Understanding the Effects of Climate Change on Offshore Wind
Digital Engineering has performed an initial analysis on the development of wind resource for the 17 ScotWind sites using an ensemble of the CMIP 6 Climate Change scenario data . The findings could be alarming for UK policy makers and investors alike: on average the ScotWind sites lose between 3.0-3.5% annual expected production. . This was observed across all climate scenarios that were analysed. The best sites see no material impact with respect to climate change, with a marginal upside in some scenarios. Poorly performing sites see annual production risks of 4%. This result was surprisingly consistent across various Climate Change scenarios.
The stakes are high for the ScotWind sites. The relevance for the UK’s Net Zero strategy, the financial exposure of participants and the current market environment with rising equipment prices and interest rates make accurate yield assessments for each site absolutely critical.
Traditional yield analyses rely on historical weather data. In the last two decades Climate Change has affected weather patterns so drastically that this methodology has to be questioned. Traditional retrospective modelling will no longer be enough to provide reliable yield assessments. The wind industry has a strong track record of adapting its methodologies to reflect the evolving understanding of the complexities of wind modelling (e.g. improved understanding of the blockage effect). In-depth analysis of the Climate Change effects on yield, O&M costs, asset lifetimes and power prices is urgently required. This will increase resilience of decisions to the uncertainty of Climate Change.
Strategic use of Climate Change scenarios can enable the selection of locations which benefit. It is crucial to incorporate the analysis at the point in the development process where it can create most value or help avoid unnecessary expenses. Forewarned is forearmed.
What is ScotWind?
The UK has set itself an ambitious decarbonisation goal: net zero greenhouse gas emissions by 2050. This strategy relies heavily on offshore wind farms, utilizing both the abundant wind resources of the north and the surrounding sea.
The ScotWind offshore auction of July 2021 saw 17 seabed plots earmarked for leasing across the Scottish coastline. These were awarded to a variety of bidders including oil companies, utility firms and investment funds from around the world. The area covers 7,000km2 of the North Sea to the east of Angus, the outer Moray Firth, west of Orkney, east of Shetland and north-west of both Lewis and Islay.
Within the UK’s energy security strategy, offshore wind is targeted to expand to 50GW. 50GW would be enough to power every home in the UK by 2030. The project is estimated to prevent six million tonnes of carbon dioxide from entering our atmosphere each year.  The ScotWind projects are estimated to have a combined generation capacity of 25GW , therefore contributing up to 50% to the total UK offshore wind plan.
Investment to date has been near £1bn (around £700m for leases awarded plus tender preparation by over 70 participants). However, it is estimated that almost £50bn will have to be invested for the construction .
Factoring in Climate Change
Currently, global temperature rise stands at 1.1°C compared to preindustrial levels.  Analysis shows that the current global efforts to cut carbon emissions put the world on track for warming of 2.7°C increase by the end of the century.
This is far higher than the limit of 1.5°C agreed at the UN climate change conference in Paris in 2015. On our current trajectory the world has a less than 5% chance of keeping warming below 2°C . Even if current net zero ambitions are achieved, a significant amount of change is already ‘locked in’. Our ‘new normal’ will be very different from the past: warmer winters with little snow, longer droughts, extreme heat periods, intense wind events and increased flooding risk.
Prudent long-term investment decisions should factor in Climate Change scenarios reflecting a +2°C trajectory at least. Including Climate Change scenarios will make critical infrastructure more resilient to future conditions.
Improving Yield Assessment Methodology
Traditionally, yield assessments rely on site measurements and 20 or 30 years of historical weather data to assess how much a wind farm will produce in the future. This methodology is well-established, has gone through several major improvement cycles and is widely accepted in the industry and for financing purposes. Recent improvements have included the switch to new reanalysis data sets and the introduction of the blockage effect.
The current methodology does have one important weakness: By looking backwards, it does not allow for potential changes in the weather patterns. Climate Change is a known issue which the backward-looking methodology cannot capture. Most renewables investments (and other energy system assets) undertaken today will last into the 2050s and 60s. This period is known to be even more affected by Climate Change under realistic scenarios.  Under the current methodology, investment decisions are taken ignoring the physical effects of Climate Change.
Digital Engineering have enhanced the existing yield methodology by incorporating CMIP 6 Climate Change scenario data and assessing the impact Climate Change could have on the 17 ScotWind development sites, compared to the traditional yield assessment methodology.
In order to do this, Digital Engineering have taken Climate Change scenario data from multiple sources contributing to the IPCC report and applied a three-stage translation process to make this data useable for site specific yield assessments:
- Bias correction: The CMIP 6 Climate Change scenario data has been compared to historical data. Any local biases between the Climate Change scenario data and actual recorded weather have been removed, whilst retaining the shape of the distribution over time and trends of the underlying Climate Change scenario data.
- Model selection: Climate Change models are ranked by their performance against the historical data. Models with high scores are used. Those with low fit are scored down or disregarded entirely.
- Ensemble creation: The selected Climate Change models are used to define a probability distribution of wind resource. The use of an ensemble is important and results of individual models on their own must be treated with caution.
Following this translation process the wind resource ensemble has been analysed and changes in average wind speed have been converted into changes to wind farm output. On average the sites see a 2.0-2.5% decline of wind resource which could translate into as much as 3.0-3.5% reduction in annual expected production . The best sites see no material impact with respect to climate change, with a marginal upside in some scenarios. Poorly performing sites see annual production risks of 4%. This result was surprisingly consistent across various Climate Change scenarios. Individual climate change models even show more than an 8% reduction in yield.
The Bigger Picture
The ScotWind site developments are both integral to and reliant on, an entire network of partners, investors, suppliers and employees. Climate Change will also affect the other stakeholders of renewables assets, the wider electricity system and security of supply.
- Higher peak wind speeds could put assets under more stress increasing O&M costs or even reducing lifetimes (without the benefit of higher production). Critical infrastructure should be made more resilient for future conditions
- The buildout of green power production may fall short of the necessary transformation. If the production downside risk is material enough, assets may be overleveraged also introducing risk into the financial system
- System load will vary with changing temperatures, irradiation and wind speeds. At the same time higher temperatures will also affect the transmission capacity of overhead lines in potentially critical times
- Changes could affect network design and thus security of supply. Inevitably this will affect power price levels which will be felt all the way down to the British tax payer
The lessons learned from the ScotWind case study should be applied to all parts of the energy system and all long-term assets. Climate Change should be factored into all long-term projection methodologies. Digital Engineering’s data services make this possible.
The ScotWind projects are a vital part of the UK’s Net Zero strategy, and must deliver on the objectives. The results of the ScotWind case study could also have material financial implications for the companies involved.
In a wider context, our analyses can help understand uncertainty, mitigate risks and more importantly identify opportunities. In particular, the scenario analysis should be incorporated early in the development process to avoid incurring unnecessary development expense. Introducing this analysis early enough can even help businesses to identify sites and technical solutions which may benefit from Climate Change.
Adjustments to the long-term yield methodology should be made now to improve resilience of decision making to the expected changes in our climate. With our support you can be more confident in making proactive decisions which benefit the future of your business.