Hilbert Klok, Sector Expert Offshore Wind NWEA
Jan van der Tempel, CEO Ampelmann
Stefan Lettink, Director Offshore Wind Market Royal IHC
Jan – Mark Meeuwisse, Commercial Director Jack-Ups GustoMSC
Jack Wattel, Director Subsea Boskalis
Offshore wind is maturing. The Netherlands, famous for its maritime expertise and knowledge of challenging offshore circumstances, has attributed to this maturity. But how does the country keep up with a continuously evolving industry? In this round table five experts in offshore wind shed their light and discuss eight statements.
The industry of offshore wind energy is dynamic, that much is sure. And one thing all collocutors agree on is that this sector offers huge opportunities for Dutch design engineers, suppliers and contractors. “Things are looking bright for the Netherlands, particularly since the government’s future plans show an expansion of wind farms with a total capacity of 7,000 megawatt”, states Hilbert Klok, who represents the Netherlands Wind Energy Association in this conversation. Joining him are GustoMSC’s Jan-Mark Meeuwisse, Royal IHC’s Stefan Lettink, Ampelmann Operations’ Jan van der Tempel and Jack Wattel representing Boskalis.
1. The biggest opportunities in offshore wind lie abroad, not as such in the Netherlands.
How much truth is there in that? Hilbert Klok takes the lead: “One could say that the Dutch plans for offshore wind are more concrete than those of Germany and Great Britain. However, emerging markets are primarily found in China, Taiwan and the US.” It is in these markets, according to the attendees, that enormous chances lie for the Dutch. To what extent, Stefan Lettink says, depends on companies and the emerging markets themselves. “Taiwan, for example, is originally not familiar with oil and gas offshore and the accompanying infrastructure, in contrast to the Netherlands. Taiwanese people are very open towards western technology and cooperation, which can lead to huge chances for the Dutch industry. The same would apply to the US. Emerging markets do not have the capital-intensive vessels yet, which bring opportunities for European contractors owning such vessels.”
Jack Wattel, too, foresees big opportunities in the supply chain for the Netherlands: “Logistics, installation and several other parts of the supply chain are great strengths of the Dutch industry and we play a major role abroad. It is safe to say that without Dutch expertise, the industry would not have matured as quickly as it has over the last ten years.”
In addition to the experience and expertise already mentioned, there are other catalysts for Dutch success. “Apart from a very strong offshore sector and the ability to construct big objects, the Dutch profit from a powerful geographical position and ports such as Rotterdam, Vlissingen, Amsterdam/IJmuiden and Eemshaven. Gaining success abroad can be challenging, but the Dutch already welcome numerous international missions from countries that consider the Netherlands as a tremendous source of expertise”, Jan van der Tempel adds.
2. The Dutch offshore wind sector stands out because of its integral outlook and approach.
Jan-Mark Meeuwisse agrees, and says: “Part of this integral approach are the huge efforts our government and embassies make in trade missions to put the Netherlands on the map. By doing so, smaller companies can be introduced as well.”
Wattel: “Without Dutch expertise there would not have been such a healthy offshore wind industry today”
Furthermore, the Dutch are able to combine technological knowledge and know-how to look beyond frontiers, Van der Tempel says. “These two qualities result from our culture. The Dutch have always been direct, open and in possession of a considerable amount of trading spirit. This has helped building consortia over the years, in which huge amounts of knowledge have been acquired. Many parties have invested in offshore wind during the past years in the Netherlands, which pays off. Continuous innovation and cooperation also contributed to an integral approach.”
3. Despite cost reduction in offshore wind recently, further cost reduction by innovation is of importance, since it could further diminish the cost for society, new locations and risks external factors bring.
The costs of offshore wind energy recently decreased. Nevertheless, further cost reduction is important, according to the third statement, and the solution lies in innovation. Lettink agrees, but innovation is not only indispensable to save costs. “Wind turbines keep getting bigger, and therefore innovation is crucial in the installation process. Innovation is also an essential factor in competition with other parties, and with other energy sources.”
Meeuwisse points out this importance with an example. It is not that long ago, he states, that wind turbines took a week to install, whereas nowadays this process takes only one day. This led to enormous cost reductions and the industry will keep focusing on optimalisation, Meeuwisse continues.
Klok: “Things are looking bright for the Netherlands”
Wattel estimates the cost of installation of wind turbines has been diminished with 15 to 20 percent during the last five years, and believes there is more reduction to come. He states: “The industry has been immature for a period of time, but is now increasingly growing up. Further innovation will help reduce the costs.”
The decrease of expenditures has also been accomplished by the growing trend of wind farms being realised by one contractor, instead of multiple. These so called Balance of Plant operating contractors will optimalise their processes with further cost saving as a result, Lettink expects.
Nevertheless there are obstacles. Van der Tempel emphasises the current environment might be a hurdle for innovation. “There is a small group of big players that currently supply and install turbines. Their first priority is return on investment, which reduces the urge to innovate. Unfortunately a billion dollar industry can raise hurdles for new and innovative entrances.”
Another threat to new initiatives, Wattel mentions, is the financing of offshore wind farms by banks. “Their strict demands for risk reduction and proven technology kill innovation”, he states.
4. In the future mainly crane ships will be deployed to install monopiles and jackets.
One of the biggest trends in offshore wind energy, as stated earlier, certainly is that objects in the industry increasingly get bigger. Hence in the future, according to the fourth statement, mainly crane vessels will be deployed in the installation of monopiles and jackets. According to Lettink the time is indeed ripe, and he mentions multi-national Boskalis as one of the famous examples of companies installing jackets with crane vessels.
Lettink: “Innovation is crucial to further optimise the installation process”
“However”, Lettink says, “the installation of monopiles by using crane vessels is a very complex process and it requires enormous intelligence (or: substantial engineering efforts) considering the endless movements the towers endure. Vessels still remain floating objects. On the other hand, crane vessels carry several plusses. One is their loading and carrying capacity. Heavy-lift crane vessels and their possibility of transporting multiple jackets do make returns to the coast – a very time-consuming process- less necessary.”
Meeuwisse adds that jackets keep getting bigger as well. Instead of weighing 600 tons, it is very well possible that this will go up to 1,800 tons in the future. “Nothing new, we are used to large-scale operations in the offshore oil and gas industry. The real novelty is repetitiveness. Jackets need to be installed shortly one after another, and instead of a single one, this could mean 70 jackets, which demands a lot from equipment.”
5. The installation of bigger wind turbines is only possible with bigger jack-ups.
Following the trend of bigger objects, jack-ups too need to increase in size, according to the fifth statement. Meeuwisse endorses this. “Next to turbines, towers too get bigger. They need to catch more wind. Current heights can go up to 150 metres, but towers of 170 metres are expected in the market soon. Up until now, there is no adequate equipment to install towers of that height.”
Lettink agrees with Meeuwisse and expects that installing future size, larger, monopiles using existing jack-ups will be very challenging. He however thinks it’s too early to speak of bigger jack-ups.
Van der Tempel debates this and says: “For several years we have heard parties in the industry like yourselves state “It’s not possible, we can’t go any bigger” when discussing the design of vessels. And yet, every time the industry managed to bring a bigger ship to the market.”
Lettink replies stating it’s not impossible to design bigger vessels, but that investors need to be found. Meeuwisse states it is becoming more difficult to earn back investments on ships. “Wind farms remain the same size while turbines increase in capacity. The result? The amount of wind turbines diminishes, and the same applies to the occupancy rate of ships.”
Lettink suggests turbine designers should be more open towards innovation. If tools like steps on the towers, he reckons, or the possibility of placing a crane on the tower would become a reality, installation could be easier. “And therefore there would be an alternative to creating bigger jack-ups.”
6. Next-generation wind turbines, to be marketed in 2021, cannot be installed.
The industry faces several challenges. The increasing size of wind turbines will eventually make it impossible to install them, according to the sixth statement. Lettink believes this is correct, at least in the current situation. Meeuwisse adds: “Building a ship takes two and a half to three years. With the increasing sizes and scales in offshore wind, parties fear that ships will be outdated before return on investment is made. In the year 2008 we would never have thought wind turbines would ever grow from four megawatt to a capacity of eight megawatt now and to 12 megawatt in 2021. Like for every one else, it is a big challenge for GustoMSC to proactively design and engineer taking into account future developments.”
7. Offshore demonstration locations are indispensable in order to reach further innovation acceptance. The current system does not function properly.
In the Netherlands, as statement seven mentions, there should be more demo locations in the field of offshore wind energy. It’s absolutely necessary, Van der Tempel states, and in his opinion the current system doesn’t function properly. “Offshore wind is being subsidised on the condition that parties introduce innovative elements. In reality, innovators pull out since there is absolutely no guarantee they will be compensated for their costs. In my opinion big players have a tendency of window-dressing when it comes to innovation, and often lack the inner drive to innovate.”
Van der Tempel: “Innovators pull out since there is absolutely no guarantee they will be compensated for their costs”
Klok agrees with Van der Tempel and states: “The current system in fact expects innovators to compete with more established parties.” Lettink agrees with them and believes a platform is necessary. Cooperation could help, he states, to create a fair platform.
8. A zero-subsidy policy is a threat for further expansion of offshore wind. The Dutch government should participate in this industry, like it did in the oil and gas sector. In that way, the need for cash and risks can be diminished, and the Dutch government will see return on its investment.
Statement eight says a zero-subsidy policy is a threat to further expansion of offshore wind. The Dutch government should participate in this industry, like it did in the oil and gas sector. In that way, the need for cash and risks can be diminished, and the Dutch government will see return on its investment. “If the switch to a zero-subsidy policy is reality, the market will take over. Therefore a good framework is indispensable. Participation of the government could be a good solution, and might work by means of revolving funds”, Van der Tempel suggests.
Wattel counters with the statement: “There are many more more uncertainties in the development of oil and gas sources, whereas the production of offshore wind can be seen as fairly predictable. In my opinion developers and contractors are quite capable of developing a model for expanding the offshore wind energy.”
Klok: “Without subsidies in the Netherlands, and given the fact that there are still subsidy systems in other countries, the question arises if we will make enough money with offshore wind in the Netherlands. The risks on the electricity market are too big to be carried by the industry alone. The British system in offshore wind might be a possible solution for the Dutch. If a wind farm creates enough profit, this is returned to the government and when prices are low, this is supplemented by the government. Furthermore, I believe that the Dutch government must think of the risks that it is willing to take and the incentives it could deploy. Electrification of the industry, for example, can function as a catalyst in the demand for offshore wind energy. In that way, incentives are a tool to bring demand and supply together.”