31st Mar 2022
Floating Wind – Why Delivery Requires A Balanced Mix of Ambition & Pragmatism
Steve Chisholm, Director of Operations and Innovation at Global Energy Group shares his thoughts on the the ambition and pragmatism needed to deliver floating wind.
The UK’s targets for offshore wind expansion are ambitious and exciting. Installed offshore wind capacity targets of 40GW by 2030 and up to 125GW by 2050 are a cornerstone of the country’s journey to a Net Zero carbon economy. If the UK is to achieve these goals and in so doing reach the stated objective of 60% UK content, then we must build out a manufacturing and logistics infrastructure at a national scale well beyond anything previously seen, even in the heady days leading up to peak oil.
The speed with which floating offshore wind has become a major element within future capacity plans has come as a surprise to many. It's only a few years since the consensus view at conferences was that our industry had much left to do to create a mature and competitive indigenous supply chain for fixed wind. Only then, they thought, with lessons learned, disruptive technologies proven and economies of scale delivered for fixed wind, could industry realistically hope to deliver floating wind at an acceptable price per MW/Hour.
Today, conference speakers talk openly and with conviction about floating wind deployments of over 100 foundations per project being delivered with the next 10 years. A sector still progressing demonstrator and early-stage projects is voicing ambitions to assemble floating foundation at a rate of 2 – 4 units a month.
The market potential is undeniable and one only needs to look at the recent ScotWind licensing round where 15GW of an allocated 25GW are based on floating wind developments. There is broad agreement that this and other initiatives such as INTOG and developments in the Celtic Sea will require the installation of between 1000 – 1500 units, making the need for port infrastructure development for floating wind increasingly urgent.
It is unlikely that 60% local content will become a mandated requirement so the infrastructure and manufacturing capability our industry develops must be competitive, viable and commercially sustainable in the long-term. Our UK ports sit at the very heart of this investment and are vital to the successful development of our industry supply chain and the UK’s delivery on energy policy.
This is the third toll of the bell for the UK supply chain in terms of wind energy development. Through the initial introduction of onshore wind right up to today’s major offshore wind developments, the UK supply chain has mainly lost out to overseas manufacturers offering lower costs. Developers have been heavily criticised for buying abroad but the reality is that it is a choice driven by necessity. A highly competitive CfD strike price and an absence of UK manufacturing capability has left little option but for developers and their main EPCI contractors to look overseas. Floating wind is thought by many as the “last chance saloon” for a long-term renaissance in UK manufacturing and few would disagree.
With one chance remaining and high stakes to play for our industry must proceed with care, mindful of the sensitivities which will determine our success or failure in maximising the opportunities that lie ahead.
Will be key to the mature and considered build out of infrastructure but needs a sea change in thinking. The current culture, generated by a highly competitive CfD process, has permeated down through the layers of supply chain. It is not conducive to the early and open collaborative discussions on resource sharing that are the hallmark of industries with greater maturity. The larger commercial floating wind projects will be too big for one port to accommodate and will need a group of ports to work together to provide the quayside space and laydown areas needed for manufacture, assembly and load out. Much emphasis is placed on the structural foundations and WTG’s (wind turbine generators) but the reality is that the mooring systems will also require a lot of space for marshalling and logistics.
A culture of collaboration is needed that starts with developers at the earliest stages of Concept and FEED and then cascades out through the supply chain. Ports cannot be all things to all people and must pick their niche as best fits their location, natural attributes and development potential.
Completion & Diversity
Not all ports will be created equal and nor should they be, for there needs to be diversity in the supply chain to ensure investment creates the maximum breadth of capability. Whilst we need capacity and capability, we should take care that we create a healthy level of competitive tension but not at the risk of oversupply. No-one wants or can afford to see new facilities lying idle a few years from now through lack of contracts because too many businesses chased after the same market segment. The line between a buoyant market segment and one which is oversupplied and engaged in a commoditised race to the bottom on pricing is a fine one and to be avoided at all cost.
Through the balanced approach described above it is expected that we will see a range of port offerings. Some will achieve Freeport status or equivalent and be the nucleus of Superhubs accommodating manufacture and assembly with a cluster of related businesses co-located on site. Others in strategic locations will develop value propositions best suited to their location and attributes focusing on foundation or WTG assembly and some level of localised manufacturing. O&M capability will likely be developed amongst smaller ports without the deeper water depths and extensive land mass essential for manufacture and assembly. If this balance can be achieved then the message is clear, there is enough work out there for everyone.
When it comes to manufacturing and assembly UK businesses will struggle to compete with areas of the world enjoying lower labour costs and more relaxed working regulations. Where the UK can and must compete is through innovation. By developing new processes and techniques and being first to market we can reduce the CAPEX and OPEX costs of floating offshore wind and seek to drive down cost on a year-on-year basis. Innovation must not be solely restricted to metalworking and allied trades and we must encourage new thinking in the areas of project controls, documentation and production planning. In this way we can develop healthy businesses with long term sustainability that create and sustain well paid jobs.
Industry should not expect any subsidies or premiums for UK content for such a path is a slippery slope towards unsustainability. We must compete on an open market because then we can then look beyond UK projects to the exploitation of export opportunities around the world, akin to those already enjoyed through the exploitation of technical excellence in oil and gas.
Equally we must accept that to make the project numbers work financially, there is always likely to be a proportion of components for UK projects which will be sourced overseas. Even these will create valuable employment in assembly and ongoing operations and maintenance.
Pace of Development
Cannot be unrealistically ambitious. We are barely beyond the point of early-stage projects such as Kincardine and Hywind, both highly successful and a credit to the innovators who delivered them, but already we are talking about floating offshore wind projects of 3GW being built by the end of the decade. There must be a suitable level of pragmatism to balance out the level of ambition that is naturally produced by the scale of the opportunity. Industry will require to take a staged approach. Ports need time to clear and prepare further land and to build additional quayside. The factories and assembly businesses that base themselves in port will need time to be constructed and to ramp up to peak efficiency, sometimes as much as three years from opening. Perhaps it time to talk less about being there and more about the development of the plans and strategies that will get us there.
There will come a point where industry considers that getting industrial manufacturing and assembly to the required scale is being held back by the constant emergence of competing foundation designs and the ongoing drive towards always bigger and better turbines.
The fact is that there are just too many foundation designs, from the highly credible and cost effective to the not so. There quickly needs to be a process of technical and commercially driven natural selection that sees choice narrowed down to a limited number of options so that optimised procedures and processes for serial production can be developed, adopted and then continuously improved through application.
The desire for increased power generation per turbine is well understood but given the interaction of forces between WTG and foundation such development brings an ongoing process of structural analysis and validation, all of which prevents industry from locking on to a particular solution and doubling down on serial delivery. Would it get more GW installed faster if industry adopted a 15MW design and placed a greater number of them as standardised units rather than chasing for new 18, 20 and greater MW devices? For WTG OEM’s and foundation designers the desire to be market leading is understandable but maybe now is the time to pick winners and consolidate around preferred solutions.
In summary, let’s develop a ports infrastructure that has the optimum blend of competitive choice and diversity of goods and services to balance supply and demand whilst ensuring any one vertical doesn’t become too crowded for long term sustainability. Thereafter, if as an industry we learn to collaborate, position ourselves and stay at the forefront of innovation in delivery whilst standardising around a limited choice of best-in-class technical solutions, we should be well placed to reap a full harvest from the unique opportunity presented to us by floating offshore wind.
Written by: Steve Chisholm, Director of Operations and Innovation, Global Energy Group.
The opinions shared in this article are the Author’s own and do not necessarily reflect the views and opinions of the Global Energy Group business.