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It will be the first of several massive wind farms which are larger than 500MW each (meaning they can produce close to 2 TWh of electricity per year), and a price tag in the EUR 1.5-2 billion range. That price can be split roughly in 3 similar-sized bits, being (i) the turbines, (ii) the marine construction work, including the foundations, and (iii) the rest, including development costs, electrical equipment (high voltage transformer station and cables) and, if relevant, financing costs.
No one is yet sure how important each of the basic three project components will be in terms of life cycle costing. I've given this a couple days thought, and I must note that what's really important is the value of the production of electricity, and that's the function of the turbines. The failure of either of the other two sectors (barring catastrophic failure) is not as important as the turbines.
The reasons the foundations, grid interconnections, and even development and financing costs are incurred is because we go to sea to more efficiently harness the wind. It's the turbines which do that.
The turbines' task is to harness the wind and produce TWh, over the life of the financing costs and then some. The revenue stream to pay for all three sectors comes from the power train. Thus, though capital costs can be divided into the three sections, isn't the lifetime success of the project due to the turbines' performance?
Foundations are either stable or not, last or not. When not, it's a catastrophic failure of the project design phase. Development costs can't really fail, though they can be excessive. Grid costs are completely standard, though of course with higher cabling costs, with the addition of a standard substation on sea legs (with added compliance to the harsh marine environment).
But the revenue stream which pays for it all is dependent upon the performance of the turbines (and the development cost of estimating the wind resource.) After all, these may be huge capital projects in comparison with mature onshore wind projects... but they're still wind projects.
So it would seem that in allocating risk, one third of project costs bears a much higher burden than the other two thirds.
My question is, do current contracts reflect such risk allocation?
"Life shrinks or expands in proportion to one's courage." - Ana´s Nin
The cables and electrical equipement can be single points of failure with a massive impact on the project.
So altogether, we do try to finetune the turbine contracts (supply & installation on one side, and long term operations on the other), but we can't ignore the rest at all.
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