Extending construction window for OWFs will cut cost and risk, Vattenfall’s Ireen Geerbex says

Innovation in wind energy has been one of the main pillars driving the upscale of the sector, enabling better components, larger and stronger turbines, faster and more cost-effective logistics, but what about its integration into tenders? Innovative approaches in tender designs can have a major impact on facilitating a successful rollout of the sector. According to Ireen Geerbex, Market Development Director NL at Swedish multinational offshore wind developer Vattenfall, one of the key elements might be extending the five-year deadline from obtaining a permit to constructing an offshore wind farm to seven years.

It has been exemplary of how tenders in the Netherlands in the past few years invited the market to come up with solutions that are much needed to address certain challenges, bottlenecks or ecological impacts, allowing co-location of innovation which is a crucial milestone in getting them to commercial scale, Geerbex said at Offshore Energy Exhibition & Conference (OEEC).

Although the Dutch system is a very strong fundament that paves the way toward the future, and can serve as a good example for many countries that are still in the very early days of shaping their offshore wind roadmaps and tender systems, market conditions have been challenging and there is a risk of being blinded by previous success and the assumption that the road can continue in the same way may be wrong.

According to Geerbex, strong adaptations are needed for future tender designs: “First of all is the flexibility of realization. In the Dutch system, there is a five-year window after winning a project until the deadline of realization. That is a really short time for a really big project, really far offshore, in a market that is struggling with the availability of manufacturing and installation capacity, and equipment. So I would argue for extending the five-year window to a seven-year one, which would allow developers to optimize the actual installation and construction windows to reduce risk and thereby also cost for the realization of offshore wind farms.”

Mattia Cecchinato, Senior Advisor Offshore Wind at WindEurope, emphasized that flexibility of realization is not only a Dutch problem but is rather widespread: “There is a 2030 bottleneck. Flexibility of realization is important. Many governments are applying this. What we ask is that the volumes are put in the market and then let the industry coordinate because that allows doing things at the right time. It allows the industry to coordinate various contracts with these forms of innovation that sometimes require time.”

Next up is the electrification roadmap which would match the offshore wind roadmap, accounting for all different aspects that need to be done, however, the one big crucial element missing is the development of demand, therefore the Netherlands needs policy and instruments to pull up demand.

Innovations and new technologies in system integration and ecology cannot be neglected as they are really important elements since there is still a big knowledge gap on what the actual impacts are on the short term and long term.

“Right now cannibalization is happening for real and we cannot keep pushing cheap green power into the system when there is no actual demand waiting. To be able to take investment decisions, developers need an outlook on positive electricity prices. There are massive challenges that are potentially stopping the large-scale rollout. We are looking at 50 GW or even 70 GW ahead. But we know that there are limits to what the system and the ecology system can absorb,” Geerbex said.

On the other hand, from the supply chain standpoint, Kai Fiand, Manager Sales at the Dutch provider of foundation installation equipment CAPE Holland, notes that developers might like innovation and innovative equipment, however, the company sees a lot of reluctance with direct clients, i.e. installation contractors, who want to have well-known and well-proven technology that worked for many years.

One of the solutions could be taking technology well-known onshore to the offshore arena: “There are certainly innovative aspects, but if you just come with a completely new product and technology, it does not go all the way through the supply chain. While the developers and the tender designers may like to see innovations, it is not necessarily going all the way through the supply chain. What really helps us is engaging with the end clients, with the developers for having the supply chain come together and engaging early on to push for innovative technology. This holistic approach is what we see is helpful and needed to take the next step,” Fiand noted.

Finally, the Netherlands needs more criteria on sustainability ranging from circularity, but also responsible business conduct and social sustainability because the market is only at the starting point of large-scale rollout.

Geerbex said: “We have to make sure that we are not just doing the right things by realizing renewable energy, but that we are also doing them right. We need to raise the bar now big time because if we raise the quality bar on our products now, that will be the minimum level for projects thereafter. I think this is where we have a real responsibility to make sure that the entire industry moves towards a fully sustainable industry, not just by the products that recreate green electricity, but also by the way we do it.”

Key actions, especially those coming from governments, whose implementation would allow the upscale of technology or innovation include co-location and seeing the tender as an offshore energy tender and not only an offshore wind one.

Since developers want to have a clear low risk and cash flow, among other things, innovation brings uncertainty, thus requirements for innovation need to come from the government side, Michael Henriksen, CEO at WavePiston, said.

“We need to get innovation into non-price criteria. There has to be some requirement from the government side. Not just for innovation purposes, but because we need security of supply, both energy supply and supply of material. And last but not least is co-location. This is a no-brainer. It needs to be a requirement that you have co-location,” Henriksen said.

The impact factor should also be taken into consideration, especially the social impact where the industry needs to ensure local communities are concordant with projects.

Co-location, or non-price criteria in general, adds complexity, risk, and cost. Governments have different ways to help de-risk projects, such as contracts for difference (CFDs) and power purchase agreements (PPAs), but other kinds of tools could be helpful to decrease the development risk.

“In our European electricity mix, we are still consuming 20% of gas and that is largely for flexibility reasons. But if we want to push for longer storage duration, which I think is required to support the deployment of offshore wind among others, we need other technologies and we do need some support because at some point it will become a price-related criteria. But we are not there yet and we need to de-risk technical and cost-related aspects,” said Vincent Bonnin, Energy Solution Analyst at Dutch Marine Energy Centre (DMEC).

According to Geerbex, alignment on requirements around mitigation measures for ecology would be very helpful to raise the bar jointly and make sure that also the industry that is investing in new solutions can see a proper pipeline of opportunities upcoming.

“I think allowing flexibility and insulation is a big element of bringing risk and therefore cost down. As for complexity, of course, it adds a bit of complexity and risk to our projects if we welcome innovations. But at the same time, they also bring us knowledge and they help us flatten the profile and increase the availability of the offshore energy project as a whole. So I would rather see risk of innovation than have a financial bid as a cost out because that is just money leaving the industry,” Geerbex said.

“When we talk about alignment, the first step is the political willingness to walk and talk across borders. There have been a lot of improvements when ministries start talking better among themselves at a national level through the maritime special planning process. Now it is time that they take the extra step and start collaborating,” Cecchinato said.

“What we ask at least is to start at sea basin level. We must start from the North Sea where most of the installations are today and where the countries are more advanced. Let’s do things with other countries because what one can produce, another can use. Just go cross-border.”

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