RCG prepares for “huge potential” of floating wind

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 collaboration with European Marine Energy Centre and Innosea, RCG explored opportunities for the Scottish Government for the floating offshore wind and hydrogen supply chains in Scotland and France.
• The Global Offshore Wind Health and Safety Organisation has tasked RCG and its partner companies Tadek and EMEC, in supporting G+ in assessing the health and safety risks associated with future global commercial floating developments.

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.

Advantage-OW is RCG’s proprietary framework for assessing new technologies and innovation in offshore wind and helps clients quickly and effectively understand the risks and opportunities of a given technology. Leveraging RCG’s cross-cutting expertise in the sector, clients receive world-class, objective advice to inform decision making.

The offshore wind industry’s continued downward cost curve is one of the great success stories in worldwide renewable energy development. Its emergence as a reliable and cost-efficient energy generation technology has led to uptake in new markets as well as a change in approach from those early adopter markets to help keep a downward pressure on costs. The general trend with governments worldwide is to turn to auction mechanisms as a way to either portion up the seabed, provide access to offtake agreements or both. In light of this new world and increased competition, offshore wind developers need to find the edge to submit a winning bid and technology and innovation is coming into its own as a way of securing this edge.

This is a trend of recent auctions, confirmed with Crosswind’s successful award of Hollandse Kust Noord in the Netherlands, where innovation will be front and centre in the development of a commercial offshore wind farm. Cost isn’t the only area where innovation helps developers win, but other levers can be pulled depending on the criteria of different auctions. For example, innovation can help with local content requirements which are becoming increasingly common, or it can help prove to regulators a commitment to the market and a potential trajectory for the industry in its region.

Technology Readiness Levels (TRL) are recognised as a planning tool for innovation management (see RCG’s Innovate-to-Market workflow [↑] ).  Technology Readiness Levels were originally developed by NASA, later used by US-DOD, US-DOE, ESA; now adopted by the European Union for technology funding. However, adaptation is needed to ensure proper decision-making processes when using any Technology Readiness Level scale. The difficulty is turning this approach into a practical tool in a competitive market.

RCG saw an opportunity to help the industry better understand and assess innovation and technology and created the Advantage-OW framework to assess the potential of a given technology:

• Technology Readiness Level (TRL) – Assessment of the technology and commercial readiness level for the required application.
• Technical – Technical assessment including engineering and logistical improvements or challenges.
• Environmental – How the environment might be impacted by the innovation.
• Supply Chain – Reviewing the supply chain required to deliver the technology.
• Codes – Standards, regulations, and legal implications.
• Health, Safety, Environment (HSE) – Potential HSE improvements or additional HSE risks associated with this new technology.
• Organisation – Research into the organisation behind the technology and their track record.
• Outlook – Future trends in different markets that affect the potential for deployment of this technology.
• Levelised cost of energy (LCoE) – The confidence in LCoE predictions.

RCG provides the client with a suite of deliverables for an in-depth understanding as well as summaries and graphics to help communicate the outcomes to their business.

The framework not only encourages offshore wind developers to start thinking about innovation more systematically at the outset of project development, but it also provides a repeatable way of assessing innovation that can be used across a portfolio of projects and helps communicate often technically complex matters, distilling them into an informative but understandable format to help make decisions. In equal measure, the framework can be leveraged by investors to scope out potential investment opportunities quickly and effectively or can be utilised by public sector bodies looking to maximise return on rate-payers’ money by investing in the most promising innovations to achieve their objectives.

The Advantage-OW framework can be applied not only by offshore wind developers in assessing technologies for projects or portfolios, but also prospective technology investors to scope out future investments, and public sector bodies requiring a robust and transparent framework to assess funding opportunities in offshore wind.

Download the full white paper.

Developers need to see new ways to innovate for the next phase of the offshore wind build-out.

The Nobel Prize winning, father of behavioural economics Daniel Kahneman describes in his bestselling book, “Thinking Fast, and Slow”, how humans are inherently poor at responding to risk. Our tendency for loss aversion – that, is minimising the chance of any loss, even at the expense of upside – leads to decision making that hard, statistical evidence proves is fundamentally flawed. In particular, humans are very bad at processing very low probability events, which leads to either extreme overreaction or a complete disregard of the risk. One need only look at how many humans react to air travel – the risks of which are extremely low, yet many of us seek to completely avoid even facing the small probability of an accident.

An understanding of risk is also fundamental in decision making and the approach to innovation, including in the offshore wind industry, where costs dropped quickly and have opened up a new frontier for offshore wind as a mainstream electricity source. The enormous amount of innovation in the formative years of the industry was particularly targeted at taking large chunks out of the levelised cost of energy profile by focusing on engineering and technology that hits the most sensitive contributors – such as availability (by improving reliability of turbines and advancing operations and maintenance strategies), and capacity factor (by designing and installing larger turbines).

As the industry moves forward however, the lower hanging fruit has been harvested and attention turns to more incremental innovation. Furthermore, innovation is no longer about proving the viability of an industry, but increasingly about competing against other developers for seabed, grid allocation or a combination of the two. Therefore, the risk profile of the technologies and innovation that is now being evaluated is completely different.

For example, the use of suction bucket jackets as a foundation concept required significant de-risking (a demonstrator at Borkum Riffgrund in 2015) before it could be relied up on as a commercial solution (Borkum Riffgrund 2 in 2018). Meanwhile the innovation in current and planned projects is often more about stretching existing envelopes, such as designing larger foundations for deeper waters – which has a lower risk profile than a completely new foundation concept. In the early years of offshore wind, the ratio between capital invested in an innovation and its possible returns was unquestionably worth taking the risk. Now, whilst the capital investments may even be lower than before, the ratio to potential return is much lower; an incremental innovation (such as optimising an existing foundation for deeper water) may be all that is needed for a developer to win an auction against its competitors, but the reward for winning is much smaller, with the heady days of fixed feed-in-tariffs or subsidy no longer around in most markets.

In some of the most recent auctions in offshore wind, innovation has been front and centre of winning bids, and it is clear that developers have to do something different to get an edge against the competition. The amount of innovation crammed into Crosswind’s recent winning bid for Hollandse Kust Noord in the Netherlands shows exactly the lengths that some developers believe they have to go to in order to outpace their rivals – the inclusion of floating solar, green hydrogen, wake steering and battery storage is perhaps the most radical stacking of innovation the industry has seen for some time. However, this sort of trump card can only work a small number of times, and as auctions continue and the global offshore wind industry settles into a rhythm, incremental innovation will likely be a recurring reason for winning bids. Such incremental innovation does not always have to be cost-focused either.

Equinor’s commitment to use novel gravity base foundations for its Empire Wind 1 offshore wind farm in New York, US, is a great example of incremental supply chain innovation. The size and number of gravity base foundations proposed has yet to be seen in the industry but is an innovative way to increase local content and score points against a key scoring criterion in NYSERDA’s procurements. Initially this may seem a high-risk strategy – a completely new foundation supporting some of the largest turbines ever to be deployed to build the first offshore wind farm in the State of New York. However, a more in-depth look at the risks and it soon becomes clear that this sort of innovation is relatively low-risk, as long as it is managed appropriately (and not ignored and not overcompensated for as humans may be inclined to do).

Equinor’s foundations are not radical, and its track record in deploying concrete mega-structures offshore will certainly have helped comfort it that the actual risk level is lower than perceived and provided it with an awareness of the mitigation strategies required to manage this risk. With a clear understanding of the risks involved, and commensurate mitigation strategies, Equinor will be able to innovate without having to take on extreme levels of risk nor produce too many novel trump cards (i.e higher risk, less mature innovation), that it may otherwise want to save for a different solicitation.

As much as we don’t like to believe it, the vast majority of business decisions, including strategies for participation in auctions, are made by humans. Humans that are hard-wired not to give appropriate responses to risks. So, whilst it is clear that innovation is an absolute necessity to survive in the modern world of offshore wind, developers must now learn how to obtain an appropriate and balanced understanding of risk that removes human instinct to avoid or over-compensate. This could be the key for many of the developers who otherwise can’t compete with the level of capital and level of necessity of investment that some of the more traditional energy giants have – and with the globalisation of offshore wind, it is critical that new, local players understand this to give them a fighting chance of succeeding.

Michael Stephenson is associate director at The Renewables Consulting Group, a renewable energy advisory firm headquartered in London.