These two offshore projects with 1.7 GW capacity seem to have negative learning effects – as in the more we do, the more we learn – the more unknowns we find that increases the costs. Onshore wind projects are naturally modular and repeatable and learning effects have brought down the cost curve over time. However, offshore wind projects have a larger share of site specific engineering and touch labor, extended permitting and lengthy construction cycles. These unique characteristics introduce a level of unpredictability that can swing the estimates wildly.
Learning curve effects need to be used wisely as there is a tendency to club learning-by-doing with economies of scale or a firm’s bargaining power with suppliers. Not all technologies learn at the same rate with scale – caution needs to be applied in technologies like CCS, Hydrogen plants, and nuclear. So to use EIA and Lazard comparative numbers indiscriminately is not just simplistic, it’s problematic and risky. Strategic investments require a keen understanding of these dynamics to navigate the evolving energy landscape wisely.
(Photo source: Chatgpt)
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