The average large-infrastructure project in Germany is 73 per cent more expensive than planned.
Berlin, 19 May 2015 – With an average cost overrun of 20 per cent, offshore wind parks perform well in comparison to other large-infrastructure projects. The average large-infrastructure project in Germany is 73 per cent more expensive than planned. This was one of the key findings of a study by the Hertie School of Governance, under the leadership of Genia Kostka, Professor of Governance of Energy and Infrastructure.
Although the coordinators of offshore wind parks face a range of risks related to pioneering new technology, a case study focusing on eight of these projects identified a clear ability to learn and adapt the planning of construction and installation. However, planned expansion was delayed an average of 13 months per park by problems with the regulated grid connection. For consumers this meant a price hike of over 1 billion Euros by the end of 2014. A central weak point has been the lack of coordination between transmission providers and wind park developers, a problem compounded by unclear political frameworks. Niklas Anzinger, author of the case study, said, “Better coordination, also with the neighbouring North Sea states, would ensure additional learning effects and allow offshore wind energy to make the desired contributions to the energy transition.” With a share of 0,3 per cent of the total electricity generation capacity in Fall 2014, this goal is, however, still a way off. By the end of 2015 an increase to 1,5 to 2 per cent is predicted.
Within the energy sector, the data reviewed by the researchers has allowed a comparison of nuclear power plant construction from the 1960s to the 1980s: the six reviewed nuclear power plants were on average 187 per cent more expensive, in other words three times more expensive than planned. Learning effects over time were not identified. “With by now comparatively standardised technology as well as shorter construction and installation periods, windparks can definitely be planned better,” said Anzinger.
This study, under the leadership of Genia Kostka, Professor of Governance of Energy and Infrastructure, analyses the scale, patterns and causes of cost overruns in 170 large public infrastructure projects in Germany. Of those, 119 were finished between 1960 and 2014 and 51 are currently still under construction. Projects from the building, transportation, defence, energy and ICT sectors are analysed based on systematically planned versus real budgets. Three detailed case studies on the Berlin Airport BER, the Elb Philarmonic and Offshore Wind Parks round out the investigation.
The study was made possible by the friendly support of the Karl Schlecht Foundation.
The detailed working paper and case studies are available for download here.