Carbon Trust’s Offshore Wind AcceleratorDriving down the cost of offshore wind

Phil de VilliersOffshore Wind Accelerator Manager

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Our mission is to accelerate the move to a low carbon economy

We cut carbon now byProviding specialist advice and finance to help organisations cut carbonSetting standards for carbon reduction

We cut future carbon emissions byOpening markets for low carbon technologies Leading industry collaborations to commercialise technologiesInvesting in early stage low carbon companies

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Focus of assessment– What is required to deliver

offshore wind in the UK?

– What does UK Government and industry need to do?

In 2008 Carbon Trust assessed barriers to offshore windOffshore wind power: Big challenge, big opportunity

Note: Report is available on our website: www.carbontrust.co.uk

…

UK faces an energy gap and tough renewable energy targetThis requires mass deployment of offshore wind

Installed capacity, projected demand (GW), 2008-2020

% of UK energy from renewables, 2005-2020

Source: Committee on Climate Change, 2008 (based on DECC Energy Model)

0

10

20

30

40

50

60

70

80

90

201520102008

Coal

Gas

NuclearRenewables

Projectedpeak demand

2020

Energy gap

15%

2%1%

2020 target

2005 2010

8x increase required

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Current expectation

Optimal site availability

Cost reductions

Achievable goal

Weak commercial returns, high levels

of public subsidy

Stronger commercial returns, lower levels

of public subsidy

Source: Carbon Trust “Offshore wind power: big challenge, big opportunity”, 2008

Increased RD&D critical for delivering cost reduction

£45bn

£14bn

£16bn£75bn

Requires major RD&D

programme, of which OWA is

one component

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0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

2002 2003 2004 2005 2006 2007 2008 2009 2010

Gunfleet Sands

Robin Rigg

Lynn

Burbo

Barrow

Kentish Flats

Scroby Sands

North Hoyle

Cost per MW installed (€m/MW)

Year

Rhyl Flats

Costs must be reducedOtherwise projects cancelled, UK renewable targets missed

Source: Emerging Energy Research, 2009

Drivers• Rising commodity prices• Bottlenecks in supply chain• Complexity of sites, distance, depth• FX rate volatility

7Offshore Wind Accelerator

Offshore Wind AcceleratorObjective: Reduce cost of energy by 10% through RD&D

8 developers + Carbon Trust

Focusing on technologies for– Round 2 extensions– Round 3– Scottish Territorial Waters

Total budget ~£40m– £10m for collaborative R&D– Up to £30m for demonstrations– Carbon Trust funds 1/3

Commitment to 2014– Started October 2008

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OWA objectivesRequires very targeted RD&D

Focus on commercial outcomes– Reduce cost of energy by 10%– Deliver innovations in time for Round 3 (~2015)

Learn from the capabilities and experiences of each member– Offshore wind, oil and gas, onshore wind

Encourage the best designers to deliver innovations– Engage them on very specific challenges– Let them keep their IP– Look internationally, not just to UK– Engage with other industries for technology transfer

Operate responsively to member needs; manage costs effectively

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• Research-focused

• May not meet customer needs

• Customer-focused

• Innovators focus on main challenges

OWA is an example of market-pull innovation

Two approaches to innovationUK offshore wind R&D

customer-driven

Offshore Wind Accelerator

Innovators Market

Technology push

Marketpull

Source: Carbon Trust 2011

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RWESSECentricaSPRVattenfallDONGStatkraftStatoilMainstreamSiemensFluorE.ONSeaEnergyEDPEnecoWarwickFred OlsenMasdarEDFAREG

Round 1 Round 2 STW & Demo Round 3 Total marketDeveloper

60% of UK market is in OWA: big pull for innovatorsOWA developers have 30GW of licensed capacity in UK waters

OWA Stage II partners

58

90200415650900975

4%2,000 4%2,360 5%2,4082,408 5%2,884 6%

4,396 9%5,350 11%5,809 12%6,015 12%6,555 14%

0%0%1%1%

5%

2%1,238 3%

1,809 4%1,985

2%900975

325

0

4,185 13%3,983 12%3,750 12%

3%3%

1%

1,733 5%2,000 6%2,000 6%2,250 7%2,250 7%

0%3,600 11%3,600 11%

58

415

913300

0

3600

58

453

6%0%

1%

8%

1,500 26%

16%5%

0%

26%1,518

1%

7%

158

200

600252

0

158

498250

504

2%

7%3%

0%2%2%

2,406 26%

5%3%1,430 16%

5%2,202 24%

90

90

2440

240

19410150

20%

7%

7%

0%

20%

16%1%

12%

Source: RenewableUK (Jan 2010), The Crown Estate (May 2010)

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Yield

Cost of finance

Focus is on areas developers most able to influence

BoP

TurbineO&M

I&C

Aiming to reduce impact of distance and depth on cost

Note: Cost analysis for <700 W/m2 wind power, where 100% = £97/MWh (2008 assumptions)Source: Carbon Trust “Big Challenge, Big Opportunity” 2008

Wind speed Distance Depth

70

80

90

100

110

120

130

Depth (m)0-20 20-40 40-60

70

80

90

100

110

120

130

Distance to shore (nm)60+12-30 30-600-12

70

80

90

100

110

120

130

800-900

Wind power (W/m2)

700-800

<700 900+

CoE as % typicalnear-shore site

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Steering Committee

Carbon Trust Management Team

Innovators, designers

Innovators, designers

Innovators, designers

Innovators, designers

OWA partnersCarbon Trust3rd party contractors

125+ people

500+ companies

Technical Working Group

Technical Working Group

Technical Working Group

Wake Effects AccessFoundationsTechnical

Working Group

Electrical

Research performed within Technical Working GroupsInnovation is provided by third-parties

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Many companies engaged by OWA to deliver innovation

Wake effects DevelopersDesigners Fabricators InstallersElectrical systems O&M

Foundations

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2010 2011 2012 2013 2014

FoundationsWake Effects

ElectricalATL

New area 1New area 2Co

mm

on R

&D

Demo proj. 1

Selected Demo proj. 2

Selected Demo proj. 3

Selected Demo proj. 4Selected Demo proj. 5

ETC

Dis

cret

iona

ry

proj

ects

CommonPartner “A” participationOther Partners’ Projects

Two types of activity: Common R&D and Discretionary ProjectsPartners opt-in to participate in Discretionary Projects

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Some important stakeholders for OWA

Funders

WTG OEMs

Finance community

Innovators, designers

R&D institutes F

W E

A

OWA

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OWA focuses on strengthening economics of offshore wind

Offshore wind returns

YieldOPEXCAPEX

Wake effects

AccessFoundations

Electrical systems

Fina

ncin

g co

sts

Four technology areas, selected on basis of detailed analysis of over 70 technical barriers

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Most of UK licenced capacity is in 20-60m depths

Source: Crown Estate 2009

560

5,060

3,660

0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 Round 1, 2 and 3potential installedcapacity (MW)

Depth (m)

60-70

50-60

40-50

30-40 6,220

20-30 6,260

10-20 1,340

0-10 580

835

5,880

6,050

Round 3Round 2Round 1

Foundations

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Turbine installation rates will need to increase dramatically Number of turbines installed per year 2003 - 20201

1,0001,000900

700

500500400400

333300218

150673330302021

202020192018201720162015201420132012201120102009200820072006200520042003

1. Number of turbines calculated from actual and forecast installed capacity figures, assuming 3MW turbines 2003 – 2013, and 5MW turbines from 2014Source: Carbon Trust “Offshore wind power: big challenge, big opportunity”, 2008; Carbon Trust analysis 2010

One new turbineinstalled per day

2.5 new turbines installed per day

One new turbineinstalled every 11 days

Over 6,000 turbines to beinstalled over 10 years

ModelledActuals

Foundations

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Fabrication

Foundations research area focuses on 30-60m

Shortlist FinalistsKeystone

Gifford / BMT /Freyssinet

SPT Offshore

MBD

Airbus A320

Source: Carbon Trust Offshore Wind Accelerator 2010, IHC

IHC

Foundations

Current focus

Installation

Demonstration

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Electrical systems opportunity: higher voltage arrays

Electrical Systems

Current priorities

Engaging cable suppliers to deliver higher voltage cables

Optimising design of switchgear, transformers

BenefitImproved reliabilityLower losses

Source: Carbon Trust Offshore Wind Accelerator 2010

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Next stepsDevelop more accurate wake effects modelsDevelop tools to optimise layoutsMeasurement campaign to reduce data collection costs

More accurate models are being developedIncreases wind farm yields and reduces financing costs

0.4

0.5

0.6

0.7

0.8

0.9

1

1.1

1.2

1 2 3 4 5 6 7 8Column

Nor

mal

ised

Pow

er

Model A

Model B

Model C

Model D

Model Db

Model Ea

Model Ec

Model F

Model F Stable

UpWind

Measured Data

Upper 25%

Low er 25%

Coloured lines represent different

models or model variants

Wake Effects

Source: Carbon Trust Offshore Wind Accelerator 2010

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New technologies required to implement optimal strategies

Access competition to increase availability and safetyOver 450 designs entered

Challenge: improve access in tough metocean conditions

Vessels

Transfer systems

Launch & recovery systems

Source: Carbon Trust Offshore Wind Accelerator 2010

Access Systems

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Some excellent R&D is being performed in EuropeExamples

Denmark – Risø

Germany – RAVE, Fraunhofer

Netherlands – ECN, FLOW

Norway – NOWITECH

Sweden – Vindforsk III

UK – ETI, NAREC

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Greater collaboration is neededReduce duplication, increase efficiency

4

4

5

5

7

8

10

15

23

0 5 10 15 20 25

Ecosystem

Wind resource assessment

Turbine development

Grid integration

Foundations

Wake effects

Access / O&M

Electrical systems

Floating wind turbine

No. projects

Source: Carbon Trust analysis 2010

OWA focus area

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We are focusing our RD&D efforts on the needs of end users

Cost reduction in site conditions applicable to EU market

RD&D is essential for driving down cost of offshore wind

Strengthens economic returns

Reduces financing costs

Reduces costs to consumers

Accelerates deployment

Greater collaboration would benefit everyone

Avoids duplication and reinvention

Conclusions

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Phil de VilliersOffshore Wind Accelerator ManagerPhil.deVilliers@CarbonTrust.co.uk