Methodology
Fifteen companies and their recent onshore wind and solar projects— around four gigawatts in total—across the EU were assessed, with a focus on both qualitative and quantitative com ponents. The qualitative component included an assessment of each compa ny’s operating model and practices. This was measured across eight EPC value levers: contracting strategy; risk-based decision making; design-to-value; market intelligence; sourcing strategy; optimized terms and conditions; contract execution; and risk and claims management. The quantitative assessment compared cap ital-expenditure performance based on three main steps: - - - 1. Scope delineation . To ensure data comparability, all study participants used the same definitions of cost
plants comparable in the benchmark.
categories across their plants. 2. Normalization. A should-cost
3. Benchmarking for a broad set of metrics. The focus of the study was the performance based on capital expenditure per MW along the main cost categories. After the projects were normalized, they were all compared using normalized capital expenditure on a granular level. Capital expenditure performance was analyzed not only as total capital expenditure but also by cost category, such as collector systems and grid interconnection. Other key performance metrics analyzed alongside this were schedule adherence and contingencies, and safety performance.
methodology was used to scale the cost of each of the assets on a granular, sub-cost-category level. This enabled a true like-for-like comparison between projects, by adjusting for drivers that cause significant differences in cost without being under full control of the asset owner—such as labor-cost differences across countries, cost of raw materials over time, or the size of the plant. For example, if the reference point is a plant with 50MW capacity and the grid interconnect cost is 20 percent lower per MW for a project with 100MW, the 20 percent cost advantage needs to be removed from the 100MW plant to make the two
trackers, and the like—shows the highest deviation among the cost categories, despite being smaller in absolute terms than costs for PV equipment (primarily modules and inverters). Choosing the right capital-expenditure delivery model Another key finding of the study was that, on a project-by-project basis, top performers use delivery models that are consistent with their internal capabilities. Under the most advanced owner-integrated models, companies acquire in-house capabilities and invest heavily in capability-building. Organizations that do not have in-house skills, and don’t plan to ramp up internal capabilities, usually do better with turnkey models. This means there is no silver-bullet model—it is
of the world), found a wide variance in capital expenditure performance between top-quartile and bottom-quartile averages—about 20 percent for onshore wind and more than 30 percent for solar PV in Europe. If lower performers could improve their capital expenditure performance in line with top performers, onshore wind projects could save around €6 billion, and solar PV projects could save roughly €4 billion—a total of about €10 billion a year at an industry level in Europe (Exhibit 1). In onshore wind, the variance in performance between top- and bottom-quartile performers is mainly caused by the large variability in wind turbine generator (WTG) cost and balance of plant (BoP) cost. For solar PV, BoP—including electrical and mechanical installation cost, piles,
Accelerating the journey to net zero
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