A 700-floater challenge facing Europe’s offshore wind industry
Victor Liu, Ph.D.
Part 1 of a three-part series on floating wind
Floating wind is on the verge of exponential growth in Europe. Without constraints on water depth, large floating windfarms can be built in heavy-wind areas far away from coastlines, offering seemingly unlimited growth potentials.
To explore the enormous opportunities, a series of pre-commercial demonstrations funded by public-private collaboration in the likes of UK, Portugal, France and Norway are on the way to validate performance, optimise solutions and reduce costs.
The 700-floater challenge
And last year, the EU announced a target for 7GW of floating wind to be installed by 2030. And the UK also set a goal for 1GW of floating wind for the same period. So, in total 8GW of floating capacity is expected to be online within the next 10 years. This translates into a giant fleet of roughly 700 floaters, on the assumption of 10-12MW of capacity per turbine.
Moreover, orders for the majority of these floaters will likely to be clustered towards the end of the 10-year period. This is because mass rollout of utility-scale floating windfarms is not expected before 2025, given the fact that the industry will still need 3-4 years to run through a dozen of demonstrations to prove new concepts such as Naval Engergies' Sea Red, SBM's TLP platform, Saipem's Hexafloat and Olav Olsen's OO Star.
So, assume that the 700 or so floating platforms will be installed in European waters between 2026 and 2030, we will be looking at nearly 140 floaters to be fabricated per year during the time.
This will be a herculean task for the European supply chain.
Let us take a pause and make sense of the numbers. In the best days for the offshore oil and gas industry around 2010, each year we saw a global delivery of 40-50 floating platforms, including both rigs and production units.
Now, we are talking about a demand of 140 wind floaters in Europe alone, not to mention the gigawatts of floating windfarms being proposed in Asia and the US.
True, floating wind platforms are less complicated than their oil counterparts, but the fabrication process of the former still proved to be painstakingly long. Operational floating windfarms such as Hywind Scotland and Kincardine managed a fabrication pace of 3-4 months per platform. But to fulfil the expected annual demand of 140 units, we will need a platform to be churned out every week or so.
This will be a huge undertaking for fabrication yards and ports in Europe. And platform fabrication may become the biggest supply chain chokepoint that could delay the anticipated floating wind boom in Europe for years.
So, why does the fabrication process take so long? A major reason has been the complex structure of platform foundations, making it hard to fabricate, assemble and install. Now, with more data and experience from previous demos, European engineers are making design advances to roll out optimised new platform solutions to tackle this issue.
Some new platform concepts such as TetraSpa, Hexafloat, X1 Wind have made structural innovations to reduce foundation weight by more than half, allow road transportation and minimise offshore operations. And early-movers Equinor and PPI have also reduced their foundation-turbine size ratio dramatically.
In addition, some new designs such as Floatgen, Gicon SOF and OO-Star have proposed standardised, modular manufacturing and assembly solutions. These concepts adopt large-scale industrial manufacturing methods to accelerate construction, instead of using non-standard traditional industrial approaches for platform fabrication.
Make realistic expectations
However, while many of these concepts look promising, rolling out tens of supersized floating platforms in short order could still face unexpected challenges.
When the industry advances from fixed offshore foundations to floating ones, infrastructure requirements and project complexity will increase exponentially. This is evident in the offshore oil industry’s experience of chronic project delays and cost overruns in mega deep-water projects due to a range of supply chain issues.
Bent Flyvbjerg, an Oxford professor, said that "performance data for megaprojects speak their own language. Nine out of ten such projects have cost overruns." At the heart of the problem is that we intuitively make forecasts on how a project will unfold. But it is counterintuitive to imagine all of the different ways in which things might go wrong.
And recent troubles in the vaccine supply chain can offer a lesson. COVID vaccines were developed at astonishing speed last year. However, the manufacturing process is, like most mega-projects, running well behind schedule. Vaccine makers expected to manufacture 800 million doses by the end of 2020. The reality was just 20-30 million.
Indeed, large, complex projects usually takes much longer than expected. We need to make realistic expectations on the time needed for mass production and prepare way ahead of the anticipated boom years of floating wind.
Early commitment
In fact, the expectation of a floating wind supply chain to take shape naturally and accommodate the mass rollout smoothly is probably wishful thinking. To avoid unnecessary delays and bottlenecks, both governments and the wind industry need to act proactively. In particular, early commitment with strategic ports and key suppliers could underline the success of a speedy rollout of floating platforms.
Let us look again at vaccinations and zoom in on UK's progress. The country has now managed to inoculate 30% of its adult population, the fastest rate of any large nation in the world.
This success is underpinned by early agreement with drug producers and early commitment to the manufacturing supply chain.
The UK government started its vaccine initiatives early in the pandemic. In March last year, it funded the Oxford research team for vaccine trials. By May, it reached a deal with AstraZeneca to buy tens of millions of doses, 3 months before the EU negotiated its purchasing agreement.
AstraZeneca said that its early agreement with Britain helped it solve inevitable manufacturing problems. “With the UK, we’ve had an extra 3 months to fix all the glitches we experienced,” said the company's CEO Pascal Soriot.
Back to floating wind, whatever design solutions the industry have in mind, it will doubtless require serious investment on port infrastructure and manufacturing facilities close to prospective floating windfarms. And investment is also needed in offshore grid connections and in the reinforcements of onshore networks.
At present, supply chain investment has a tailwind from the apparent willingness of European governments to spend big for renewables and central banks to atone for their fiscal austerity. But, without enough of clarity on development plan and a pipeline for projects, it will be difficult for the supply chain to green light the investment. Then we will face a chicken-and-egg problem for scaling up capacity.
Hence, coordinated public-private efforts are needed to provide clear plans for block auctions, investments and projects as early as possible to instil confidence and visibility for the supply chain and investment community.
Manage bottleneck risks
That said, the supply chain for floating wind will be a complex, integral one. Whether the component is as trivial as balsa wood used in turbines, or as colossal as installation vessels, any bottleneck threatens to bring an entire project to a halt.
The same goes for any large manufacturing and engineering industries. Let us take a look at what is happening in the auto industry for a moment.
Auto manufacturers including General Motors, Volkswagen and Honda are facing a shortage of semiconductor chips, which will drive the global auto industry to produce about 700,000 fewer cars than scheduled for Q1 2021.
What happened? Early last year, based on gloomy expectation of car sales, auto-parts suppliers reduced chip orders. Some even invoked legal clauses in their contracts to avoid shipments. However, a surprising rebound of car sales of late caught the auto supply chain off guarded. They have not been able to secure chip orders as a lockdown-driven boom in consumer electronics such as laptops and game consoles have gobbled up supply.
A few car makers have spent decades to streamline their supply chains, carrying little inventory and relying on the so called 'tier-one' suppliers to deliver key components "just in time". But now they found out that they cannot deal with the semiconductor industry, which has a much broader customer base, with the same mentality.
However, some automakers such as Toyota and a few Chinese car producers are less affected as they have carried more inventory through stockpiling at an earlier stage last year. It seemed that they were more vigilant about possible supply bottlenecks.
All these prompted many in the auto industry to rethink its supply chain. VW is considering buying chips directly or stockpile inventory instead of relying on tier 1 suppliers to struck chip deals. Some also now demanded greater transparency from their partners about supply-chain risks.
Similarly, port and fabrication facilities will not be dedicated to floating wind alone. The industry will be in competition with more traditional activities such as oil and gas, container transport, fishing, tourism, and even fixed offshore wind.
Indeed, it is key to proactively assess and prepare the supply chain for floating wind in Europe. Strategic supply-chain commitment and collaboration would be helpful. And it would be even better if the industry can develop an early-warning system for possible bottlenecks.
In the next part of the series, we will drill down into the floating wind supply chain and discuss strategic moves that the industry can take to make itself ready for the expected construction boom of wind floaters in European waters.