London, England – The Renewables Consulting (RCG), an ERM Group company, is strengthening its capabilities and service offerings in the rapidly growing floating offshore wind sector.
As floating offshore wind continues to emerge as a utility-scale option for markets with deep-water seabed areas, the technology has rapidly expanded in the past two years as developers, offtakers and governments are embracing more innovative technology concepts at a large scale.
The first competitive tender for a commercial scale floating sites is currently underway in France, while more projects are set to be offered in competitive processes in Scotland and Norway later in 2021, with plans to lease projects in California also ongoing. Development of new projects of over 100 MW in capacity across at least eight different countries to date has shown floating technology to be a viable power generation option in a wide range of environments.
RCG is active with several key floating wind initiatives:
In response to rapidly expanding market conditions and client requests, RCG has added to its professionals ranks. Yiwen Lu joins RCG as Senior Associate bringing with her a track record of floating offshore wind due diligence and project development. She has been involved in a range of international onshore, offshore and floating wind projects from UK, Europe, Asia Pacific and North America. Our newest Associate, Max Peel, has a background including research into the levelised cost of hydrogen and offshore wind cost modelling.
RCG’s latest floating wind hires – Yiwen Lu and Max Peel.
Dan Kyle-Spearman, Associate Director and RCG’s Floating Offshore Wind Lead, said:
“Floating wind technology has proven itself to be a viable power generation option in a wide range of environments. It is a technology with huge potential and is about to boom. Yiwen and Max joining the team will further add strength to our growing offshore wind team. RCG is well-positioned to support clients to realise commercial opportunities in the floating wind market.” – Dan Kyle-Spearman, Floating Offshore Wind Lead.
RCG is a leading full-service provider of floating offshore wind advisory services globally. Our expertise covers the full floating offshore wind value chain, from development, through construction, to asset management and decommissioning. We think of floating offshore wind as power at scale – technology with the potential to deliver a global energy transition.
ERM has developed the award-winning ERM Dolphyn concept, a first of a kind technology combining electrolysis, desalination and hydrogen production on a floating wind platform – with the hydrogen transported to shore via pipeline. It is an economic and scalable solution, which produces green hydrogen with no carbon emissions at the point of use.
ERM’s Dolphyn concept, combining electrolysis, desalination and hydrogen production on a floating wind platform.
Offshore wind has seen a remarkable cost reduction and growth over the last 30 years since the commissioning of Orsted’s 4.95 MW Vindeby Offshore Wind Farm, the first offshore wind project. Floating offshore wind, the next evolution of offshore wind technology, consists of wind turbines installed on floating platforms, held in position with mooring systems attached to the seabed. Floating offshore wind will enable projects to be installed in deeper waters, further offshore.
The offshore wind industry is at an exciting phase, a technology that is now enabling low-cost energy to be supplied at a utility scale anywhere with access to an ocean or lake. Offshore wind is increasingly seen as the powerhouse behind the transition to low-carbon generation and one of the key technologies to replace fossil fuel supply. According to RCG’s Global Renewable Infrastructure Projects (GRIP) database, offshore wind has grown at a CAGR of 35% from 2000 to 2021, therefore doubling in capacity every 30 months.
Exhibit 1 – GRIP plot of global offshore wind growth, in MW
As the industry looks to increase energy generated from offshore wind, there are few shallow water seabed sites suitable for current offshore wind technology. Currently, nearly all offshore wind turbines are installed on monopiles or jackets that are fixed to the seabed. Fixed-bottom offshore wind requires shallow sites of up to 70 m — going deeper makes the size and weight of the foundation structures uneconomical. In the United States, more than 58% of offshore wind resource is in waters deeper than 60 m; it’s 80% for Europe. Clearly a new approach is required to harvest this energy.
The solution is to install wind turbines on floating platforms with sufficient stability, buoyance and damping of wave motions — called floating offshore wind. Floating offshore wind technology is an evolution of platforms developed four decades ago in the oil and gas industries for their deep-water operations. The platforms have been adapted and re-designed to consider the different loads and stability demands required for wind turbines, as well as a significant focus on cost reduction and serial production. Generally speaking, suitable floating offshore wind sites require depths of at least 60 m, but minimum water depths are driven by local conditions.
The main reasons why large floating offshore wind projects aren’t being built today are that current costs are too high and there is insufficient track record for project developers and financial institutions to be willing to take the risk in developing and investing in these projects.
However, there is good news. Analysis conducted by The Renewables Consulting Group shows that floating offshore wind costs will come down significantly over time. However, the rationale may be somewhat and perhaps counter-intuitive.
The analysis shows that the number of turbines installed or deployment is a major, if not the main, cost reduction driver for offshore wind. This same principle also applies to floating offshore wind.
Floating offshore wind is expected to follow similar cost reduction pathways as was seen moving from onshore to fixed-bottom offshore wind — onshore wind created a stepping-stone to support learning, development of supply chain and transferable skills.
Floating costs are currently at a premium compared to fixed-bottom projects at over $200/MWh, however costs are reducing as projects increase in size and lessons are learned. The upcoming 250-MW project in Brittany, France, will have a maximum price of $141/MWh and, considering this will be a competitive auction process, the award price is expected to be well south of $120/MWh. With further deployment, floating wind will become a cost-competitive renewable technology. Floating wind deployment is gradually increasing over time with the largest floating wind project, the 50-MW Kincardine farm, being commissioned this year in Scotland and soon to be overtaken by the 88-MW Hywind Tampen farm currently under construction in Norway. This gradual build-out bolsters confidence in the technology and demonstrates cost reductions.
Exhibit 2 – Plot of LCOE reduction against time
The move to offshore has had challenges, and similarly, floating will have new challenges that need to be considered. Moving from onshore to offshore required installing turbines offshore from either a floating vessel or a self-elevating platform (jack-up vessel), required marinization to protect turbines from the elements and accessing the turbines for maintenance and repair.
Levelized Cost of Energy (LCoE) – the average net present cost of electricity generation over a plant’s lifetime – enables developers, investors and governments to assess and compare costs of energy from different generation sources. RCG has undertaken analysis utilizing IRENA’s Renewable Power Generation Costs in 2020 to assess the trends of costs against time and deployment. Figure 2 shows the LCoE of fixed-bottom offshore wind against time and Figure 3 against deployment. As the figures outline, there is a clear trend showing deployment as a clearer driver of cost reduction than against time. Note that the trend shows an often-neglected rise before reduction, partly driven by moving to sites further offshore, but does show initial challenges in scaling from small-scale demonstration projects to large commercial-scale projects. However, the deployment figure shows that the hump in costs is much shorter in the deployment scale.
Exhibit 3 – Plot of LCOE reduction against deployment
This analysis shows that the expectation that costs fall naturally with time is flawed. If the objective is to reduce costs to compete with mainstream generation, the focus should be on how to facilitate increased deployment. Of course, increasing deployment needs to be combined with ambitious cost reduction pathways together with a considerable effort and investment into R&D and supply chains.
Over the past 20 years, increased deployment has facilitated the following key cost reduction forces for fixed-bottom offshore wind and will again drive costs down for floating wind:
Floating wind will utilize the supply chain fixed-bottom offshore wind has created for turbines, towers and vessels, however the approach to installing wind turbines on floating foundations requires some new approaches. The key cost drivers specific for floating wind and beyond those benefiting from offshore wind experience broadly are:
In understanding that deployment is a main cost driver, how can cost reduction be further accelerated? Policy makers and industry can provide the necessary levers and shift their focus from R&D to commercialization, enabling larger floating wind projects and faster buildout to drive down costs quickly. The focus should be on offtake markets, supply chain investments and de-risking finance rather than supporting new floater designs. There will be higher costs for first-mover projects, but these should be viewed as investments into the local supply chain and economy, increasing the local content of local projects and reducing the costs for future projects. Direct investments in supply chain are an alternative mechanism to enhance local industry capacity and capability, and ensure projects are built using local companies.
This Opinion piece first appeared in Windpower Engineering & Development on 30 August 2021:
It is reproduced by kind permission
Michael Stephenson, Associate Director of The Renewables Consulting Group spoke during Gard’s 2021 Lillehammer Energy Claims Conference (LECC), 9-11 March 2021. The Conference was established in 1996 and chaired ever since by Gard’s Jan-Hugo Marthinsen, Vice-President responsible for Offshore Energy Claims.
Since its modest beginning as a forum for informal discussions between leading energy insurers and their loss adjusters, the annual Lillehammer Energy Claims Conference has grown to encompass representatives from global oil & gas companies, claims brokers and certain specialist service providers. This year was the first using an entirely digital platform.
“Energy Transition” was the first day’s theme. Joining Michael on the panel were Jarand Rystad (Rystad Energy), Marie Bysveen (SINTEF), Lamberto Eldering (Equinor), and Tim Fillingham (McGill & Partners). Michael represented the renewables voice on the panel and stood well his ground in the panel discussion. It was a pleasure to interview Michael about some of the topics he touched upon during the “Energy Transition” session.
Michael, congratulations, well presented during LECC. Would you share with our readers, in a nutshell, what is the “Story of the next decade in offshore wind” that you were talking about?
Thank you Monica. The story of the next decade in offshore wind is truly about growth. The previous decade has been about offshore wind industry establishing itself as a serious energy player, but we’re seeing now that in the next decade it will become a pillar of the future energy mix. I particularly highlighted the growth we expect to see in Asia, even outside of China – going from nearly zero to over 30 GW in 10 years – as well as how the oil and gas industry will take a role in this growth too.
For those unfamiliar with the term, GW stands for gigawatt – just one GW can provide electricity to about 300,000 household so you are really talking about significant energy generation. Can you explain the difference between Onshore and Offshore wind farms? And what is the difference between Fixed and Floating wind?
An offshore wind farm consists of a number of wind turbines installed out at sea, sometimes close to shore but increasingly far from shore, over 100 km from the nearest coastline. They are typically larger in scale than land-based wind farms (both number of turbines and the size of turbines themselves) and have the benefit of increased wind speeds at sea where there is less terrain or interference in the wind flow. Fixed offshore wind farms are secured to the seabed with foundations similar to those used in offshore oil and gas, typically large steel structures which are piled into the ground. Floating offshore wind farms are still secured to the seabed, however they are used in much deeper water where it would be unfeasible to place fixed foundations. Floating offshore wind farms use a buoyant platform secured to the seafloor with mooring lines and anchors, making them more dynamic than fixed offshore wind farms.
Are offshore wind farms really thought through from an environmental perspective? I’ve just read, that 9 out of 10 birds would have voted for an offshore oil platform rather than an offshore wind farm.
Environmentally speaking, offshore wind farms are held to a rigorous standard for impacts to seabirds and other marine life. Here in the UK, they are subject to significant environmental assessment and a forensic examination of predicted impacts which can take many years, ensuring these impacts are kept to a minimum. Ultimately, in 10- or 20-years’ time when the effects of climate change on the environment continue to develop, offshore wind farms will be helping to mitigate this much greater threat to seabirds. Offshore wind will have a huge part to play in providing large scale, clean energy generation to prevent further global warming around the world.
I think it is worth mentioning that studies are showing that larger more efficient turbines reduce bird deaths by reducing the proportion of an at-risk area that is occupied by the blades. With larger turbines, the ratio goes down, thereby reducing bird deaths.
What is the current installed capacity by GW – and will offshore wind ever get a significant share of the energy mix?
The installed capacity is growing all the time. As of the end of 2020, there was 34 GW of offshore wind installed worldwide. We forecast that this will grow to over 200 GW by 2030, and by that time it will be one of the key pillars of the energy mix. It may never reach the same capacity as onshore wind or solar globally, but there will be countries-particularly with long coastlines relative to their land area- that could see the majority of their power supplied by offshore wind in the future.
With the quick development of offshore wind in areas suitable for fixed installation the industry will have to develop the technology to operate in more challenging deep waters. When do you expect floating wind to become commercial?
Yes, although floating wind may take a little longer to develop. At RCG, we expect to see the first full-scale commercial floating projects online before the end of this decade, with the 2030s likely to be the decade where floating wind truly booms and starts to compete on a cost basis with fixed bottom.
Which countries were the offshore wind pioneers and which countries are the current leaders?
Denmark and the UK stick out as the two main offshore wind pioneers. Denmark because they will always hold the record for installing the first offshore wind farm, Vindeby, back in 1991 as well as a strong track record since then including the largely state-owned Ørsted (previously DONG Energy) making one of the most ambitious pivots to green energy we’ve seen. The UK is the current leader for offshore wind installed capacity (at 10 GW), and has been the pioneer for commercial scale offshore wind. They have succeeded by making commercial offshore wind cost-competitive with fossil fuels.
We see that a number of Oil and Gas Majors are diversifying into renewables. In your view what is the role of traditional oil and gas companies in energy transition?
The oil and gas companies and their workforce have a tremendous amount to offer the offshore wind industry. Their experience in the marine environment, operating industrial assets and managing industrial scale engineering out at sea has been invaluable. There are roles throughout the supply chain for oil and gas companies, from developers and owners like Equinor and Shell, to engineering, installation, inspection, maintenance and in the future asset life extension. I also see floating wind as a major opportunity for oil and gas companies to diversify, with their experience in floating oil and gas platforms.
As discussed during the Conference there are several ways for oil and gas companies to reduce their carbon footprint, including investment in renewables. More than 25% of our premium in the Gard Energy portfolio, is connected with offshore wind which evidences our mission statement; “Together we enable sustainable maritime development”. Are renewables generally viewed these days as a positive business opportunity?
Absolutely- renewables including offshore wind has shown itself to be a bankable, investor-friendly asset class. With the growth of technologies like energy storage and hydrogen the whole energy system is undergoing a massive revolution. And renewables will be at the forefront. At RCG, we are solely focused on renewable energy and in that way, we are wholly endorsing the industry as an opportunity for growth and offshore wind as a sector of the future.
RCG was delighted to participate in this year’s Lillehammer Energy Claims Conference.
This article first appeared on Gard’s website, 11 March 2020 (Link: ↑) and is reproduced with permission.
For more than 100 years, Gard has been insuring the global maritime industries for their whole range of risks. Its focus is entirely on the maritime industries. Today, it is the largest P&I Club and the second largest marine insurer in the world – employing 480 people in 13 global offices. Assuranceforeningen Gard was founded in 1907 in Arendal and was driven by owners of sailing ships’ reluctance to subsidise the liabilities arising from steam operations. In 2003, Gard Marine & Energy was formed to extend the products offered by the group.