Joule
Volume 5, Issue 6, 16 June 2021, Pages 1485-1500
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Article
Toward global comparability in renewable energy procurement

https://doi.org/10.1016/j.joule.2021.04.017Get rights and content
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Highlights

  • Interpreting renewable procurement prices at their face value can be misleading.

  • New method shows how renewable procurement prices can be compared like-for-like.

  • The level and composition of offshore wind revenue and value varies globally.

  • Support regimes remain essential even when direct subsidy payments decline.

Context & scale

Procurement prices are increasingly used to gauge the financial performance and costs of renewable energy projects. Comparing procurement prices from auctions or contracts at their face value alone is rarely adequate across different jurisdictions and time horizons. This often results in misleading conclusions. We employ a holistic approach to capture all relevant project revenue and value elements and apply it to eight global offshore wind projects. In a like-for-like comparison, we find significant variation in absolute levels and relative composition of project revenue and value streams. This confirms that our developed metric is useful to establish comparability. Our findings also emphasize the continued importance of support regimes, even when subsidy payments are nonexistent. With sufficient data available, our approach enables global like-for-like comparisons of renewable energy procurement prices and can inform and supplement established cost metrics.

Summary

Prices from the competitive procurement of renewable energy are increasingly used for the comparative evaluation of financial and technology performance. Comparing prices from auctions or power-purchase agreements at their face value is often not meaningful, particularly across jurisdictions or over time. Differences in support regimes and the market, tax, and regulatory environment can make a like-for-like comparison convoluted and result in misleading conclusions. Here, we estimate project revenue and value holistically for eight global offshore wind projects. Using a cash flow model, we consider applicable support regimes; market sales; and the monetized value of tax incentives, depreciation, and transmission. We find considerable variation in the absolute levels and relative composition of project revenue and value, which must be considered for deducting costs from procurement prices. The resulting metric enables decision makers and research to compare the total cost of procurement on an equal footing and supplements established cost metrics.

Keywords

levelized revenue of energy
offshore wind
support regimes
price analysis
procurement
project revenue
power-purchase agreement
auctions
policy instruments
energy policy

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