The floating wind industry’s current malaise overlooks both the extraordinary progress made to-date and how lessons already gleaned can be used to navigate the way toward international industrialization, writes Bruno Geschier
There are few in the floating wind industry today who would deny the sector doesn’t feel rather all at sea. The irrational exuberance demonstrated by some lease applicants in recent years, the overly optimistic financial modelling and business cases adopted by ambitious yet often poorly advised players, site investigation and/or execution shortcuts tolerated by some early movers in the sector have together created ample concern as to the state of health of the industry - not only in the eyes of the lending and insurance community but also with policy-makers and governmental agencies that have progressively to this point embraced and supported the floating wind industry’ aspirations.
Inflationary stress on both capital and operating expenditure, interest rate hikes, quality issues and the vagaries within the energy sector are further contributing to the complexity and uncertainties surrounding the market. Forecasts of a 16GW fleet by 2030 have looked increasingly wishful for some time.
Despite this perfect market storm, the floating wind sector has luckily witnessed certain pace-setting developers sensibly stepping out of auctions where bidding was reaching dizzying heights; steadfastly pursuing financial models with reasonable assumptions instead of falling for scenarios perceived by many as ‘too good to be true’; doing their homework properly, solidly de-risking their projects from technical, financial and consenting points of view. And some key contractors within the supply chain have remained level-headed too, educating their clients to the highest industry standards and not promising the unachievable for a tantalizingly low price.
'The floating wind industry is moving forward led by experienced, knowledgeable and sound companies that are in pursuit of a market expected to grow into hundreds of gigawatts in the next decades'Bruno Geschier
Chief Sales & Marketing Officer
So, with that said, it is time to get back to first principles in facing the challenges ahead – some of which admittedly will invariably come as a surprise to even for the most astute industry observers when they happen.
The entire industry has not gone berserk, succumbing to greed, ego or panic, as some fear. We can legitimately look at the glass being half-full instead of being dragged down by pessimism and so quailing from entirely viable projects. The floating wind industry is still very much in control of itself and is moving forward led by – in vast majority – experienced, knowledgeable and sound companies that are in pursuit of a market expected to grow into hundreds of gigawatts in the next decades.
And let us not overlook the local and global industry associations which have spared no effort in promoting the merits, the potential and undoubted past and recent success of offshore wind more widely: this supports member companies in choosing best practices and due process over haste and knee-jerk decisions.
Insofar as 'past is prologue' for floating wind as the sector heads into an era of international commercialization, the following is a modest proposal, in five points, of arguably common-sense approaches that now deserve focus in order to limit risks and possible industrial tragedies ahead, key for a nascent sector such as floating wind:
- Embrace tried and tested solutions provided they come with credible and validated delivery scenarios.
- Surround yourself with real experience and science at all levels of the value chain and the project development process, don’t get carried away by emotions or intuitions … including your year-end bonus.
- Set ambitious timelines and milestones but don’t rush key technical and financial de-risking stages – ‘bore a few more holes’ or initiate discussions with a few more suppliers if necessary.
- Never give up educating lenders, insurers, policy-makers and any other relevant stakeholders: they remain the principal enablers of floating wind’s current and future opportunities.
- Without clear routes to market, points 1-4 mean nothing.
Testing times during the birth of industry can overshadow many rightfully morale-boosting milestone announcements and technological leaps forward that are taking place ‘in the background’.
From the US government’s plans to open up deepwater plays off Maine and Oregon to follow on from the recent Californian acreage awards, through the inauguration of the world’s largest floating wind farm, Hywind Tampen, off Norway, to the record output of Vestas’ latest and largest turbine, already in the frame for a floating project off South Korea, clear progress is being made.
Throughout its evolution these last 15 years, floating wind’s entire value chain has continued to make market-boosting efforts to carve out capex and opex cost reductions while optimizing power production and asset reliability, and contributed many valuable innovations the process. More than the gift of revolutionary technology, it is in floating wind’s pioneering spirit – and the valuable return on experience such pioneers have acquired – in these ‘early years’ – as the sector positions itself as a key contributor to the world’s future renewable energy mix.
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