteorological and oceanographic), and data acquisition systems

5 Met and o cean m onitoring

i nstallation Includes the v essels, labor, and equipment required to install the met station,

instrumentation

, and data acquisition system

5 Wind r esource a nalysis Involves the c ollection, cleaning, and analysis of data to develop the wind resource profile and power production estimates for a selection of turbine types

at a project site ; m ight include array layout optimization surveys

5 Geotechnical and g eophysical

s urveys Incl ude the v essels, labor, and equipment required to establish bathymetry, seabed features, water depth, stratigraphy, and identify hazards on the seafloor ;
p erformed for the project site and potential cable routes to interconnection

4 Interconnection and p o wer

m arketing Consist of a ctivities performed to gain access to the transmission grid and negotiate contracts to sell or otherwise market power

5 Interconnection s tudies and f ees Include a ctivities required to obtain a Large Generator Interconnection Agr eement from FERC, prepared in coordination with the transmission system
operator ; s tudies cover technical considerations of the interconnecting project
with the grid while maintaining system balance and grid operation within specified limits

5 Transmissio n rights of way Include c osts of obtaining or expanding the transmission rights of way for any
land

- based electric infrastructure (e.g., overhead transmission lines) ; includes any costs to permit transmission on land

5 Power m arketing Includes e fforts t o develop a power marketing strategy, forecast pricing, and negotiate p ower p urchase a greements

4 Project m anagement during
d evelopment M anag ing the project from the start of the d evelopment p hase t o the f inancial

c lose

5 Procurement Prepar ing tenders fo r each work package, evaluation of bids, and negotiations with suppliers

5 Salaries Include s alaries for management and support staff on the project developer’s payroll ; some overlap with categories above is expected, depending on the
amount of work that is completed internally v ersu s contracted

5 Sales : g eneral and a dministrative Consists of o verhead for the project company including administrative salaries and benefits, rent, utilities, depreciation, insurance , etc.

5 Profit (if private developer) Incl udes a ny margin earned by the developer upon sale of the project at financial
close ; does not include the cost to a new owner of any stake that a developer might retain in the project

4 Financing and i ncentives Include f ees, closing costs, and staff and c onsultant efforts to arrange and secure equity, debt financing, and government incentives

5 Due d iligence Involves a ctivities performed by potential investors to investigate the technical and economic aspects of the project and estimate its value prior t o executing a
financial commitment ; t ypically conducted by thi rd

- party technical consultant(s) hired by investor(s)

5 Incentives Consist of e fforts performed by the developer to secure and demonstrate qualification for local, state, and federal incentives

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Level Term Definition

5 Closing c osts Include a dministrative costs incurred by investors (debt and equity) during the
evaluation of the investment

5 Legal s upport Consists of d eveloper's legal support during negotiations to arrange financing

3 Engineering and m anagement Con sists of m anagement activities performed from f inancial c lose through COD

4 Detailed d esign and c onstruction

e ngineering Include the d etailed design and construction engineering costs

4 Procurement m anagement Consists of b id management, purchasing, negot iations, and contract management

4 Construction m anagement Includes q uality control and assurance

5 Salaries Consist of s alaries for management and support staff on of the project owner ’s and/or construction manager ’s payroll

5 Sales : g eneral and a dmini strative Consists of the o verhead for the project company and/or construction manager including administrative salaries and benefits, rent, utilities, depreciation, and

insurance

5 Profit Includes a ny margin earned by an independent construction manageme nt firm

4 Project c ertification Consists of r eview by a third party, independent verification agent to assure that
the project is in compliance with the design basis as well as technical standards and regulatory requirements ; results in a p roject c ertific ate

4 Health, s afety, and e nvironmental

m onitoring C onsists of c oordination and monitoring to ensure compliance with HSE requirements during construction

5 Health and s afety m onitoring C onsists of c oordination and monitoring to ensure compliance with hea lth and safety requirements during construction

5 Environmental m onitoring Includes c oordination and monitoring to ensure compliance with environmental requirement s during construction

3 Electrical i nfrastructure Consists of a ll electrical infrastructure to collect power from the generators and deliver to the grid

4 Array c able s ystem Collects power generated by the turbines and transports it to the offshore
substation

5 Array c ables (high or medium voltage) C onnect turbines with the offshore substation or export turbine

5 Protection Consists of e quipment and materials used to protect cable s from damage ( e.g., strikes, overbending, and so on )

6 Scour p rotection Includes r ock fill, sand bags, or concrete mattresses to protect from scouring ; used where burial is not possible

6 Seabed p rotection m ats C onsist of c oncrete, sand bags, and polyurethane mats to route cables over existing electric/telecommunications cables

6 Ducting s ystem P rovides a p rotective sheath that can be fitted around cables where b urial is not an option

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Level Term Definition

6 J

- tube s eals Provide a seal to the ends of the J

- t ube to keep sea water out ; can be active or passive

6 Bend r estrictors Prevents the overbending of static cables during installation and operation

6 Bend s tiffeners Limit bendin g stresses and maintain an acceptable curvature for dynamic cables

at the hang

- off point and touch down

5 Ancillary e quipment Include o ther elements that provid e necessary functions to the array cable
system

6 Termination k it Consists of the n ecessary co mponents to connect the array cable to each turbine
transformer

6 Connectors C onnect individual sections of cable together, in the event of long cable runs or damage

6 Buoyancy m odules M anage buoyancy in some dynamic cable configurations and control load
transfer

6 Anchorage M aintain s the station of dynamic cable at the touchdown point

6 Messenger l ines and b uoys Include the a ncillary equipment used during the installation of static and dynamic cable systems

6 Portable d iesel g enerators P rovide power t o turbines if the grid connection is not established before commissioning, including generators, fuel tanks, fuel, fueling, and maintenance during deployment

6 Array c able s ystem c ommissioning A ssur es that all array cable systems and components are operat ional through a predefined series of tests and checks

5 Array c able s ystem t ransportation Includes c osts of transporting the array cable components from the manufacturing facility to the staging area

4 Export c able s ystem C onnect turbines or offshore sub stations with the land

- based electric
infrastructure or offshore convert e r station (if DC) ; includes IATC

5 Export c ables (High or medium voltage) C onnect turbines or offshore substations with the land

- based electric
infrastructure or offshore convert e r s tation (if DC) ; includes IATC

5 Protection Includes the e quipment and materials used to protect the cable from damage ( e.g., strikes and overbending)

6 Scour p rotection Includes the r ock fill, sand bags, or concrete mattresses to protect from scouring ; used where burial is not possible

6 Seabed p rotection m ats Include the c oncrete, sand bags, and polyurethane mats to route cables over existing electric/telecommunication cables

6 Ducting s ystem P rovides a p rotective sheath that can be fitted around cab les in which burial is not an option

6 J

- tube s eals S eal the ends of the J

- t ube and keep sea water out ; can be active or passive

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Level Term Definition

6 Bend r estrictors Prevents the overbending of static cables during installation and operation

6 Bend s tiffeners Limit bend ing stresses and maintain an acceptable curvature for dynamic cables

at the hang

- off point and touch down

5 Ancillary e quipment Includes o ther elements that provid e necessary functions to the export cable
system

6 Termination k it Consist of n ecessary co mponents for connect ing the cable to the substation and

to land

- based electric infrastructure

6 Connectors C onnect individual sections of cable together, in the event of long cable runs or damage

6 Buoyancy m odules M anage buoyancy in some dynamic cable c onfigurations and control load
transfer

6 Anchorage M aintain s the station of dynamic cable at the touch down point

6 Messenger l ines and b uoys Consist of the a ncillary equipment used during the installation of static and dynamic cable systems

5 Export c able s ystem t ransportation Includes the c osts of transporting the export cable components from the manufacturing facility to the staging area

4 Offshore s ubstation(s) Includes the e lectric conversion equipment required to step up or convert power for exp ort to the land

- based grid and support structure ; also includes onboard work platforms, accommodation, equipment storage, and helicopter access

5 Topside P rovides support and climate

- controlled housing for the electrical conversion equipment ; can also pr ovide work platforms, accommodation, equipment
storage, and helicopter access

6 Structure Includes m aterial, equipment, and labor costs of fabricating structural steel or

concrete structure

6 Helicopter d eck Provides the o nboard helicopter landing platfo rm

6 Accommodations Include the r efuge, temporary, or permanent accommodations for project personnel

6 Outfitting s teel Includes a dditional nonstructural elements attached to the primary structure

6 Topside m arine s ystems Consist of the a ncillary syste ms required for marine operations

6 Substation t opside and f oundation

IATC Consists of a ctivities performed by the manufacturer to integrate, assemble, test, and verify the s ubstation t opside before deliver ing to the customer (does not
include commissio ning activities)

6 Substation t opside t ransportation Includes c osts to transport the substation topside from the manufacturer to the staging port

5 Substructure and f oundation Includes a ll elements of the offshore substation below the point of connection with the topside

6 Foundation Consists of the m ain structural interface that transfers the loads into the seabed

6 Substructure C onnects the foundation to the substation topside

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Level Term Definition

6 Substructure m arine s ystems Consist of a ncillary systems for marine ope rations ; the major element is the ballast system for floating offshore substations

6 Scour p rotection Includes r ock fill or concrete mattresses to protect substructures from scouring

at the point of connection to the seafloor

6 Substation s ubstructure an d
f oundation IATC Consists of a ctivities performed by the manufacturer to integrate, assemble, test,
and check out the s ubstation s ubstructure and f oundation before deliver ing to the customer (does not include commissioning activities)

6 Substation s ubstr ucture and
f oundation t ransportation Includes c osts to transport the substation substructure and foundation from the
manufacturer to the staging port

5 Electrical c onversion e quip ment S tep s up power from the array cable voltage to the export voltage and/o r

convert s power to DC

6 AC t ransformers S tep

- up generated power from the array cable voltage to the export voltage

6 High

- v oltage s witchgear C ontrol s , protect s, and disconnect s the high

- voltage connection

6 Medium

- v oltage s witchgear C ontrol s , protec t s, and disconnect s the medium

- voltage connection

6 Shunt r eactors Consist of the o nboard reactive compensation equipment

6 DC c onvert e r C onvert s power from HVAC to HVDC for export to shore

6 Filtering s ystem Filters to address harmonics generated by HV DC convert e rs

6 Substation e lectrical c onversion

e quipment IATC Includes a ctivities performed by the manufacturer to integrate, assemble, test,
and check out the s ubstation e lectrical c onversion e quipment before deliver ing

to the customer (does not incl ude commissioning activities)

6 Substation e lectrical c onversion

e quipment t ransportation Includes c osts to transport the substation e lectrical c onversion e quipment from
the manufacturer to the staging port

5 Ancillary s ystems Consist of o ther elements t hat provid e necessary functions to the offshore substation during operations

6 Diesel g enerator b ack u p P rovide s power to the substation if the grid connection is lost

6 Fire p rotection s ystem Includes f ire alarms and fire response equipment

6 Water t an ks Include f resh water tanks and pumping equip ment

6 Fuel t anks Consist of f uel tanks and pumping equip ment For the generator and possibly emergency fueling of service/crew transfer vessels

6 Control and c ommunication

s ystem Connects the substation with an operations center on land; provides the project operator with information about the status of substation systems ; and allows
remote control of some functions

6 Safety and s ecurity s ystems I nclud e access control to safeguard personnel from hazards aris ing from the installation, maintenance, or operation of substation equipment

4 Land

- based t ransmission

i nfrastructure Include a ny land

- based transmission or conversion equipment required to

connect a project to the grid

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Level Term Definition

5 Land l eases Consist of l and l ea se or r ight

- of

- w ay payments for the transmission corridor prior

to COD

5 Underground c able s ystem Includes a ny underground cables required for connecti ng export cables to the
substation on land

6 Underground c ables Connect export cables to the land

- base d substation directly or via overhead lines

6 Ancillary equipment Consists of the a ncillary equipment required for the underground cable system including ducts

5 Self

- s upporting t owers with

i nsulators Support any overhead lines required for connecti ng e xport cables to the land

based substation

6 Foundations Include s upport tower structures, typically reinforced concrete

6 Transmission t owers Support overhead transmission lines

6 Insulators A ttach overhead transmission lines to the towers

5 Overhead l ines T ransmit power and enable communications with the offshore wind project

6 Conductors T ransmit power between the export cable and land

- based substation (three

phase system)

6 Communications Consist of the f iber optic wire routed to the control cente r that transmits
information from the data acquisition system (DAS) and Conditioning Monitoring System ( CMS ) , and allows land

- based control of project systems

6 Shield w ire Provides a g rounded conductor to protect phase conductors from surges (lightning)

5 Onshore s ubstations H ouse electric conversion equipment to transform or convert power from the export voltage to the land

- based grid voltage

6 Buildings/ f acilities H ouse electric conversion equipment ( climate controlled )

6 Civil i nfrastructure Provid e necessary i mprovements to the construction site (e.g., roads) for substation construction and operation

6 Electric c onversion e quipment T ransform s generated power from the export cable voltage to the interconnection voltage and/or convert s power from D C to AC (e.g., AC transformers, switchgears, shunt reactors, and DC convert e rs)

6 Ancillary s ystems Include o ther elements that provid e necessary functions to the substation during operations (e.g., metering equipment, s afety and s ecurity s ystems, fire

pr otection, and gas detection)

5 Land

- based t ransmission

i nfrastructure t ransportation Includes the c osts of transporting the land

- based transmission infrastructure components from the manufacturing facility to the staging area

3 Plant c ommissioning Includ es the c ost incurred by the owner or prime contractor to test and commission the integrated power plant

3 Site Access, p ort , and s taging Consist of a ctivities and physical aspects of a staging port; elements needed to support the delivery, storage, handli ng, and deployment of offshore wind plant
components

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Level Term Definition

4 Facilities Include p ort facilities or space leased to support the installation of a project

5 Laydown a rea Consists of the l eased space at the staging port to store turbine components and
foundations

5 Assembly a reas Consist of the l eased space at the staging port with a high load bearing capacity to perform land

- based assembly activities

5 Utilities Include t emporary power, restrooms, and water located at f acilities to be used by subcontractors dur ing the construction phase

5 Fabrication f acilities S upport fabrication, construction

, or assembly of components

4 Cranage Includes c ranage fees to use and operate crawler cranes, tower cranes, harbor

cranes, and self

- propelled modular transporters for t he land

- based assembly of components and load ing onto installation vessels

4 Port i mprovements Consist of a ny improvement to the existing port infrastructure that is paid for by
the project owner (e.g., quayside reinforcement)

4 Port f ees Include f ees for vessel access, docking

, and loading/unloading

5 Entrance/ e xit f ees C onsist of c harges levied upon entry of vessels into the port, generally calculated using a standard formula basis upon g ross r egistered t on

5 Quayside d ocking f ees Include c harges le vied for the use of a berth either occupied by a vessel or by preassembly activities

5 Wharfage f ees Include c harges for loading or unloading cargo from vessels, generally calculated by tonnage and equipment requirements for loading/unloading the cargo

3 Assembly and i nstallation Consists of a ssembly and installation activities conducted at the staging port and at the project site ; a ssume that financial costs related to warranties, contractor insurance, SG&A, profit margin, and so on , are loaded in day ra tes for vessels, labor, and equipment

4 Substructures and f oundations Include v essel, labor

, and equipment costs to complete installation of
foundations and substructures

5 Foundation Includes vessel, labor

, and equipment costs to complete installation o f the
foundation

5 Substructure Includes v essel, labor

, and equipment costs to complete installation of the
substructure

5 Scour protection Includes v essel, labor

, and equipment costs to complete installation of scour protection

4 Turbines Include v e ssel, labor

, and equipment costs to complete turbine installation for the entire project

5 Towers Include v essel, labor

, and equipment costs to complete tower installation

5 Nacelle Includes v essel, labor

, and equipment costs to complete nacelle instal lation

5 Blades Include v essel, labor

, and equipment costs to complete blade installation

4 Electrical i nfrastructure Includes v essel, labor

, and equipment costs to install electrical infrastructure

5 Array c ables Include i nstallation of the subsea arra y cable system

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Level Term Definition

6 Laying Includes v essel, labor

, and equipment costs to lay array cables

6 Trenching Includes v essel, labor

, and equipment costs to bury array cables

6 Protection Includes v essel, labor

, and equipment costs to protect array cables

6 Ter minations Include v essel, labor

, and equipment costs to pull array cables through J

- t ubes
and connect to transformers

5 Export c ables installation of subsea export power cable system from offshore substation to
land

- based substation

6 Laying/ t renching Includes v essel, labor

, and equipment costs to lay and bury export cables

6 Protection Includes v essel, labor

, and equipment costs to protect export cables

6 Terminations Includes v essel, labor

, and equipment costs to pull export cables through J

- t ubes

a nd connect to transformers

6 Landfall o perations Include v essel, labor

, and equipment costs to transition export cable from the
subsea trench to the land

- based jointing pit

5 Offshore s ubstation(s) Include c osts of installing offshore substations at a project site

6 Substructure Includes v essel, labor

, and equipment costs to install substation substructure(s)

6 Topside Includes v essel, labor

, and equipment costs to install substation topside(s)

5 Offshore a ccommodations

p latform(s) Include c osts of i nstalling offshore accommodations platforms at a project site

6 Substructure Includes v essel, labor

, and equipment costs to install offshore accommodations platform substructure(s)

6 Topside Includes v essel, labor

, and equipment costs to install offshore accommodations platform topside(s)

5 Land

- based e lectric i nfrastructure Includes costs of installing land

- based electric infrastructure

6 Underground c able s ystem Includes l abor and equipment costs to install underground cables on land

6 Overhead t ran smission l ines Include l abor equipment costs to install overhead transmission lines

6 Land

- based s ubstation Includes labor and equipment costs to install land

- based substation

3 Other i nfrastructure Includes o ther capital investments made by the project company prior to COD

4 Offshore a ccommodations

p latform(s) H ouse project personnel during operations

4 Dedicated O&M v essel(s) Includes n ew

- build vessels owned by the project company that will be used exclusively to support operations at a project site

4 Land

- based O&M f acilities Consist of f acilities on land, owned by the project company, to support the operation of the project

4 O&M e quipment p urchases Include o ther purchases necessary for the operation of the wind project after

COD ; e xamples includ e safety equipment (e.g., harnesses and floatation devices), equipment to store replacement parts (e.g., climate control for spare electric cables), and vehicles to support operations (e.g., fork trucks)

3 Substructure and f oundation Includes a ll elements of the offshore wind turbine support structure below the point of connection with the tower

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Level Term Definition

4 Substructure C onnects the foundation to the tower

5 Primary s tructure Consists of s tructural steel or concrete (e.g., jacket, tripod, floating platform, and

g ravity base)

5 Transition p iece Provides the m ain structural interface between the primary structure and point
of connection with the tower

5 Fasteners S ecure connections between the substructure and foundation elements

5 Grout, g rout l ines, and s eals S ecure connections between the substructure and foundation elements

5 Marine c oatings Provide a nti

- corrosion protection for substructure elements

4 Foundation Provides the m ain structural interface that transfers loads into the seabed

5 Bedding sto nes P rovide a stable and level surface on which to place gravity

- based structures or
anchors

5 Piles Consist of s teel pipes driven into the seabed to provide support and transfer loads acting on the structure into seabed

5 Anchors T ransfer loads from flo ating platforms into the seabed (installed below the mudline)

5 Mooring l ines Include c hain, wire, or synthetic fiber ropes to connect floating platforms with
anchors on the seabed

5 Mooring t endons Consist of synthetic fiber ropes or welded steel pipers to connect floating

tension

- leg platforms with anchors on the seabed

5 Connecting h ardware (required) A ttach the mooring lines/tendons to anchors and to the platform

5 Messenger lines and buoys Provide the a ncillary equipment used to install the moori ng system

4 Outfitting s teel Includes a dditional nonstructural elements attached to substructure elements

5 Vessel l anding Provides the interface between the maintenance vessels and the substructure to
enable safe access for personnel

5 Service p latfor ms and d ecks Provide access to the inside of the turbine and a work platform for maintenance

activities

5 J

- tube Routes array cable from the trench to the point of connection with the turbine
and protects the cable from dynamic loads

5 Ladders Provide ac cess from the vessel landing to the deck

5 Railings Enclose the deck to provide a safe working environment for personnel

5 Marine c oatings Provide a nti

- corrosion protection to any outfitting steel elements

4 Marine s ystems Consist of a ncillary systems for marine operations

5 On

- board c rane Consists of a Davit crane installed on deck to lift small components ; used for

maintenance

5 Cathodic p rotection s ystem Consists of an active (impressed current) or passive (anodes) cathodic protection
system

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Level Term Definition

5 Pe rsonnel a ccess s ystem Consists of e quipment installed on the vessel landing, ladders, and deck to
facilitate safe access to the turbine

5 Ballast s ystem C ontrol s draft/stability of floating systems ; can be fixed or variable (active or passive)

5 Conditio n m onitoring system M onitor s and control s substructure systems (e.g., variable ballast)

4 Scour protection Consists of r ock fill or concrete mattresses to protect substructures from scouring caused by currents

4 Substructure and f oundation IATC Include a ctivities performed by the manufacturer to integrate, assemble, test,
and check out the s ubstructure and f oundation before deliver ing to the customer (does not include commissioning activities)

4 Substructure and f oundation

t ransportation Includes costs of transporting other substructure and foundation components from the manufacturing facility to the staging area

2 Financial c osts Consist of f inancial expenditures for which the project owner is responsible prior to the COD, related to either payments fo r financial products, carrying charges on loans, or setting up financial instruments

3 Project c ontingency b udget Consists of a l iquid financial instrument set up to respond to "known unknown" costs that arise during construction ; does not include contin genc i es set by
manufacture r s and contractors as part of supply contract pricing

3 Insurance d uring c onstruction Consist of i nsurance policies held by the owner during the construction period, can include construction all risk, marine cargo, commercial gen eral liability, workers compensation, environmental site liability, pollution liability, and so on;
d oes not include insurance held by contractors

3 Carrying c harges d uring

c onstruction ( c onstruction
f inancing c osts) Include c arrying charges of expenditur es on equipment and services incurred
before COD

3 Reserve a ccounts Involve p ayments (before commissioning) into reserve accounts; generally required by financiers or regulators

4 Maintenance r eserve a ccounts Involve p ayments (before commissioning) into reserve accounts set up to cover major MRAs, often required by debt service providers

4 Debt s ervice r eserve a ccounts Involve p ayments (before commissioning) into reserve accounts set up to cover DSRAs, often required by debt service providers

4 Decommi ssioning r eserve a ccount Involve p ayments (before commissioning) into reserve accounts to fund project decommissioning obligations (e.g., surety bonds)

1 Operational e xpenditures (OpEx) Consist of e xpenditures required to operate the project and maintai n availability, generally annualized

2 Operations Include nonequipment costs of operations for the project

3 Environmental, h ealth, and s afety

m onitoring Consist of c oordination and monitoring to ensure compliance with HSE requirements during constructio n

4 Health and s afety m onitoring C onsist of c oordination and monitoring to ensure compliance with health and safety requirements during operations

4 Environmental m onitoring C onsist of c oordination and monitoring to ensure compliance with
environmental r equirement during operations ; i ncludes postconstruction survey

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This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

.

Level Term Definition

activities

3 Annual l eases, f ees, and other costs of doing business Consist of o ngoing payments, including but not limited to: payments to a regulatory body for permission to operate at a pro ject site (terms defined within lease); payments to t ransmissions s ystems o perators or t ransmission a sset

o wners for rights to transport generated power

4 Submerged land

- lease Involve p ayments to the state or federal regulatory authorities for rights to

o perate an offshore wind project on a publicly owned seabed or lakebed

4 Onshore land

- lease Involve p ayments to land owners for rights to operate transmission lines, a land

based substation, or other facilities

4 Transmission c harges/ r ights Consist of a ny payments to t ransmissions s ystems o perators or t ransmission

a sset o wners for rights to transport generated power

4 FERC f ees Consist of f ees paid to FERC during operations

3 Insurance Consists of i nsurance policies held by the project company or operati ons manager during the operational period

3 Operation, m anagement , and

g eneral a dministration Consist of the a ctivities necessary to forecast, dispatch, sell, and manage the production of power from the plant ; i ncludes both on

- site and off

- site personnel, software, and equipment to coordinate high

- voltage equipment, switching, port activities, marine activities, and weather forecasting

4 Generation p lanning and

i ntegration Include e fforts to forecast, sell, and dispatch power generated by the facility

4 Operating f acilities C onsist of c o

- located offices, parts store and quayside facility, helicopter facilities, and so on

4 Operating e quipment Include l ease payments for operating equipment held by the project to support operations (e.g., cranes and fork t rucks)

4 Sales : g eneral and a dministrative Includes financial reporting, public relations, procurement, parts and stock management, HSE management, training, subcontracts

, and general
administration

4 Turbine p ower c onsumption Include c harges for power d rawn from the grid by the wind project (e.g., turbine, foundation, and substation) during operation

4 Weather f orecasting Provides a d aily 96

- hour forecast of metocean conditions used to plan maintenance visits and project plant power production

4 Marine management Involves the c oordination of port equipment, vessels, and personnel to carry out maintenance and inspections of generation and transmission equipment

4 Condition m onitoring Involves m onitoring of SCADA data from wind turbine components to opt imize performance and identify component faults

4 Operating m argin Includes a ny margin earned by an independent operations management

company

4 Professional a dvisory s ervices Include l egal support, external consultants, accounting, and so on during

opera tion

2 Maintenance Includes v essel, labor, and equipment costs of operations for the project

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This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications

.

Level Term Definition

3 Long

- t erm s ervice a greement Includes the a nnualized cost of a contract, generally between the owner and
turbine OEM or t hird p arty, to maintain the offshore wi nd project at a guaranteed level of availability for a defined period ; will likely replace scheduled and unscheduled maintenance categories below for duration of contract

3 Scheduled m aintenance Includes p lanned and routine activities to ensure that turbi nes, substructures, and all related systems are operating correctly and at optimal efficiency, and to minimize unscheduled breakdowns/ downtime ; includes cost of vessels, labor, equipment, spare parts

, and consumables (s ometimes referred to as preventative maintenance )

4 Wind turbine scheduled

maintenance Includes p lanned maintenance activities for turbine systems

5 Nacelle m odule Involves p lanned maintenance related to d rivetrain m odules

5 Rotor m odule Involves p lanned maintenance related to r otor m odul es

5 Tower m odule Involves p lanned maintenance related to t ower m odules

4 BOS scheduled maintenance Involves p lanned maintenance activities for BOS

5 Regular c able s urveys Involves conducting surveys of array and export cable routes to ensure coverage

a nd determine cable burial depth

5 Foundation inspections Consist of i nspections that cover above

- and under

- water aspects of the substructure and foundation as well as the integrity of the cathodic protection system maintenance

5 Electrical transformi ng equipment inspection I nvolves i nspections of switchgears, transformers

, and the back

- up power supply

5 DC convert e r inspection Includes i nspection of DC convert e r equipment and filtering equipment

5 Land

- based e lectric i nfrastructure I ncludes i nspect ions of switchgear, transformers

, and any connections

3 Unscheduled m aintenance I ncludes i nterventions and other activities needed to respond to random failures ;

c osts include equipment and vessels, labor, replacement parts, and consumables ;

a lso known as corrective maintenance

4 Wind turbine unscheduled

maintenance Involves u nscheduled maintenance for turbine systems

5 Nacelle m odule Involves c orrective maintenance related to d rivetrain m odules

5 Rotor m odule Involves c orrective maintenance related to r otor m odules

5 Tower m odule Involves c orrective maintenance related to t ower m odules

4 BOS unscheduled maintenance Involves u nscheduled maintenance for BOS

5 Substructure and f oundation Involves c orrective maintenance related to the s ubstructure and f o undations

5 Electrical i nfrastructure Involves the c orrective maintenance related to the e lectric i nfrastructure

5 Other i nfrastructure Involves the c orrective maintenance related to o ther i nfrastructure

5 Land

- based e lectric i nfrastructure Involves s e rvicing and repairs to the switchgear, transformers

, and any connections (infrequent)

4 U nscheduled maintenance contingency Consists of a l iquid financial instrument set up to respond to "known unknown" costs that arise during maintenance