Changing the Scale of Offshore Wind: Examining Mega-Projects in the United Kingdom SESSION: Wind Energy and the current international situation, Madrid, June 12, 2012
More than 50% of mega-projects are in the UK, accounting for over 70% of mega project capacity Projects Total Capacity 13 37.1 GW UK 73% 5 5.4 GW Norway 11% 3 3.2 GW Germany 6% 1 1.6 GW Canada 1 1.5 GW Sweden 1 1.1 GW Ireland 1 1.0 GW China Mega-project = wind farm of >800 MW Source: Accenture analysis and RenewableUK. 2
Distance from shore (km) UK mega-projects are an order of magnitude larger than anything currently in operation Existing and planned offshore wind farms in the UK 150 100 Bubble size: number of turbines Mega-projects 50 0 100 1000 10000 Project Capacity (MW) Logarithmic scale Operational Planned Under construction Source: Accenture analysis and RenewableUK. 3
MW million / MW and the cost structure has to reduced by 30-50% 8.000 7.000 6.000 Forecast new capacity build (MW) Investment cost (m / MW) 5 4 5.000 4.000 3.000 3 2 2.000 1.000 1 0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 0 Source: Accenture calculations; Wind in our Sails: The coming of Europe s offshore wind energy industry, European Wind Energy Association, 2011 www.ewea.org 4
There are opportunities for cost reduction, better economics and focus across the value chain 5-7 years 4-5 years 1-2 years 1.5-2.5 years 20+ years 1-2 years Development Component manufacture Turbine manufacture Installation Operations/ maintenance Support services Decommissioning Development and Consenting 5-10% of CAPEX CAPEX - 70-80% OPEX 20-30% Large scope for technology and logistics improvements Components and Structure 20-30% of CAPEX Installation Turbine 30-50% of CAPEX 10-15% of CAPEX O&M (Vessel and equipment) 20-30% Decommissioning 0-5% Regulatory uncertainty Costly surveys Risk bias on developers Lack of risk sharing Insufficient capacity Constrained vessel supply and lack of bespoke vessels Inefficient logistics Bottlenecks in grid connectivity Heavy dependence on subsidies Reliability Low EOL value Recyclabilit y Multiple contracting Lack of standardisation Notes: Timing based on installation of a 100 turbine, 300 MW wind farm in 25-meter water depth. Cost percentages are rough averages of publicly available data Source: Accenture research and analysis 5
Focus areas for offshore wind Turbines, components and structure Vessels HSE Intermittency 6
UK megaprojects Better project economics via innovation in turbine design, components and supply chain Turbines with greater energy capture to allow for fewer turbines Products increasingly tailored to offshore marine environment that are easier to install and maintain Dong, Siemens Unit cost reduction- scale creates opportunity to change manufacturing processes Statoil Assembly close to shore and improved logistics Next generation sub structures, e.g. floating Source for images: Statoil, Dong, Siemens 7
UK megaprojects More vessels, including purpose built Cable Cable laying laying VSMC Carel Kramer for VSMC Access / egress Scaldis Heavy lift High competition for heavy lift, pipe cable laying, and transportation vessels Historically adapted from O&G Requirements more stringent, industry specific, eg. access to and egress from turbines 20 specialised vessels by 2013 SeaEnergy Purpose built- more expensive day rate but can significantly reduce overall costs Transport BBC Chartering 1.7billion investment in ships needed Sources for images: Sea Energy, VSMC, MPI, Scaldis, BBC Chartering 8
UK megaprojects Greater HSE risk, but a lot to leverage 18 GW by 2020 Dogger Bank (9.0 GW) SSE RWE Statoil SSE Statkraft Firth of Forth (3.5 GW) SSE Fluor 40+ years of O&G North Sea HSE experience, much transferable to offshore wind Oilfield service providers making offshore wind a priority High concentration of marine engineering expertise in North Sea hubs Emerging Centres of Excellence e.g. EOWDC North Sea cross industry collaboration and partnerships- eg. NORSTEC Source: AREG 9
Accenture/Robert Gordon University Survey: Supply Chain transferability from offshore Oil & Gas to Offshore Wind Respondent views on transferability Planning, Legislation & Regulation Consultancy Grid Interface Consulting Non Transferable Resource Analysis and Modelling Environmental Assesment and Modelling Partly Transferable Offshore Engineering Development Design Project Management Directly Transferable 0 50 100 Respondents % Survey and interviews with 36 Industry experts including Utility companies, Service companies, Government agencies and contractors. Source: Accenture research and analysis 10
UK megaprojects Natural gas to complement intermittency GE Flexefficiency 50 Natural gas - dominant back-up capacity in the UK Purpose built generators to complement offshore wind Source: GE Flexibility a design driver for new coal and natural gas plants Sophisticated grid integration (eg. super node, HVDC) But Need to reduce back-up requirements Source: RWE R&D in alternative storage technologies 11
Implications Meeting aggressive timelines while maintaining a good HSE record Focus on fixing the big things highlighted today Leverage the O&G marine engineering experience Risk sharing among the key stakeholders - turbine manufacturers, vessel suppliers, EPCs, and developers Reduce inefficiencies in basic processes that the industry should not be competing on, for example: Contracting process: industry standard templates and guidelines for scopes of work, safety requirements, etc that can be modified to avoid starting from scratch for every project IT infrastructure and reporting tools: changing requirements and structure from consent, FID, development and operations. Can a light, fit for purpose infrastructure, be shared across projects? 12
Thank You Melissa Stark, Clean Energy Lead melissa.stark@accenture.com Mauricio Bermudez-Neubauer, Offshore Wind Lead m.bermudez.neubauer@accenture.com 13
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