Electrical Power and Energy Systems 65 (2015) 2125

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Electrical Power and Energy Systems

journal homepage: www.elsevier.com/locate/ijepes

The Levelized Cost of Energy (LCOE) of wave energy using GIS based
analysis: The case study of Portugal
Laura Castro-Santos , Geuffer Prado Garcia, Ana Estanqueiro, Paulo A.P.S. Justino
National Energy Laboratory (LNEG), Solar, Wind and Ocean Energy Unit (UESEO), Estrada do Pao do Lumiar, 22, 1649-038 Lisbon, Portugal

a r t i c l e

i n f o

Article history:
Received 4 July 2014
Received in revised form 1 September 2014
Accepted 13 September 2014
Available online 6 October 2014
Keywords:
Wave power
GIS
Economic atlas
Ocean renewable energy

a b s t r a c t
The main objective of this paper is to establish an economic modelling of wave energy through a
Geographical Information System (GIS). Furthermore, this method has been tested for the particular case
of the Portuguese coast. It determines the best sea areas to install wave energy converters in this region,
using spatial analysis of the Levelized Cost of Energy (LCOE). Several economic parameters, as capital or
O&M costs, have been considered. In addition, a sensitivity analysis has been performed by varying the
discount rate in three different scenarios. Several types of physical restrictions have been taken into
account: bathymetry, submarine electrical cables, seabed geology, environmental conditions, protected
areas in terms of heritage, navigation areas, seismic fault lines, etc. Spatial operations have been carried
out to complete the procedure, using Model Builder of GIS software. Results indicate the most suitable
areas in economic terms in Portugal to install wave energy devices.
2014 Elsevier Ltd. All rights reserved.

Introduction
Nowadays, one of the most important problems all over the
world is generating enough clean energy to guarantee human
consumption without harming the environment [1]. In this context, offshore renewable energies can help to achieve this purpose.
Portugal has many kilometres of coast which could be exploited
in terms of wave energy [2]. Furthermore, the Portuguese government is aiming to achieve 60% of produced electricity by RES in
2020, following the European path. Nevertheless, renewable
resources for electricity production should be diversied to achieve
this objective.
According to different renewable resources for electricity production, marine energies, such as wave, tide or offshore wind, have
a large potential of application in Portugal [35]. In fact, over the
last 30 years, Portugal has been on the front edge of marine renewable energy eld. In this sense, several examples could be quoted:
wave power plant of 400 kW was connected to the grid in 1999, in
Pico (Aores) [6]; the research wave power plant, Pelamis [7,8],
with 2.25 MW, has been in operation in 2009 in Aguadoura [9];
or the second oating offshore wind turbine in the world, WindFloat [10], which has also been installed in 2009 in Aguadoura.
In the last decade, many research projects of wave energy
converters (WECs) have been developed all over the world
Corresponding author.
E-mail address: laura.castro.santos@udc.es (L. Castro-Santos).
http://dx.doi.org/10.1016/j.ijepes.2014.09.022
0142-0615/ 2014 Elsevier Ltd. All rights reserved.

[14,15], especially in Europe. They can be used to obtain some of

the huge amounts of energy which can theoretically be exploited
from the oceans [16,17]. Most of the designs convert the wave
energy to electrical energy [18,19], but wave energy can also be
used for the desalination of salt water by reverse osmosis, which
has vital importance for many societies and countries situated in
arid climates [20].
Wave energy development is being considered by the Portuguese Government for the accomplishment of its goal respecting
renewable energy sources [5]. One example is the pilot zone in
Pedro de Moel (Decree-Law 5/2008), created in early 2008 [21].
Although waves resource has been previously studied in
several papers [1113], the economic path [22] is the most important perspective for developers [23]. In this context, the aim of this
article will be to determine the best economic areas in Portugal
where wave energy can be developed. In this sense, the economic
index of the Levelized Cost of Energy (LCOE) will be analysed. In
addition, a sensitivity analysis will be performed by varying the
discount rate in three different scenarios. Furthermore, several
types of physical restrictions will be taken into account: bathymetry, submarine electrical cables, seabed geology, environmental
conditions, protected areas in terms of heritage, navigation areas,
seismic fault lines, etc. Spatial operations have been carried out to
complete the procedure, using Model Builder of GIS (Geographic
Information System) software [24]. Results will indicate the most
suitable areas in economic terms in Portugal to install wave
energy devices.

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L. Castro-Santos et al. / Electrical Power and Energy Systems 65 (2015) 2125

carried out. The LCOE depends on the following variables: initial

investment costs (C0), operation and maintenance costs in the year
k (C 0&M ), ination rate (Inf), discount rate (d) and energy output on
year k (ECRk), as Eq. (1) shows:

Methodology
Economic procedure
Using the wave resource map as reference, it is possible to calculate the average annual energy of the wave farm assuming that
devices are largely spaced and no interaction between them is considered. Through the energy values and using all the input data, the
results of economics evaluations (Levelized Cost of Energy (LCOE))
are calculated for each point of the reference maps. These results
are saved in the coordinates of each origin point in distinct grids/
matrix, each with one type of economic evaluation. The resulting
grids are saved as grids compatible with Surfer and ArcGIS
software [25]. They will be the economic maps. The relation
between the economic tool, which calculates de LCOE, and the
GIS tool, which determines the area selected is shown in Fig. 1:
The Levelized Cost of Energy (LCOE), in /MW h, evaluates the
economic cost of a power generation system throughout its life cycle
[26]. There are several approaches of dening the LCOE [2628].
However, the denition given by the International Energy Agency
(IEA) and the Nuclear Energy Agency (NEA) has been considered. It
denes the costs as a sum of the total cost of the initial investment,
annual operating and maintenance costs, annual fuel and carbon
costs and the cost of decommissioning. This model does not take
into account extremely volatile values, like interest rates and tax
rates which differ depending on the country or region selected. It
is very useful to compare normalized costs of energy production
from different sources, regardless of the oating parameters.
Since a clean renewable energy source is being analysed, the
parameters fuel costs and cost of carbon were considered to
be zero. The decommissioning cost was also considered to be
zero since the site could usually be used in the future for repowering, taking advantage of the groundwork and construction already

LCOE f C 0 ; C 0&Mk ; Inf ; d; ECRk

The annual wave resource (kW/m) will be used in the calculation of

the annual energy output. Using the specic parameters for the
wave energy technology considered, the annual energy output for
one unit will be calculated in Eq. (2). It will be dependent on: Atlas
of Annual Wave Resource [kW/m] (AR), if AR is higher them 35 kW/
m, then its value becomes 35 kW/m; capture width ratio (CR),
depends on device technology and available sea states; hours per
year [h/year] (hyear); main dimension [m] (ddim); power Take-Off
(gPTO), mechanical efciency, 0.6 in this study; distinct wave technology type (k).

ECRuk AR  CRk  ddimk  gPTO  hyear  1  DegP

In addition, it will be necessary to estimate the nominal power of

each device, essential to obtain the initial investment when
multiplied by the capital cost (/kW). To determine the nominal
power (Pn), in kW, of each power group is required to absorb the
available power on the area of Peniche will be used Eq. (3), which
is dependent on: annual offshore resource available in a particular
location [kW/m] (MAR) and the capacity factor (Cf), among others:

Pn f MAR; CRk ; ddim ; gPTO ; C f

The resulting maps have the format (coordinates and size) of the
wave resource reference maps, and illustrate the spatial analysis
of the wave farm economics evaluation with all technical and economic parameters introduced as input data at the beginning of the
tool. The illustration of this procedure is shown in a simplied form
in Fig. 2:

Fig. 1. Relation between economic and GIS procedures.

Fig. 2. Economic procedure.

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L. Castro-Santos et al. / Electrical Power and Energy Systems 65 (2015) 2125

Fig. 3. GIS procedure.

Fig. 4. LCOE with restrictions for a capital cost of 3000 /kW, maximum capture ratio and 5% (a), 7.5% (b) and 10% (c) of discount rate.

Table 1
Main characteristics of the BBDB wave device considered.
Concept

Nomenclature

Value

Units

Atlas of Annual Wave

Resource
Capture width ratio

AR

Several (depending on
the point of the map)
Minimum, mean,
maximum (depending
on the considered
scenario)
24
60

kW/m

Main dimension
Power Take-Off efciency

CR

ddim

gPTO

m
%

Table 2
Technical and economic parameters.

Fig. 5. Minimum LCOE values (/MW h) depending on discount rate and capital
cost.

Once the economic maps have been calculated, the GIS

(Geographical Information System) tool carries out the restriction
of the selected area [29]. In this sense, taking into account several
spatial operations, the GIS tool allows the establishment of an atlas
which considers the physical restrictions selected (one or several):

Parameter

Waves

Capital costs
O&M costs
Lifecycle
Discount rate

3000 /kW; 6000 /kW; 9000 /kW (different scenarios)

1%/year of total investments costs
20 years
5%, 7.5% and 10% (different scenarios)

buoys for tanker vessels, submarine electric cables, supply lines,

seabed geology, anchorage areas, seismic fault lines, heritage and
protected areas, submerged electric lines protection area,

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L. Castro-Santos et al. / Electrical Power and Energy Systems 65 (2015) 2125

Table 3
Types of capture width ratios considered.
Type

Min

Mean

Max

Capture width ratio (%)

CwrMin = CwrMean  (1  0.25)

CwrMean = 41

CwrMax = CwrMean  (1 + 0.25)

Table 4
Summary of the results.
LCOE (/MW h)
Capital cost (/kW)

Max. capture ratio

5% D.R.

3000

6000

7.5% D.R.

10% D.R.

81573
95667
Med. capture ratio
101707
117824
Min. capture ratio
116813
135948

109767

Max. capture ratio

1631146
1901335

135946
1551089

environmental protected areas [30], navigation and pilot area [31].

This tool will give a rst approximation of the areas where offshore
farms could be installed in Portugal, as shown Fig. 3:
Firstly, the map of all the physical restrictions added by the user
is obtained. Moreover, each of these restrictions should be reclassied. For this purpose, selected areas will be dened as 1 and
non-selected areas will be dened as 0. Then, all these restrictions
reclassied should be added, thus obtaining the map of all the
physical restrictions. Secondly, the bathymetry restriction is
added. Finally, all the restrictions, which will be multiplied by
the economic map selected can be joined, obtaining the economic
restricted atlas (see Figs. 4 and 5).
Case of study
The case study has been developed taking into account a oating
oscillating water column, also called backward bent duct buoy
(BBDB), which is a type of OWC (Oscillating Water Column) device.
It is composed by an air chamber, with six degrees freedom of
movement. The water column inlet is located on the downstream
side of the device. According to the material, the hull is built of thin
steel walls enclosing the water column. The power transformation
is provided by means of an air turbine connected to an electric generator. The movement of the water column relative to the OWC
body creates oscillating pressure in the chamber and air ow
through the turbine [18]. Table 1 summarises the main characteristics of the energy converter considered in this study: Atlas of Annual
Wave Resource [32], capture width ratio [18], main dimension [18].
The mean power-take-off efciency value was based on [24].
The spatial economic analysis is based on the wave resource
available on each location in the Portuguese atlas. This atlas provides a reference tool to calculate the produced energy based on
the available resource and correspondent coordinate of each point
of Portuguese atlas. The reference atlas for wave technology is the
Portuguese annual resource atlas for wave energy, based on the
interpolated resource around Portugal, considering ONDATLAS
database [32].
Current and realistic technical and economic parameters [33],
[34] will be used as inputs to calculate the economic atlas using
the Matlab tool developed for this propose, as shown in Table 2.
Furthermore, all the calculations will be made for one device in
each cell of the atlas.
The nominal power is calculated with the knowledge that every
device is dimensioned to absorb the energy potential available in
Peniche (MAR = 35 kW/m) with a 30% capacity factor.

Finally, there are many types of wave energy technologies with

distinct working principles and dimensions [18]: small bottom-referenced heaving buoy, bottom-referenced submerged heavy-buoy,
oating two-body heaving converter, bottom-xed heave-buoy
array, oating heave-buoy array, etc. However, this study will only
take into account one typical wave energy converter characterized
by different capture width ratios (%), which have been obtained for
the offshore conditions of continental Portugal: minimum (Min),
mean (Mean) and maximum (Max). The minimum and maximum
value will be 25% inferior or superior to the medium ratio of the
BBDB converter [18], as Table 3 sums up. Nevertheless, the main
dimension of these devices and the restriction of the depth will
be the same: 24 m and from 40 to 100 m respectively [18].

Results: Levelized Cost of Energy (LCOE)

According to LCOE calculations, values are different depending
on the capital cost, the capture ratio and the discount rate. The
summary of these results is shown in Table 4. The other values
of LCOE are higher than 200 /MW h.
As far as LCOE maps with restrictions are concerned, three scenarios (5%, 7.5% and 10% of the discount rate) could be compared,
depending on the capital cost taken into account. However, the
best values for LCOE are these whose discount rate is 5% or 7.5%
and the capital cost is 3000 /kW, as Fig. 3 shown: as can be seen
the northwest cost of Portugal is the most favourable location for
wave power devices deployment. This is due mainly to low restrictions on sea areas use and a medium to high level of available wave
energy resource.
In the context of wave energy, the best value for LCOE is also for
the 5% of discount rate and the maximum capture ratio: up to
81.00 /MW h for 3000 /kW and 163 /MW h for 6000 /kW. Furthermore, the LCOE value rises when the capture width ratio of the
wave device is reduced.

Conclusions
Several types of physical restrictions, as bathymetry or protected areas have been applied using a GIS tool. They have reduced
the region of study of the LCOE economic maps with three different
discount rates: 5%, 7.5% and 10%. It gives a wide range of areas
where wave farms could be installed in Portuguese waters. In addition, three scenarios of capital costs and capture width ratio have
been respectively taken into account: 3000 /kW, 6000 /kW,
9000 /kW and maximum, medium, minimum.
All the results indicate that the NorthWest coast of Portugal is
the best location in economic terms for installing wave energy
devices. This area has LCOE of 81 /MW h, 95 /MW h and 109 /
MW h for 5%, 7.5% and 10% of discount rate.
Finally, after analysing each point of the Portuguese coast, a
conclusion could be established: there are areas in Portugal where
wave energy could be regarded as an important source of renewable energy. The economic study of wave energy in Portugal gives
feasible economic results for investors in some areas. In this sense,
it could improve the regional development of other parallel
industries as naval construction, research clusters, maintenance
industries and developers of wave devices.

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Acknowledgement
This work has been funded by FCT/MTCES (PIDDAC) through
project PTDC/SEN-ENR/105403/2008.

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