4C is now TGS

We are excited to announce a significant milestone in 4C Offshore's journey. Our integration into the TGS family marks the beginning of a new era in offshore wind market intelligence.

Learn what this means for you!

Floating Wind: Changing Gear

By: Tom Russell 04/07/2019 4C Offshore

General

4C Offshore has released a special feature report titled Floating Wind: Changing Gear. This comprehensive report provides a detailed analysis of the global floating wind market, an outlook of growth to 2030 and an in-depth review of the various floating designs and their current development plans. Since 4C’s last deep dive into floating wind in 2017, the 2030 outlook has increased markedly from 3GW+ to between ~7-13GW. In the near term, 2021 will be a milestone year for floating wind, seeing a cumulative installed capacity of more than 250MW.

When 66% of the earth’s surface is occupied by waters over 200m deep, and 2.4 billion people (40% of the population) live within 100km of the shoreline, it is easy to understand why floating offshore wind is credited as having the potential to deliver the ‘civilisation-scale power’ needed in a post fossil-fuel world.

Coastal administrations globally are responding to the attractively low prices of offshore wind by scaling up their own ambitions for deployment. Offshore wind is recognised as a viable, low cost opportunity to both accelerate the decarbonisation agenda and capture economic value by bringing supply chains to the region.

In effect, this has brought the future forward. Countries with waters beyond the reach of fixed foundations can begin to explore the potential of floating on the expectation of cost reductions to follow. In several jurisdictions, the shallower, cheapest development sites have already been allocated or are in short supply (e.g. Scotland, France). Furthermore, cumulative environmental impacts, notably avian, also prevent high concentrations of wind parks at nearshore locations, driving development into deeper waters.

"We have a heavy steel bicycle but we need a carbon road bike" - X1 Wind

Informed observers and participants are expecting floating costs to converge with fixed in the next 10 years or so. Economies of scale, notably in manufacturing, are cited as the key to unlocking cost savings for floaters, alongside strong wind speeds. A doubling of project size, from e.g. 250MW to 500MW, will bring the costs down 15-20% according to Engie.

But is scale enough? For now, it probably is. Current floating designs are significantly heavier, and can be more complex than fixed foundations, especially monopiles. Two approaches to bringing structural costs down through scale include far-east fabrication and modular construction from simple steel tubulars allowing for rapidly increased production rates. However, from an engineering perspective the current design paradigm which is wedded on ‘upwind, 3-bladed onshore turbine variants’ mounted on ‘oil and gas’ foundations may be the biggest barrier to long-term success.

A single optimised structure of integrated design will be lighter, subject to less loads, and logic follows, significantly cheaper. Alternative designs include downwind weather-vanning turbines and pyramids instead of towers. Unfortunately, offshore wind insurance companies, banks and investors are not fans of innovation. However, if the investments in disruptive floating turbine technology can be found to bring them competitively to market, then perhaps floating can begin to compete more widely with fixed foundations, and not just under specific environmental, technical or economic conditions. The incumbents disagree; they are more sceptical of innovative designs and see the CAPEX savings as less critical for LCOE reductions, and the costs of switching as too high.

A gear change is underway. The most advanced concept, Hywind has performed impressively in Scotland and Equinor are now ready to build commercial scale parks. The WindFloat concept is not far behind. However, the demand side is slower to respond; France is the only government committed to commercial scale floating parks. Despite the loneliness, and concerns that it was unwise to be the industry’s sole backer, in June France went a step further and escalated its commitments thanks to savings at the low cost (€44/MWh) Dunkerque fixed-bottom tender. More is needed to maintain momentum.

Floating Wind: 2030 Outlook

This section gives an overview of the current installed floating capacity, the capacity under construction or post-FID, and provides a forecast to 2030.

2.1 Current Market Outlook (2019-2022)

By end-2019 (Figure 1; Figure 4) the UK will lead the floating market with 32MW installed, followed by Portugal (25MW), Japan (19MW), Norway (2.3MW) and France (2MW). A three-fold increase is anticipated for floating wind by 2021 (from ~80MW to 276MW) when projects in France, Japan, Spain, US and UK enter operations. More specifically, 2021 will see France leading, with nearly 100MW installed, closely followed by the UK with ~80MW. Also in 2021, Japan reaches 41MW, Spain enters with up to three full-scale demos and China’s Shanghai Electric will commission a single floating Siemens 4MW turbine.

Although the UK takes an early lead, current plans do not include a route to market for new floating wind; support ceased in 2018 with termination of the ROC scheme.

Norway

Cleaning up offshore and preparing to export

With abundant cheap hydropower (96% of electricity production) and adequate onshore space for turbines, there is no obvious Norwegian case for deploying offshore wind. Nonetheless, the industry has ambitions for 3GW of offshore wind by 2030 with the majority being floating. The business case includes cutting CO2 emissions in the offshore oil and gas sector, and stimulating a $5 billion (~€4.4 billion) export opportunity into a rapidly expanding global floating wind market.

Whilst emissions in Norway are declining, those in its oil and gas sector have ballooned 250% since 1990, and now contribute 28% towards the country’s total. With the low hanging fruit taken, fulfilling Norway’s climate goals now requires the petroleum industry to cut its CO2 emissions by 15m t/yr.

Following two investigations into 15 potential sites for offshore wind projects off Norway, the Ministry of Petroleum and Energy announced in Q3 2018 that ‘one or two areas’ will be opened for development, and that they are likely to be motivated by decarbonisation of electricity generation on existing oil and gas platforms. The Minister of Petroleum and Energy laid out the position of industry and government: ‘… industry has called for a demonstration and pilot facility … enabling Norwegian technology and competence to develop in order to compete in a quickly evolving and growing global market. A part of our offshore wind strategy is to strengthen the supplier industry. I don’t expect to see a lot of offshore windmills in Norway. We have far more accessible and unexploited wind resources onshore, but it is important to develop the industry in a new segment that has great global potential.’

Electrical giant ABB and think-tank Zero are proposing a three-stage journey to 3 GW:

Developing offshore projects in Norway requires a concession from the Ministry and an EIA (as has been granted to the fixed-bottom Havsul project). The Offshore Energy Act 2010 provides exceptions to this requirement, which are likely to encompass power plants for offshore O&G installations, but the legislation is ambiguous. Hence Tampen was regulated instead via the Petroleum Act.

Subsidies will be required to stimulate investment and develop the supply chain to be competitive, firstly in delivering power to replace gas-generation on offshore platforms and then to compete with onshore electricity. At present there is no dedicated subsidy specific to offshore wind, fixed or floating, while the existing certificate scheme for all wind expires in 2021 and is unlikely to be replaced. Innovative renewable energy projects are eligible for support through Enova’s subsidy mechanism, but the scheme is not intended, nor designed, to deliver energy policy, e.g. via auctions for stable revenue streams. According to parliamentary debate, Hywind Tampen is seeking up to €300m in subsidies from Enova for the up to €510m project (CAPEX). The NOx fund - an industry backed pot for NOx emissions reduction - will also provide up to €57m in CAPEX support.

Earlier this month, the Ministry of Petroleum and Energy announced that an opening proposal for a 0,5-1,5GW Utsira Nord will be sent in Summer 2019, potentially including an opening for a 1-2GW Sørlige Nordsjø II, two, out of the four ‘Category A’, areas identified as feasible for offshore wind, with good technical-economic conditions and opportunities for network connection by 2025. As this document went to press the Ministry also requested opinion on a third ‘Category A’ site, Sandskallen-Sørøya Nord, in the arctic circle whose 27-70m water depths and proximity to shore make it suitable for both fixed and floating foundations, and pilot sites. The government has confirmed that there will be no new subsidies for these areas despite ministerial support.

An opposition (Labour) led proposal supportive of developing offshore wind is currently being evaluated by the Energy and Environment Committee. The group is calling for:

several offshore wind areas to be opened to support floating wind supply chain development;
initiation of North Sea cooperation with a view to exports to Europe;
ambitions to develop 3 GW by 2030;
a goal of 10% market share of the global turnover in the offshore wind market;
a goal to reduce O&G emissions through offshore wind; and
a turnover of kr50 billion (€5.17 billion) by 2030.

It also suggests that giving Statnett responsibility for developing and operating a future offshore power grid in the North Sea will facilitate a Norwegian market for new maritime energy technology, including offshore wind power, with test centres and offshore energy parks.

In 2018, alongside Hywind Tampen, Equinor, and Aker BP announced plans to develop a floating project for the 100% electrification of the upcoming North of Alvheim Krafla Askja (NOAKA) project. So far, conflicts have delayed progress, but an expected FID end-2019/early-2020 will shed light on NOAKA’s future floating project.

This is just a short excerpt from 4C's new, concise 58-page report Floating Wind: Changing Gear which provides a detailed analysis of the global floating wind market, an outlook of growth to 2030 and an in-depth review of the various floating designs and their current development plans.

The full report is available to subscribers here. Non-subscribers can obtain details and samples by inquiring here or via sales@4coffshore.net.

The full report contains details of 14 different country markets for floating wind and 27 different floating designs, across 58 pages and 47 figures. Includes easily referable, at-a-glance project pipelines and tech-summaries.

Premium

4C Offshore Premium, our most popular subscription, gives you full access to use the 4C Offshore WebApp which includes exclusive offshore wind, transmission and vessel reports, news and downloads.

Request a 30 minute Demo

Floating Wind: Changing Gear

Back to News

Trending News!