EconomyEditor's PickEnergy dep’t estimates offshore wind to require $157.5 billion in capital

November 17, 2022

THE Department of Energy (DoE) said it expects investment in offshore wind (OSW) projects to require $157.5 billion, based on a rule-of-thumb cost estimate of about $5 million per megawatt.

“While floating offshore wind is still being developed all over the world the rule of thumb is about $5 million per megawatt, but this is only for floating wind turbine. It will be a little cheaper for the ones that are not floating,” Undersecretary Alessandro O. Sales said in a briefing on Thursday.

Offshore wind entails a significant cost premium over land-based wind projects because of the additional engineering required to generate power from water-based facilities. The capital cost of onshore wind power in Europe has been estimated at €1.23 million per megawatt by the Wind Energy advocacy organization.

Energy Secretary Raphael P.M. Lotilla said the department is currently reviewing its offshore wind policies in preparation for issuing future service contracts.

“The refinements to the existing policies, framework and guidelines governing the administration of wind energy service contracts cover the technical, financial, operational, and administrative risks and challenges of OSW development,” Mr. Lotilla said.

To date, the DoE has awarded 42 OSW service contracts with 31,500 MW of installed capacity which will be located in Northern Luzon, the Verde Island Passage, Northern Mindoro, and Southern Mindoro.

Mr. Lotilla said that the department has been receiving “considerable” investment interest, including from potential foreign investors, in OSW.

“A robust OSW requires a long-term vision, support infrastructure development, investment, and sound policy. Therefore, it is deemed critical to have a well-thought-out regulatory framework to enable successful growth of this newer technology,” Mr. Lotilla said.

The DoE has said it is drafting an executive order to streamline the process for applying to develop OSW.

On Tuesday, Mr. Lotilla signed a circular which amended the implementing rules and regulations of the Renewable Energy (RE) Act of 2008 to allow full foreign ownership in the RE sector. — Ashley Erika O. Jose

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