We expect plenty of discussion at Global Offshore Wind about how the industry is “coming of age”. How are the pressures on offshore wind developers changing?
I’ve worked in the energy industry for three decades, so there have been big changes. We’ve seen so many new players coming in – offshore wind developers, operators and contractors – and also new technology, whether that’s bigger turbines or floating structures. And then there’s the financial side too. It’s a complex environment for design and construction.
In the early days of offshore wind, projects were heavily subsidized. But now we have moved into a subsidy-free auction regime and an era of extreme competition. We used to have between five and ten serious developers in the market, but now you can see 60 or 70 consortia bidding in projects around the world. That means companies have to be really clear on what they want to do in the market and the profitability of their projects.
How does that affect offshore wind developers on a day-to-day basis?
The day-to-day work depends on what stage they are at in the project life cycle. At the early stage, it’s about the viability of bids. Companies need a really in-depth insight into what it is going to cost them to build and operate their project. That’s really important.
And when they are executing projects during the construction and operational phases, developers need clarity over precise costs and risks at their projects so they can make informed decisions based on that. Offshore wind projects are highly dynamic and there are a lot of reasons they can be delayed, which can have big financial impacts.
Is this affected by offshore wind expanding into more parts of the world?
Yes. If you have a team trying to estimate the costs and risks to build a project in an unproven area in South America, Asia or Australia, they wouldn’t really know where to start. They might make conservative assumptions and add a lot of contingencies, and then make decisions based on that, which can affect the financial returns. But using the right digital tools can help them with accurate modelling throughout the project life cycle.
We are just about to publish a white paper ahead of Global Offshore Wind 2024 that looks at why delays are such a big challenge for offshore wind project developers, and how digital innovations can help them to keep their projects on track. You can download that here.
We are also seeing developers and contractors coming in from oil and gas, where they have some experience, but it is not the same. It’s a huge difference between installing an offshore drilling platform, where you can sit for months and wait for the right weather window, and installing 80 turbines, 80 foundations and cables to a tight timeline in the North Sea.
You mention “accurate modelling”. What sort of modelling do you mean?
In the early stages, there are a lot of variables to create a viable project. That includes technology such as turbines, foundations and substations; and you also have to take into account environmental conditions, weather conditions, and so on. When you are planning a project, it helps if you can create digital simulations that include these details. This means you can tweak turbine configurations, logistics, start dates, and so on.
But we’re also seeing that companies are using our design simulation tools through the construction phase too, because they frequently see delays and changes. Perhaps the weather is bad, or half of the jacket structures are late, or there are problems with some of the installation vessels. These are complex, very large projects with so many moving parts. Using a digital simulation solution like ours provides you with a live overview of a project, enables you to dynamically update schedules, and make the right decisions.
How would that work typically be done?
The traditional approach is that projects are managed by tonnes of Excel spreadsheets, which some companies still do. Now that approach was fine when projects were heavily subsidized, but now developers simply cannot afford those mistakes.
It introduces more human error too. One reason people are swapping from that historic approach to our solution is that they have experienced significant errors when data is moved between spreadsheets. In addition, they can see the benefits of carrying out new simulations quickly, which is work that typically took days or weeks. These are complex projects, and developers need to be able to take smarter decisions and faster.
How complex can these offshore construction sites get?
Just consider the vessels. You might have two installation vessels putting up turbines; a vessel doing piling for the foundations; and maybe even one or two installing the jacket foundations. You might have a huge vessel installing the substation and pulling cables, and then a lot of other vessels sailing around too. It’s a complex environment, so being able to carry out simulations and optimize the project can be super-important. If you can save a week of construction time by optimizing the project, that means a lot of money.
This highlights the need for platforms that can support collaboration, both on a single project or on a portfolio of schemes. With our system, companies can work together on multiple projects but with no overflow of sensitive data between different parties. That way, nothing gets damaged if they do end up going their separate ways.
Who is typically looking at the data from these simulations?
It’s the project managers actually using them, but we also see their senior management teams looking for more certainty on the cost modelling too. What have the assumptions been? What does the project look like if we go with turbines from Siemens Gamesa, GE or Vestas? If we have a problem, how much is it going to cost us? Projects are getting bigger, so more people within companies to drill down into the nuts and bolts.
