Floating wind power gains traction but can it set sail?
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[April 24, 2023]
By Nina Chestney and Susanna Twidale
LONDON (Reuters) - After a bumper year for floating offshore wind farm
tenders, the nascent industry is poised for explosive growth in the
coming decade as countries strive to cut their carbon emissions.
But it's unlikely to be all plain sailing.
Rising costs and supply chain bottlenecks have hit some projects and
without investment in infrastructure to launch the vast turbines and tow
them to sea, hopes of harnessing the full power of the ocean's winds to
hit climate targets could be dashed, industry experts say.
"If the next decade is to see the adoption of floating offshore wind,
and its growth into a leading market, the work that we do in 2023 will
dictate just how successful this is," said Felipe Cornago, commercial
director offshore wind at BayWa, which is developing a wind farm off
Scotland.
About 80% of the world's offshore wind power potential lies in waters
deeper than 60 metres, according to the Global Wind Energy Council (GWEC),
meaning floating turbines will be vital for some countries with little
space left on land and steep coastal shelves to decarbonise their power
sectors.
Winds are stronger and more continuous further out to sea so floating
turbines can generate more power than those fixed to the seabed near to
shore - and they less visible from the coast, reducing the risk of
resistance from local communities.
By the end of 2022, plans for about 48 gigawatts (GW) of floating wind
capacity around the world were in place, nearly double the amount in the
first quarter last year, according to Fitch Solutions, with European
companies driving the expansion.
Since then, new tenders have been launched in Norway and more are
planned this year - but so far there are only just over 120 megawatts
(MW) in operation worldwide.
Consultancy DNV forecasts that about 300 GW will be installed by 2050,
representing 15% of all offshore wind capacity, but wind turbine makers
are already struggling to meet rising demand due to rising inflation and
raw material costs.
BOTTLENECKS AND COSTS
The largest project to date, the 88 MW Hywind Tampen project being
developed by oil and gas company Equinor off Norway, was meant to be
fully commissioned in 2022 but delays due to some steel parts not being
of sufficient quality for four of the towers has pushed the start to
later this year.
Last year, oil company Shell and state-owned Chinese energy company CGN
dropped a plan for a floating wind project off France's Brittany coast,
citing inflation and supply chain problems among other reasons.
GWEC said supply bottlenecks for turbines and components could continue
or even be compounded by incentives in the United States for low-carbon
energy deployment, as well as increased demand in China, Europe and
emerging markets.
As most commercial-scale floating wind farms are only expected to be up
and running from 2030, there could be time for such problems to be
resolved, said Francesco Cacciabue, partner and CFO at renewable energy
investor Glennmont Partners.
At the moment, technology costs for floating wind are far higher than
for fixed turbines but companies hope to reduce those costs sharply as
larger projects come on stream.
According to DNV, the average levelized cost of energy (LCOE) - which
compares the total lifetime cost of building and running a power plant
to its lifetime output - for floating wind was about 250 euros per
megawatt hour (MWh) in 2020, compared with around 50 euros/MWh for fixed
turbines.
But by 2035, the LCOE for floating wind is expected to fall to about 60
euros/MWh.
"For floating, the expectation is that it will sell power at a higher
price than fixed-foundation offshore wind for several years while it
industrialises and gets to a point where it can compete on a
like-for-like basis," said Jonathan Cole, chief executive of Corio
Generation, part of Macquarie's Green Investment Group.
OFFSHORE PLANS
Norway's Equinor kick-started the floating wind industry after two of
its oil and gas engineers saw a marker buoy they thought could be a
structure to hold a floating turbine.
The company installed a pilot floating turbine in 2009 and has seen
costs fall by 70% from the demonstration project to its 30 MW Hywind
Scotland project. It expects a further 40% cost reduction for Hywind
Tampen.
"It's about having larger turbines which are more efficient offshore,"
said Steinar Berge, head of floating wind at Equinor.
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Spar structures of the Hywind Tampen
floating wind farm are being moved to Dommersnes from Aker Solutions
site in Stord, Norway, April 18, 2021. Jan Arne Wold Equinor/Handout
via REUTERS
"The journey going forward is more reliant upon putting full-scale
projects into action because then you will see much more innovation
and investments in the supply chain which will drive costs further
down," he said.
Still, higher costs in the medium term haven't dulled investor
appetite for tenders. For some countries, floating wind might be the
best option due to their seabed conditions, such as Japan, South
Korea and the west coast of the United States.
"These are huge areas with the energy demands to match their huge
populations, and they have a mandate to decarbonise as quickly as
possible," said Cacciabue at Glennmont Partners.
The United States wants to develop 15 GW of floating offshore wind
capacity by 2035 and its Wind Shot research and development
programme hopes to cut the cost to $45/MWh by 2035.
Japan wants to install up to 10 GW of offshore wind capacity by
2030, and up to 45 GW by 2040, including floating. It plans to set a
specific target for floating wind this year. South Korea, meanwhile,
is aiming for 9 GW of floating wind by 2030.
Several countries in Europe have also set targets such as Spain
which is seeking up to 3 GW of floating capacity by 2030.
PORTS AND SHIPS
Floating offshore wind farms are made up of huge turbines installed
on floating platforms anchored to the seabed with flexible anchors,
chains or steel cables.
But at the moment, there are at least 50 designs under development,
so narrowing down the concepts is important for standardisation and
enabling mass production, experts say.
They believe that can be achieved, as many oil companies have
significant expertise operating in deep waters such as Shell,
Equinor, BP and Aker Solutions - and some are teaming up with
renewable developers to bid in floating wind tenders.
For now, Equinor's Berge said one of the biggest challenges was
having enough large ports to assemble the turbines and move them out
to sea. Many of his peers agree.
According to a DNV survey of 244 experts, the biggest supply chain
risk they identified was having enough suitable ports, followed by
the availability of installation vessels.
Ports where towers measuring more than 150 m to the centre of the
rotor and their giant floating bases can be manufactured and
assembled are ideal - and they will also need enough access
channels, berths, land areas and storage space for handling large,
heavy structures, experts say.
But in many countries, such ports are sorely lacking.
Britain aims to have 5 GW of floating wind installed by 2030 but a
report by the UK Floating Wind Offshore Wind Taskforce, said 34 GW
could be installed by 2040 if ports were upgraded.
It said up to 11 ports will need to be transformed into hubs to
enable the roll-out of floating offshore wind at scale - along with
investment of at least 4 billion pounds ($5 billion).
Britain's Crown Estate will launch a tender for 4 GW of floating
wind in the Celtic Sea off Wales this year but said the area had the
potential to produce more than 20 GW.
While Britain wants to lead the world on floating wind, some experts
say South Korea could be the real winner given its existing ports
and large-scale engineering capacity.
"South Korea will be commercial the quickest," said Cole at Corio
Generation, which has 1.5 GW of floating wind under development
there. "People want to buy low-carbon products so how South Korea
produces its electricity and how it will decarbonise is a really
important thing for the entire economy."
Another issue is the lack of vessels needed to tow structures to
their offshore sites, install them and connect the turbines to the
onshore power grid.
"Even the largest vessels from the oil and gas industry have limited
capacity for efficient installation of the latest floating wind
farms," said DNV.
($1 = 0.8036 pounds)
(Reporting by Nina Chestney and Susanna Twidale; Additional
reporting by Charlie Devreux in Madrid, Yuka Obayashi in Tokyo,
Heekyong Yang in Seoul, Nichola Groom in Los Angeles; Editing by
Veronica Brown and David Clarke)
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