In Alfred D Chandler’s, acclaimed business history The Visible Hand: Managerial Revolution in American Business, the simple meaning of economies of scale is “doing things more efficiently with increasing size or speed of operation.”
While large-scale offshore wind farms have achieved cost parity with fossil fuels, their development can hardly be described as fast or efficient. The Barrow Offshore Wind Farm (2001–2006) in the East Irish Sea took 5 years to install 90 megawatts. The Dungeon Offshore Wind Farm (2009–2017) in the North Sea took 8 years to install 400 megawatts. Granted many sector experts would contend that when non-technological factors such as achieving planning consent and adequate financing are taken into account, large-scale offshore wind is the way to go.
By comparison, onshore project development at commercial scale must contend with diverse terrain and a greater multitude of technological, geographical and political factors, e.g. Not In My Backyarders or NIMBYs.
Even though offshore projects require suppliers to move heavy equipment over land, the lack of visibility from towns and cities means that the NIMBYs are kept at bay. The politics of securing consents happen mostly behind closed doors at high-level and aren’t subject to the same scrutiny you’d encounter onshore. So is offshore really where renewable energy achieves economies of scale?
As a former project developer I have personally experienced the pain of trying to get wind turbines and solar panels to move quickly at smaller-scale: it’s hard. The complexity of securing all the necessary consents to make a project bankable can involve a wide range of stakeholders.
It’s a very collaborative process, which consists of balancing diverse interests often in the face of shifting deadlines. Although from a purely engineering point-of-view, the process of installing a few 2.5MW wind turbines on a farmer’s land is far simpler than what you’d encounter on the high seas, smaller projects onshore don’t benefit from the same shared standards and best practices that offshore teams have co-created.
Still, in a rational world, smaller projects would move faster, be cheaper and benefit from efficiency gains when ramping up operations, i.e. they would scale. Thirty onshore wind turbines of 3MW should deliver 90MW of nameplate capacity in less time and at lower cost onshore compared to offshore. In the solar market where a large rooftop installation maxes out at around 2MW, the logistics of installing PV panels across a portfolio of industrial estates, food storage facilities or auto dealerships aren’t that complicated. The problem is in assembling and signing off a project plan in a timely manner that will be acceptable to funders.
At Enian, where we specialise in making commercial solar and wind projects fast and bankable, we believe that the solution to scaling smaller projects is a digital one. When equipped with our user-friendly collaboration tools, project developers can coordinate with stakeholders far more efficiently. By building IFC best practice standards into the user experience of contract execution and file sharing, every action is instantly aligned with the due diligence requirements of sophisticated investors and financiers. The result is a lower cost per deal that cuts down on delivery timescales by half. This is dealtech for the planet.
IRENA estimates that increasing renewables to 36 per cent of the global energy mix by 2030 would provide about half emissions reductions needed to hold warming to 2C.
Even though renewable energy is the fastest growing source of energy (7.1 per annum p.a.), according to BP’s World Energy Outlook (2017) renewables will supply only 14% of global energy by 2040. As a sector we need to move a hell of a lot faster if we’re going to safeguard a prosperous and sustainable future for the coming generations.