Floating wind power's European depth charge

Technologies field-proven, first major projects underway, banks onboard: the sector is entering a golden era — if it can get its costs down, writes Darius Snieckus

The floating wind industry finds itself facing a moment of reckoning. Key technologies have been proven at industrial-scale, first commercial developments formally announced, international investment houses have anointed floating wind as “bankable” — and yet forecasts suggest the sector could grow from the 58MW currently turning offshore to anything from 3GW to almost 20GW by 2030. Floating wind, in one analyst’s understatement, is a market “in flux”.

Sailing into this are a flotilla of pilot projects, one being built off Portugal, another off the UK and four in development off France. These pre-commercial demonstrators have the task of proving that floating wind is on a trajectory to bring its prohibitively high levelised cost of energy (LCOE) — the French arrays are being underwritten by Paris at €240 ($267) per MWh — down to a price on par with conventional bottom-fixed projects, already now under €60/MWh.

Industry consensus is that these projects — the 25MW WindFloat Atlantic, now being moored in the Portuguese Atlantic, France’s 25MW Groix et Belle Ile, Leucate, Eolmed and Provence Grand Large arrays, and the biggest of them all, the 50MW Kincardine off Scotland — will be pivotal to this ambition.

Sebastian Bringsværd, head of floating wind at Norwegian energy giant Equinor — which brought the world’s first array, the 30MW Hywind Scotland, on line in the UK North Sea in 2017 and is building an 88MW floating project to part power the Tampen oil complex in the Norwegian Sea — puts his money on floating wind being the “preferred techno-economic solution in several markets” by 2030.

“These developments indicate a rapidly maturing floating wind industry and should serve to demonstrate bankability and the outstanding performance of floating wind technologies to the world,” said Bringsvaerd, who developed Equinor’s roadmap to bring the cost of floating wind to sub-€60 by 2030.

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“This is a critical period on the pathway to a floating wind industry where scaled, low-cost, high-performing assets are the standard.”

Grzegorz Gorski, director of offshore wind at France’s Engie — which holds a 25% stake in WFA and recently formed a joint venture with Portgual’s EDPR with the aspiration of building gigawatt-scale projects around the globe from 2021 — sees floating wind’s financial viability already largely established thanks to the performance of the prototypes and the Hywind Scotland array.

“‘Bankability’, already today, we are quite confident [about],” he says. “These [arrays] all have classic project finance, though compared to bottom-fixed, they may have a bit higher margins for the new technology and vendors might be asking for more engagement with [the developers], but not much.

“I am perhaps more optimistic than Equinor and think [cost-parity with conventional offshore wind] will happen somewhere between 2025 and 2030.

“The condition for this is [the sector having] enough volume that we can industrialise the technology — so that the supply chain can be built and manufacturing can be done at scale… with proper industrial ‘Takt’ [per-unit throughput]. A floater per week, not a floater every six months, [and] we can reach gigawatt-scale [annual deployment].”

Wood Mackenzie senior offshore wind analyst Søren Lassen sees the first arrays as “more evolutionary than revolutionary in the greater scheme of things”, highlighting “these [first arrays] are all an important part of the commercialisation journey that adds important learnings and ties across the nascent value chain.

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“Moreover,” he adds, “they will also help us understand the bottlenecks and get a better understanding of the risk.”

No company has lived more on the razor’s edge of risk in developing floating wind technology than pioneering US-headquartered Principle Power, which installed a prototype of its triangular semisubmersible design off Portugal in 2011, and has refined it for WFA, Kincardine and one of the four French arrays, among other projects in its global pipeline.

“We are already seeing huge learnings [on top of those acquired since WF1], huge advances in building WFA, not least from the financial institutions, in relieving a lot of the risk people attribute to new technology. Seeing a development project like this in operation makes a big difference to perceptions about financability,” says Joao Metelo, chief executive of Principle Power.

“There are large amounts of development capital going into floating wind [projects in the pipeline] and that is a result of pilots like WFA. Investors are growing more confident seeing units going into the water. That is the biggest factor: non-prototype floating wind farms being physically built.”

Continental Europe’s first array, WFA is being constructed by the EDPR-led WindPlus consortium in deep waters off the northwest coast of Portugal in the Atlantic using a trio of platforms topped with 8.3MW MHI Vestas V164 turbines. Switch-on is expected later this year, with the plant set to supply 60,000 homes.

Compared to the gigawatt-plus bottom-fixed wind farms heading for the waters off the UK, the US and Asia, the European floating arrays may seem puny, but they are now using the same size turbines, with MHI Vestas 9.5MW machines in the frame for Kincardine.

“These V164s are the latest and greatest turbines being deployed on the market today — the prototypes used 2MW machines in many cases — so for the first time [floating units] are on par with the rest of the offshore wind industry,” says Metelo. “That makes a big different to our advancing our sector, how the economics of floating wind is perceived.”

"I believe floating will be the future. The pace might just be a little bit slower than some hoped"
MHI Vestas head of floating Albert Winnemuller

Albert Winnemuller, head of floating at MHI Vestas, sees a singularly “important” role for the OEMs in helping to usher floating wind on its path to utility-scale deployment, with its experience in designing and mass producing the bigger turbines that will help to reduce floating wind’s LCOE.

“If you plot the strike price of conventional offshore wind over recent years you can see the decrease of LCOE — which also has to happen on floating [projects] — and [it] is widely recognised [that] this was achieved in some large part because of the scale-up of the turbines used,” he says.

Winnemuller spotlights the marriage of “the market development side with the technology development side” as key to floating wind making the lead from array to industrial-scale projects.

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“When you look at the typical way that turbines are being produced [for conventional offshore wind projects] there is a lot of emphasis placed on avoiding bottlenecks in the assembly process to speed up the production line — the ‘Takt’ time,” he says. “For a real production line of floaters, we will need to give close consideration to what is done ‘offline’ and what quayside [is used in order] to optimise the way manufacturing is done.

“There has to a major effort to get from building a few floating foundations to something large-scale. That part of the industrialisation is definitely needed and hopefully something we as OEMs can help the industry solve.”

Rethink Technology Research managing director Peter White takes the view that the European arrays’ ability to “change the game” hinge on two factors: “the length of time a country has seriously considered floating wind, so that it has experience of claims being trustworthy, and the length of time that a particular platform has performed in trials”.

“There are three or four floating platforms that are now well established and can be shown to ‘do the job’, [and] there are many others which are not yet proven — some never will be — while others just need more time.

“As we get through these early years, the time to market for a new [offshore] territory can be brought down considerably, compared to these pioneering regions… who will have pick up the pace to reach their [floating wind capacity] targets.”

Bringsvaerd says though Equinor expects 12-15GW afloat by 2030, he feels the coming build-out will ramp up to add “significant additional capacity only from 2022 onwards, [bringing] with it real cost reduction”.

Wood Mackenzie’s calculus suggests Europe will have around 340MW of floating wind grid-connected within the next two years – just shy of industry advocacy body WindEurope’s 2018 forecast of 350MW. But Lassen cautions that this would still be of a size similar to “a small commercial offshore wind project by today's standards” and could be eclipsed by a single utility-scale project in another market, such as Asia, repositioning the balance in the emerging global supply chain.

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“We expect 90% of global capacity to be in Europe [in 2022],” he says. “The UK went from 0MW of floating wind capacity by 2016, to market leaders in 2017 accounting for 58% of the global floating wind capacity when the first multi-turbine pilot project [30MW Hywind] was grid-connected. Similarly, Europe’s current leading position is fragile and could easily be overtaken with a commercial project [in Asia or the US]”

This reality resonated in a recent report by industry associations RenewableUK and Scottish Renewables, which makes the case for a “specific pot of funding” for technologies like floating wind within the country’s Contract for Difference auction system. This could underpin the UK market growing into a 2GW play by 2030 by “doing much more at scale, securing further cost reduction and much-needed new capacity” in the process.

The long-gestating 50MW Kincardine project, being developed by Floatation Energy off Aberdeen, Scotland, saw a “scout” turbine installed at its offshore site last year, with plans to bring the full six-turbine array on-line in 2020/21.

The array is foreseen redoubling the case to the British government made by Hywind Scotland, which has been flowing power to the grid for two years from turbines showing a capacity factor as high as 65% — where most bottom-fixed projects come in at around 50%.

And there is also the wider economic development incentive of reinvigorating the country’s network of mothballed offshore oil & gas fabrication yards, ports and harbours, with the report figuring some 17,000 UK jobs could be generated by 2050 along with £33.6bn in overall supply chain activity.

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Lassen worries that the UK, despite being the market leader in floating wind, is hamstrung by a “Catch-22” — operational projects are needed to cut the cost of the technology, “but cost-out [ie, cost reduction] is needed for governments to allocate capacity to floating wind, which spirals into delays”.

“The [UK government among others] is still to offer a route to market for commercial floating wind. This Catch-22 needs to be broken,” he says.

RenewableUK and Scottish Renewables are calling on the UK authorities to make deep water sites available “all around the UK” for floating wind projects to answer this problem, and for government and industry to co-invest in port and supply chain infrastructure as part of the UK’s Industrial Strategy, with the authors seeing the Scotland’s upcoming ScotWind offshore leasing round as a ready-made opportunity for the development of floating wind in Scottish waters.

A vital piece in the puzzle, many in the industry argue, will be the arrival of deep-pocketed international oil companies. The recent investments of Shell — which nailed its colours to the mast this month by buying French floating wind developer Eolfi, adding to stakes in Stiesdal Offshore Techologies’ TetraSpar concept and the twin-turbine Hexicon platform — could be a sign of things to come.

Total and BP, which have both openly expressed a desire to move into conventional bottom-fixed offshore wind off the UK but have long pedigrees in floating oil & gas developments could follow close behind.

Vincent Fromont, chief executive of Eolfi, which is developing the Groix et Belle Île array, underlines that the pilot would be a flagship project for Shell’s determination to create “a number one with a global footprint for floating [wind power]”.

“There are pioneers in floating, of course, but there is no true market leader. In [Shell acquiring Eolfi] we see as a tipping point,” he says. “The first [floating wind arrays] are building blocks to a strategy which we feel is really going to disrupt the [offshore energy market].”

Lassen adds: “We are seeing more of the experienced developers [including oil & gas players] looking seriously at floating wind — this is reflected in the more than 20 alliances that have been made in 2018 and the first half of 2019.”

Given international oil companies’ financial muscle and appetite for billion-dollar energy projects, it is hoped that their entry into the market will step-up floating wind’s cost-reduction efforts by their focus on “scale, scale, scale”.

“This is where the biggest improvements [in LCOE] will come — from scale,” says Gorski.

Just how quickly floating wind’s LCOE will come down, however, is still being hotly debated.

White expects “acceleration points” when countries move to the next level of scale in 2022, 2024 and 2027, with the industry “getting to $44/MWh by 2030, with high volume and rapid scaling accelerating its fall post-2027”.

But Lassen isn’t so sure. “We do not foresee floating wind ‘outcompeting’ bottom-fixed. Although we do foresee significant cost-out for floating wind, we also expect further cost-out for bottom-fixed that will be challenging to catch for floating wind. Having said that, it is important to stress that this is highly project-specific.”

Winnermuller takes a more philosophical stance: “I believe floating will be the future, and an important element in the offshore mix. The pace might just be a little bit slower than some of us hoped.”

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