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The long gestation of the global floating offshore wind sector
took two steps forward in recent days, with announcements by
authorities in the UK advancing potential facilities in English,
Scottish, and Welsh waters.
There are no commercial floating offshore wind projects up and
running as yet, and the UK announcements bring that one step
closer.
Observers say a key factor in the development of the offshore
floating wind sector globally will be dedicated leasing, auctions,
and regulatory frameworks for the technology, particularly in areas
where it is difficult to locate fixed-bottom turbines en masse such
as Japan and the US West Coast.
So, on 24 March, the UK Crown Estate (UKCE), which oversees
government lands in England, Wales and Northern Ireland, announced it was starting to
design a leasing opportunity for early commercial-scale floating
wind projects in the Celtic Sea.
The Celtic Sea extends from the far southwestern reaches of
Wales and England until it meets the Atlantic Ocean, running as far
north as the southern Irish coastline and as far south as parts of
Brittany in northwestern France.
The leasing process will focus on projects of about 300 MW in
scale, as much as three times larger than any rights previously
awarded to floating offshore wind in the UK, according to the UKCE.
The process is a "new frontier" for the sector and an "important
step" toward the British government's plans to deliver 1 GW of
floating wind by 2030, UKCE added.
In December, UKCE sought advice on how best to accelerate the
development of floating wind in the UK. UKCE received input from
more than 30 stakeholders, it said, indicating strong interest in
new floating wind rights and an appetite to develop projects of 300
MW in size. UKCE said it would provide further details on the
leasing design "in the coming months."
Unlocking full potential
These won't be the first Celtic Sea floating wind projects. In
2020, UKCE awarded rights to Blue Gem Wind to develop the proposed
96-MW Erebus demonstration project in
Welsh Celtic Sea waters.
UKCE is also exploring how best to support pre-commercial,
smaller projects that it said "will continue to be an important
part of developing new technologies for a range of seabed
conditions and locations." Details of those efforts will be
released alongside more on the leasing process in the coming
months, it added.
"Floating offshore wind is the next frontier of the UK's clean
energy ambitions, offering an exciting opportunity to deliver more
green energy, in new areas offshore," said Huub den Rooijen,
director of UKCE's energy, minerals and infrastructure
portfolio.
The floating wind push has ministerial support in both London
and Cardiff. "Floating offshore projects are going to be vital in
ensuring we unlock the full potential of natural resources in the
windiest parts around our coastline and ensure the UK remains a
world-leader in offshore wind," UK Energy Minister Anne-Marie
Trevelyan said.
The devolved Welsh government sang
from the same hymn sheet. "We are committed to building a green and
prosperous Wales for our future generations," said Welsh Government
Minister for Environment, Energy and Rural Affairs Lesley
Griffiths. "We welcome [UKCE's] intent to open the Celtic Sea for
early-commercial scale floating wind development."
ScotWind advances too
Support for the UK floating offshore wind sector was also
forthcoming in Edinburgh this week, as the devolved Scottish
government answered impassioned entreaties of
renewable energy advocates a week earlier. The Scottish electricity
industry is dominated by renewable energy,
with 97.4% of consumption met from green sources in 2020, according
to Scottish Renewables.
Crown Estate Scotland (CES) on 24 March announced the outcome of a
review of the option structure for ScotWind Leasing, the leasing
round for seabed rights in Scottish waters. The review, which began
in February, came in response to "revised market dynamics," CES
said, specifically a pricey fixed-bottom offshore wind auction for sites in English
and Welsh waters.
"This rapid review was undertaken to reflect the recent changes
we have seen in the UK offshore wind market so that we could arrive
at a pricing structure which properly reflects those changes,"
Amanda Bryan, chair of Crown Estate Scotland, said.
The revised option structure will see the same basic pricing
structure for option agreements, but the maximum fee was raised to
£100,000/square km ($138,000) of seabed from £10,000/square km and
the threshold for local supply chain commitments that applicants
must meet to request a lease increased to 25% from 10%.
Additional technical information will be published by the end of
April to allow registered applicants to move in ScotWind Leasing
forward, SEC said, with the closing date for applications 16 July.
A total of 8,600 square km of Scottish seabed is potentially
available for development.
Scottish Renewables was pleased with the rapid pace and outcome
of the review. "Industry always understood the reasons for this
delay and we are pleased [CES] has delivered these changes within a
matter of weeks, keeping the process on track for the majority of
Scottish Renewables members who have already spent thousands of
hours and millions of pounds getting ready to bid for the seabed
leases they need to build their projects," said CEO Claire
Mack.
"It is now for those individual developers to decide if the new
price of these leases reflects their assessment of the value of the
contracts which they will need to secure from the UK government,"
added Mack.
In addition, RenewableUK Head of Policy and Regulation Rebecca
Williams said: "ScotWind ... offers multi-billion-pound investment
opportunities which can revitalize coastal communities in Scotland
and expand the offshore wind supply chain throughout the UK,
supporting thousands of jobs."
The timing of the ScotWind announcement was not a complete
surprise, but it was welcome, according to Maf Smith, vice-chair of
the Global Wind Energy Council's Floating Offshore Wind Taskforce,
who told IHS Markit it was business that needed to be dealt with in
advance of the quiet period -- when no such activity is permitted
-- ahead of May's Scottish parliamentary elections.
ScotWind could support as much as 1 GW of floating offshore wind
generation by 2030, said Smith, adding that choosing 300 MW as a
starting point or "pathfinder" was a good place to land. Now
developers have clarity and a timeline, he said.
And the expectations are that the ramp up will be rapid, even
while the UK remains, for now, top of the table for installed
offshore wind capacity. Research published 25 March by the UK's
Offshore Wind Industry Council (OWIC) shows the number of people
working in direct and indirect jobs in the country's offshore wind
sector is set to rise from 26,000 currently to more than 69,800 by
2026.
Most of the jobs will being created in parts of the country
which urgently need those jobs, the OWIC said, including the
northeast of England, Yorkshire and The Humber, East Anglia, and
Scotland.
The private sector will invest £60.8 billion across the UK over
the next five years in developing, constructing, and operating
offshore wind projects as the industry expands rapidly to help the
government to achieve its net-zero emissions goal, according to
OWIC estimates. The average annual investment will be £10.1 billion
between 2021 and 2026, and investment in 2026 will total £10.6
billion, it said.
Floating offshore wind is at an interesting juncture in the UK,
said GWEC's Smith, where the technology is available and what is
needed is a scaling up. Such a step forward would also help in
terms of developing supply chains and in growing expertise, he
added.
The UK will not be alone in ramping up its floating offshore
wind sector, observers say, especially with the advantages it
offers.
The key advantages for floating offshore wind, according to a 15
March paper by London-based law firm
Ashurst, generally fall into one of the following broad
categories:
the ability to locate wind farms in previously inaccessible,
high wind-speed locations
time and cost savings due to no need to construct
foundations
the installation of the turbines is done in or close to the
port, which is much easier, more cost effective and reduces the
impact of adverse weather
reduced environmental impacts
floating projects are better suited to turbulent weather
conditions than fixed-base projects.
One of floating offshore wind's disadvantages though, according
to Ashurst, is that it requires dynamic cabling, exposing the line
to greater loads than a fixed-bottom facility. That exposure
includes to wave loads, impact loads from drifting objects, and
additional fatigue due to substructure motion, the law firm said,
increasing the cable failure risks compared with fixed-bottom
offshore wind generation.
Source: Ashurst
The ambitions are much bigger though than those shown on the map
above though, including on the US West Coast, where waters are too
deep for fixed-bottom projects.
The biggest project yet announced is EnBW and Trident Winds' 1
GW Castle Wind project off the coast of
California, according to Smith. That said, South Korea has two
800-MW projects in the works — the Firefly project proposed by
Equinor and GIG/Total's south Jeolla project.
Some 6.1 GW of offshore wind capacity was installed in 2020,
which was 175 MW less than in the record-setting year of 2019,
according GWEC data published 24 March. China was responsible for
half that figure, it said, adding that this growth dropped Germany
to third in the global rankings.
Spanish company Iberdrola is one of the industry leaders driving
such numbers. It wants to have a 4 GW offshore wind fleet up and
running by 2025. Included in those ambitions are floating offshore
wind plans in its home waters. The
company wants to build its first commercial scale floating offshore
wind farm in domestic waters, developing a 300-MW project at an
expected cost of €1 billion ($1.2 billion). Design and engineering
studies could begin later this year, with commissioning targeted in
2026, it said. Iberdrola aims to spearhead the development of up to
2 GW of floating wind projects off the coasts of Galicia,
Andalusia, and the Canary Islands, it added.
However, a deadline for zoning proposals was postponed until
September 2021 by the Spanish government, according to the Spanish
Wind Energy Association, which believes the decision will push
Spain further behind not just the UK and other European offshore
wind leaders, but relative newcomers such as Greece, too.
The planets align for floating wind when there is a strong
political desire to build renewable generation and achieve net zero
within a reasonable amount of time, an appropriate regulatory
framework, and centers of consumption that are not too far from the
generation facilities, said Bruno Geschier, chief sales and
marketing officer, BW Ideol.
BW Offshore spent €60 million ($72 million) on a roughly 50%
stake in France's Ideol in February, completing the deal 15 March.
Ideol has two full-scale demonstration wind turbines in France and
Japan based on its patented floater design and is building up a
pipeline of projects as co-developer in Japan, Europe, and the US,
including the 30-MW EOIMed project, the first floating wind farm in
French waters. Oslo-listed BW Offshore historically provided
offshore services to oil and gas operations.
The French government plans to hold three tenders for floating
wind capacity in 2021 and 2022, each with 250 MW of capacity. The
first will be in the Bretagne Sud area, while the other two in 2022
are planned for areas in the Mediterranean. This is part of wider French ambitions.
Back in the UK, on 18 November, Ideol signed a letter of intent
with the Scottish port of Cromarty Firth to use its land and
berthing sites and develop a serial manufacturing yard for its
concrete hulls. Ideol has formed a consortium with Belgium's Elico
and Germany's BayWa r.e. to bid into the ScotWind tender.
The technology is suitable for lots of countries, Marcus Thor,
CEO of turbine developer Hexicon, said during a World Offshore Wind
Forum webinar on 18 March.
"The bottom line is the market for floating [wind] is much
vaster than we think, and when we see stats and maps that indicate
that floating wind has tremendous potential, and could represent
60% to 80% of the possibilities across the globe, well, there you
have it. And that's why the future for floating is bright,
especially when we start to also see left and right that the
low-hanging fruit of fixed-bottom has been picked, and it is time
to go deeper offshore," Geschier said during the webinar.
Half the world's floating wind fleet is likely to be in Asia
eventually, added Thor.
Japanese needs, ambitions
Japan and South Korea are prime candidates for floating wind,
Marco Wiedijk, vice president of business development, Principle
Power Windfloat, told the webinar, as a result of their deep
coastal waters and large offtake opportunities. Principle Power has
offices in Portugal, France, the UK, and Japan.
Japan wants to source 22-24% of its energy needs from renewable
generation by 2030. The Japan Wind Power Association proposed a
target of 10 GW of new offshore wind by 2030. A number of
fixed-bottom offshore wind projects have been announced in recent
weeks, including by JERA and Iberdrola.
Japan has the world's sixth-largest sea space, according to law
firm Hogan Lovells. Japan's offshore wind potential is as much as
600 GW, the law firm said, citing the JWPA.
Such is the enthusiasm and need for offshore wind in Japan that
plans are underway for mass buildout of undersea cabling. Japan's
Ministry of Economy, Trade and Industry (METI) is considering
whether to lay subsea power cables connecting load centers with
offshore wind projects as part of a push to expand the country's
renewable generation fleet, according to local media.
Such efforts may cost as much as 1 trillion yen ($9.16 billion),
but would be cheaper than running onshore transmission lines, which
requires pricey and extended negotiations in land-scarce Japan, Nikkei reported 13 March.
China -- which installed 52 GW of onshore and offshore wind
capacity in 2020 -- is not expected to rival its near neighbors
such as Japan, South Korea, or even Taiwan, in the initial couple
of phases of the commercial-scale floating wind buildout, said
Andrei Utkin, senior associate, global clean energy technology, IHS
Markit/ China still has so much space to expand into for its
fixed-bottom offshore operations, he explained.
Across the Taiwan Strait, Taiwan is attracting a great deal of
interest from international players who have had success there in
the fixed-bottom sector. The reason
Orsted is so active in Taiwan is that it makes financial sense,
said Utkin, because it doesn't have to compete with the bulging
wallets wielded by oil and natural gas behemoths such as Total and
BP.
The oil companies dominated the UK's most recent leasing
auction, precipitating the Scottish review. The prices for the
power produced in Taiwan offer better returns too, Utkin said,
citing prices of $100/MWh in Taiwan versus £40/MWh ($55/MWh) in the
UK.
Such slim margins in Europe illustrate why government support is
so welcome for the nascent floating sector, given the current
differences in the cost of developing a floating offshore wind
project and a fixed-bottom alternative.
Current estimates putting the price of putting floating wind
capacity in the water at twice that of fixed-bottom generation were
a "reasonable assumption," said GWEC's Smith, although the cost is
expected to fall in the coming years. It isn't a competition
between the fixed-bottom and floating options, added IHS Markit's
Utkin.
Scaling up
A roadmap is necessary, Geschier said during the 18 March
webinar, adding that policymakers need to lay out an appropriate
regulatory environment that can encourage volume and visibility.
This is especially important for the newer players in the space, he
said.
The sector requires clarity and predictability from regulators
in order to plan accordingly, noted Wiedijk, adding that subsidies
and dedicated floating wind auctions would be especially
beneficial.
The whole of the sector has a duty to keep educating lawmakers
and policymakers on cost reduction, hammering home how such support
for fixed-bottom wind paid off in that respect, Geschier said,
adding that the advantages over nuclear - which was also seeking
government support in many countries - need to be highlighted.
Floating wind projects are unlikely to need as much support or
backing for anywhere near the same amount of time as their
fixed-bottom brethren, he said.
Scaling up floating wind operations will be the next phase of
cost reduction, Smith said, and that is without innovation
increasing the pace of the decrease. In a sector that has yet to
settle on one or more standard design formats, innovation "might
drive a different way of doing things," he said.
Once the first commercial projects are underway, costs will
decrease "massively," added Utkin.