Last year construction began on the world’s first 1GW+ offshore wind farm in the North Sea – Hornsea 1 – with the first blades turning this February. A major milestone in our sustainable energy transition, the next generation of offshore wind projects rival the capacity of traditional fossil-fuel plants. Concurrently, the past 12 months have seen shifts in focus across markets, specifications and finance.
As the US Offshore Wind conference approaches, Eoghan Quinn, Global Wind Lead for the newly branded Worley, reflects on the ever-evolving environment of offshore wind.
Opex Under the Microscope
Developers are shifting their focus from capex to opex. Economies of scale have driven down capex to a point where initial costs are increasingly fixed, yet opex for larger projects increases in line with a project’s size. As more 1GW+ projects are developed, the opportunity to streamline opex and improve return on investment grows.
Developers are shifting their focus from capex to opex. Economies of scale have driven down capex to a point where initial costs are increasingly fixed, yet opex for larger projects increases in line with a project’s size. As more 1GW+ projects are developed, the opportunity to streamline opex and improve return on investment grows.
In tandem, we are actively using predictive maintenance techniques for asset performance management, which can lower life-cycle operational costs while maximising reliability without increasing risk.
Integration is Exciting
When bidding for work as part of a consortium, points are awarded for skills and experience, and this year the trending skill is the know-how to integrate offshore wind and green hydrogen into one project.
When bidding for work as part of a consortium, points are awarded for skills and experience, and this year the trending skill is the know-how to integrate offshore wind and green hydrogen into one project.
Twelve months ago, nobody was talking about green hydrogen but now it is a top topic for every developer I meet. And while we do not expect to see hydrogen replacing gas soon, electricity from offshore wind has the potential to allow green hydrogen to become commercially viable. As a result, we are observing clients seeking to dip their toes in the water now, in preparation for what is to come.
No One Size Fits All in Emerging Markets
The Asian and American markets are gaining momentum and are taking with them European experience to navigate through their challenges. However, their approaches could not be more different. While Asia is very energetic, the USA is more conscious of risk, with developers taking longer to embrace the opportunities fully.
The Asian and American markets are gaining momentum and are taking with them European experience to navigate through their challenges. However, their approaches could not be more different. While Asia is very energetic, the USA is more conscious of risk, with developers taking longer to embrace the opportunities fully.
Asia is leaning on its existing oil and gas supply chain to move quickly. The USA’s offshore wind supply chain, having only delivered the Block Island project, is still embryonic and is hampered by the Jones Act, which requires goods being transported by boat between two American points to do so on American vessels.
Despite these challenges, the USA’s supply chain has synergies to build on. As an example, Ørsted recently awarded Worley the design and engineering for two offshore wind topsides substations for its Revolution Wind project in Rhode Island. The project will draw on Worley’s experience in digital, new energy and offshore hydrocarbons.
Goodbye to Subsidies
Project costs have reduced to a point where, in certain circumstances, projects are being planned without subsidy. In part, this is an effort by developers to compete against each other by offering projects that require no government finance. Integrating different technologies, like green hydrogen, is also becoming a key differentiator.
Project costs have reduced to a point where, in certain circumstances, projects are being planned without subsidy. In part, this is an effort by developers to compete against each other by offering projects that require no government finance. Integrating different technologies, like green hydrogen, is also becoming a key differentiator.
In a similar vein, there is an influx of household energy names boosting investment in the sector. Pioneered by the likes of Ørsted and Equinor, these well-established market players now see offshore wind as a commercially viable way to move into new energy.
Strategic Data
We are increasingly reaping the benefits of using historic data to inform the way we develop and operate projects. It is becoming strategic in its role. Benefits abound – from its ability to optimise the supply chain to informing how to extend asset life safely. Everything going forward will be digitally centric and what will be important is to remain aware of what offers true value in a world of ever-increasing options.
NB. All opinions are the author’s own.
