Analysis of the cost of building an offshore wind farm on the Moroccan coast (Oct - 2023)
The Kingdom of Morocco, a North-African country with a population of roughly 38 million inhabitants located at the juncture of the Mediterranean Sea and the Atlantic Ocean, has set very ambitious renewable targets: the country plans to reach 52% of renewable energy capacity by 2030 and 80% by 2050. The geography of the Kingdom offers great potential for renewable energy: from over 3500km of coast with large areas of strong winds, to countless acres of land under abundant and long-lasting sunlight. Morocco’s energy industry has developed and many believe that the country is now at a point where it can start harnessing nature to produce green energy to satisfy a great part of its energy needs. It has in fact already started, with over 4000 MW of renewable energy capacity already installed, the majority from onshore wind and solar installations. By comparison to onshore, offshore wind has a better output due to the naturally stronger winds at sea. Stronger winds allow for larger wind turbines which, in turn, produce more electricity. In this report, we will address the question of whether there is a potential for offshore wind in Morocco, and, if so, what would be the costs and considerations, both technical and financial, which should be taken into account to leverage such a promising source of energy.
1. Morocco’s Offshore Wind Potential
Morocco has a vast offshore wind potential, estimated at over 200 gigawatts (GW). This is more than 17 times Morocco's current electricity demand. The country has about 3500 km of coasts which offer great wind speeds. In particular, the waters in the region of Agadir and Dakhla have average wind speeds of above 10m/s which makes them prime locations for offshore wind farms and make it possible to use large wind turbines (10MW). The potential benefits are as such: offshore wind can help Morocco to meet its growing energy demand, increase its energy independence while reducing its reliance on fossil fuels, and create jobs. Through spillover gains in port developments and workforce experience on offshore projects, such projects can also help to attract more foreign investments in any port or offshore-related activity. Finally, it can also bolster the country’s aspiration to become a major green energy exporter to European countries.
Figure 1: Map of wind speeds in Morocco (Source: Global Wind Atlas)
2. Potential Synergies
As an offshore wind farm would be a new type of infrastructure project in Morocco; some additional costs of establishing supply chains and facilities (port terminals, substations, cable connections to the grid) can be expected (we cover this point later). However, some synergies could also be leveraged. As often with offshore wind, there is an overlap in expertise and experience from building offshore oil and gas structures. This overlap covers various areas such as setting foundations & structures, cabling, project management, vessel operations, seabed and maritime surveys and operations & maintenance. This is the case in Morocco as the country already has developed offshore gas fields facilities (Anchois field, 40km off the coast near Larache). Industrial synergies could also emerge, Morocco hosts a turbine blade manufacturing plant near Tangiers (previously owned by Siemens Gamesa) and thus could have the blades produced in-house which would reduce overall costs.
Finally, there is an advantage in Morocco’s ports: with vast land to expand, the port of Dakhla could have an area dedicated to offshore wind activities; the ports of Agadir and Casablanca could also be leveraged, and finally, for the largest vessels, the port of Tangier Med, located in by the strait of Gibraltar, could provide a decent base to reduce repetitive transits between Europe and Morocco.
3. Technical Considerations
Wind farms come in different flavours and technologies. We are basing our analysis on a few assumptions with regards to suitability, cost-efficiency, manufacturability, and other factors.
3.1.Floating vs. Fixed foundations
Figure 2: Various Offshore Turbine Foundations. (Source: ResearchGate)
Turbines can either have a fixed or floating foundation. Floating foundations allow for the turbine to be built further from land and into deeper waters (depths higher than 50m). For each there are different subtypes of platforms and foundations, each tailored for specific environmental characteristics such as current and other horizontal forces, vertical pressures, soil type, etc.
While the floating technologies allow for wind farms in deeper waters and therefore stronger winds, it is important to point out that, at the moment, a floating wind farm is more costly than a fixed-bottom one. As of 2023 there is only one large-sized commissioned floating wind farm, Hywind Tampen in Norway; the other current floating installations are at much smaller scales (one to three turbines only). In terms of LCOE (levelized cost of electricity), fixed bottom’s LCOE is at around €90-€100/MWh while the floating’s at €200/MWh. This difference shows why most countries still go for the fixed-bottom option, but this trend should change in coming years, as economies of scale start to bear fruits for floating. The floating vs. fixed duality also brings in additional considerations: port capacity and vessel types. Fixed bottom turbines require very large vessels which are limited in the world; these vessels essentially assemble the turbine and install the foundation offshore. It also requires ports which are large enough to host these vessels. Floating on the other hand requires onshore assembly and thus demands ports which are equipped for the installation of these turbines. The assembled turbines are then dragged into their position in the open water. In the case of Morocco, the fixed-bottom option is the most realistic one for the near-future. The country has a few ports which can host the large vessels needed for the installation and assembly. The current construction of the port of Dakhla is opportune as it would allow for shorter transfers of material and crew. The ports of Casablanca, or even further, that of Tanger-Med could also be leveraged. The floating option could be considered for a later stage since, as mentioned previously, the technology is still expensive but the situation could change towards the end of the decade. Some ports in Spain and the Canary Islands have already existing floating turbine assembly units and could be leveraged, however these are designed for “Demo” projects only (small wind farms of only 2-3 turbines). As we are assessing the costs for a project in the near future, we will consider a fixed-bottom offshore wind farm in our analysis.
The three fixed-bottom options are monopile, jackets and gravity-based, for simplicity of manufacturing and installation, we will consider a monopile foundation (which is widely used in Southern Europe).
3.2.Choice of Turbine
Turbines vary in sizes and types. In our analysis we will use the traditional horizontal axis, 3- blade turbine as it is the most widely used type and the one most adapted to offshore wind in the region. There are various turbine manufacturers around the world but in our analysis we will limit ourselves to European producers as they are closest geographically to Morocco and are widely used in the region. A common choice of turbine for the wind speeds on the coast of Agadir and Dakhla is the 10MW turbine. This is manufactured by both Vestas Wind and Siemens Gamesa.
3.3.Choice of Cabling
There are two types of cables to be considered in an offshore wind farm: inter-array cables (connecting turbines to each other and substation) and export cables (connecting the wind farm to the onshore station and the grid). Two technologies of cables can be considered, HVAC and HVDC. HVAC are in theory cheaper for shorter distances due to not needing a converter, however, over longer distances, the costs and energy losses become too important, and HVDC becomes a better solution. For inter-array cable, HVAC are always a better option. The breakeven point for export cables is at about 50km, which is when HVDC becomes a better option. Our analysis will consider HVDC cables, as it is likely that the wind farms would be further than 50km from the shore (this will not only offer higher wind speeds but will make the turbines look much smaller from the shores of Dakhla/Agadir, which are considered touristic hubs).
3.4.Installation Costs
The data used to estimate installation costs is taken from European projects and therefore must be adjusted upwards. The reason is that most installers are based in Europe and benefit from local synergies from other projects and short distances to nearby ports and facilities. Installation vessels would need to be brought from far, as for the material itself. Local crew also needs to be trained. This extra cost is common when a country starts building a new type of large scale energy infrastructure. We base our adjustments on the differences in cost that other countries experienced as they build or have built their first offshore wind farm (for example, Romania, South Korea and Greece). As an example, the offshore substation will likely be assembled abroad and transported either directly or via a Moroccan port. Installation costs are about €45 million but this number will likely have to be adjusted upwards to €55 million to compensate for the assembly and transportation from abroad.
4. Cost of Building an Offshore Wind Farm in Morocco:
(This study is partly based on a study carried by BVGAssociates for a generic country but contains several adjustments to account for the various technical, geographical, logistical, and other factors unique to Morocco.)
Wind farms come in different flavours and technologies. We are basing our analysis on a few assumptions with regards to suitability, cost-efficiency, manufacturability, and other factors.
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Development and consenting services, €50-65 millions. The development would likely be done by a foreign firm with experience building offshore wind farms. The consenting process should be relatively simple as Morocco typically offers administrative support from the concerned Ministries and public companies & regulators for these types of project.
Environmental surveys, €4-7 millions. This includes benthic, fish and shellfish, ornithological and marine mammal surveys.
Resource and Metocean assessment, €4-7 millions. These are studies of atmospheric and oceanographic data to determine necessary specs and potential output of the wind farm.
Geological and Geophysical surveys, €4-7 millions. These are studies of the seabed profile and its conditions.
Engineering & consultancy, €4-7 millions. This is the study which determines size of the wind farm, type of turbines and foundations etc.
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100 x 10MW turbines, €12* - €15 millions per turbine.
*(Note that this cost assumes that all manufacturing is happening abroad. Should parts of it, such as for turbines, happen locally, these costs should go down due to cheaper labor, taxes, etc. Secondly, the upside costs take into account inflation.)
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(Balance of Plant or BOP refers to all installations of the wind farm except for turbines, this includes cabling systems, both offshore and onshore substations, etc.)
Cables:
Export Cables: €140 - €180 millions HVDC, 50-70km
Inter-Array Cables: €35 - €55 millions HVAC, 100km
Cable Protection: €3 - €5 millions
Foundations: €325 - €500 millions. €3.25 - €5 million x100 monopile foundations.
Onshore substation: €30 - €45 millions
Offshore substation: €135 - €150 millions
Operations base: €3 - €5 millions
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Foundations installation: €130 - €160 millions. This part involves installing the monopiles into the seabed and the price includes contracting the heavy-lift and jack-up vessels to install the foundation.
Turbine Installation: €55 - €80 millions.
Offshore Substation installation: €50 - €75 millions. The substation will also use a monopile foundation.
Onshore Substation & Cabling Installation: €37 - €45 millions.
Offshore Cabling Installation: €240 - €290 millions. This includes cable-laying vessel location, cable burial, pull-in and testing as well as pre-burial surveys and protection systems.
Overall logistics and support: €4 - €7 millions. This includes hiring CTVs and ROV support vessels.
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Operations: €30 - €50 millions per year, this includes operation of all assets including vessels, as well as trainings, health and safety systems, etc.
Maintenance: €55 - €75 millions per year
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Decommissioning costs - €360 - €410 millions, not including any resale value.
Total cost : €2453 - €3190 millions,
Total cost (inc. O&M, decom.): €6213 - €8600 millions
5. Additional notes and considerations:
Note 1: Please note that this is not a discounted present value (no discount rate used).
Note 2: This project assumes a full equity/cash contribution and does not take into account any interests, dividend or any other cash return.
Note 3: This project assumes constant currency conditions and no additional inflation from 2023 Q2.
Note 4:
- Potential reasons why the project could cost less: local production of any material (i.e cables, turbine components, foundations, etc), lower local wages compared to European wages, cheaper materials in the future.
- Potential reasons why the project could cost more: higher bids needed for contracts, vessel rentals, higher inflation, higher material prices.Note 5: This research is inspired by the work of BVGAssociates. This research offers a completely independent view and is not related or affiliated in any way to TGS Group, 4C Offshore, BP or any other organisation.
