Offshore wind power economics : analysis on the economic utilization of Turkey's offshore wind power potential under the current support mechanisms

Climate change and the energy supply security concerns supported the development of wind power growth in the world, which made wind power as one of the fastest growing renewable energy sources. Offshore wind energy attracts more investments day by day with its advantages such as higher wind speeds, larger wind turbines and lower GHG emissions. In order for developing projects that will power the grids with renewable electricity extracted from wind, governments provide extensive policy supports primarily as feed in tariffs (FiTs). To address its energy challenges, Turkey also encourages wind power development primarily with FiT support mechanism. This paper investigates whether profitable utilization of Turkey‟s offshore wind power potential is possible under the current support mechanisms and, if possible, how much of it is in fact economically viable. A model is built in Excel to calculate the free cash flows and NPV for economic analysis. Results show that none of the wind classes are able to produce a positive NPV. A sensitivity analysis on capital costs shows that wind class 7 (with a total potential of 142.7 MW) can produce positive NPV at the lowest level of 1.9 M USD. Recommendations are provided for students and researchers, wind power producers and the Turkish government based on the results of the analysis in this paper