13 April 2021

Following our first two articles in this offshore wind series (Offshore Wind - A brief appraisal of offshore wind, 20 years from the first project) and (Offshore Wind - Next Wave Supply Chain Challenges and Evolution) and The Crown Estate’s recent announcement of a new 300MW leasing opportunity for floating offshore wind in the Celtic Sea (see here), we now look in more detail at floating offshore wind; the opportunities and some of the challenges facing this fast emerging sector. We are particularly excited about this new technology, as we are currently advising on three floating wind projects, including the recently announced Salamander project to be developed by the Simply Blue Group and Subsea 7, and are helping shape some of the thinking around the transition, the procurement challenges and other issues outlined in this piece.

Market Opportunities

As briefly discussed in our first article, fixed-bottom offshore windfarms (currently the dominant solution in offshore wind, accounting for the vast majority of projects constructed to date) can usually only be constructed in water depths up to 60m. However, it is estimated that over 80 per cent of all offshore wind energy resource is in waters deeper than 60m, making it unsuitable for fixed-bottom offshore wind[1]. Furthermore, fixed-bottom offshore wind is also dependent on suitable seabed conditions, which can vary greatly in even a small stretch of coast, further limiting suitable locations.

The solution to these issues appears to lie in the fast-evolving floating wind sector, where wind turbine generators are fixed to floating foundations and anchored or moored to the seabed. Such technology removes the need for fixed foundations as well as removing water depth constraints and much of the dependence on seabed conditions. Floating wind developers can (theoretically) select the best sites across the world for harnessing wind resource, including sites further from the shore where wind speeds are higher and more consistent. This is neatly demonstrated by the world’s first full-scale floating windfarm, Hywind Scotland, which has now recorded the UK’s best results for capturing potential output (its ‘capacity factor’) for a third consecutive year, achieving an impressive average of 57.1 per cent over the past year[2]. Clear evidence that the technology works and can meet the challenges presented, despite this being a relatively new solution.

The benefits of this new technology are clear and the market opportunities huge. In June 2020, the Carbon Trust forecasted that the floating wind market would increase from the (then) current 73 MW of global installed capacity to 70GW by 2040, with a project value of £195bn[3]. DNV have given similarly bullish forecasts, predicting that floating wind will account for 20 per cent of the offshore wind market by 2050 with a total installed capacity of 250GW[4]. Part of the reason for such extreme forecasted growth lies in the potential for floating offshore wind to open-up previously untapped markets to offshore wind. Of particular interest are Japan and the West Coast of the USA, where deep coastal waters have restricted the deployment of fixed-bottom offshore wind but present exciting opportunities for floating wind to grow. There is of course localised potential and opportunity in the UK too, with floating wind set to be deployed off the East and North East of Scotland, within the Celtic Sea and off the North East of England[5]. The vast majority of fixed-bottom offshore wind has so far been situated off the East Coast of England.

However, to achieve these heady heights, continued innovation will be required in the construction and engineering industry. Whilst there are many more factors we could consider in this exciting and emerging field, we outline below some of the main challenges and considerations that face the sector as it moves to the next stages of development.

Technological challenges

As with any new technology, there are a number of points that market participants will need to get comfortable with as the sector develops. From our experience of advising on early floating wind projects, one area of interest for developers and contractors alike has centred on the interface between turbine suppliers and floating foundation designers. One of the benefits of floating wind is that the current technology deploys proven wind turbines (previously rolled out on fixed-bottom projects). As such, the market is exploring innovative solutions for floating platforms to anchor the turbines to and how best to effectively combine the technologies, which early development projects have already proven successful in. Whilst contractors are (understandably) reluctant to provide some of the usual warranties you may expect to see in a construction contract due to the new technology, this is not unexplored territory for an industry that has been built on innovative technologies that have been subject to exponential development over the past decade. Nonetheless, greater integration between turbine suppliers and floating foundation designers will help to counteract this, and although floating wind is currently perceived to be ‘new technology’, in practice, Hywind Scotland is already one of the most successful UK assets (as noted above). 

The market is likely to settle naturally as more projects become operational and market participants become familiar with the technology. Additionally, as the floating wind market develops we expect to see greater standardisation of technologies (there are currently 40 different floating foundation designs under development) which should allow for contractors and developers to be familiar with the favoured solution and its efficacy. A greater consolidation of technologies together with the learning and development from early projects, both operational and under development, will be key to streamline solutions for future commercial projects.

Construction and Installation

One of the major potential benefits for floating offshore wind is lower reliance on expensive heavy lifting installation vessels during the construction and installation phase of a project. Where fixed-bottom offshore wind installations require such vessels to install foundations, transport, and assemble turbines on-site - floating turbines can be constructed in port and towed to site. This has significant potential cost saving and programme de-risking implications; with developers’ exposure to specialist installation vessel supply chain issues (as explored in our previous article on supply chain pressures) and the impacts of adverse weather conditions, reduced with most construction work occurring onshore.

However, the construction and installation of floating turbines comes with its own intricacies. Whilst assembling floating turbines in port has the obvious benefits of a controlled environment, reduced reliance on installation vessels and a lesser need for accommodation and transport of workers offshore, it may add to the increased pressure on port infrastructure already being experienced as a result of the global uptake in wind projects (please see our previous article on supply chain pressures). In particular, floating foundations require a lot of storage space in port, especially where multiple floating turbines are to be constructed and towed to site within a short programme, and this is likely to become a more important consideration as the size (and number) of floating projects being constructed increases. To reduce any strains on already tight project programmes, early engagement with ports and contractors will be key - developers may wish to think about establishing framework agreements with key counterparties and having oversight of supply chain manufacturing agreements to ensure that proper relationships and contracts are in place to facilitate the ambitions of each project. The industry and authorities are already aware of the need to upscale infrastructure to meet new technology demands and the overall Net Zero target and consequently, upgrading port infrastructure to accommodate ‘port-side’ construction is already contemplated in the Government’s recently announced £160m wind manufacturing investment support scheme to develop port infrastructure. We consider such plans to be a clear ‘win-win’ scenario for the Government, with big opportunities for market growth, UK ports and jobs in coastal Britain as well as ensuring that the necessary infrastructure is in place to continue the innovative advancement of the wind industry in the UK.

As floating windfarms move further offshore in search of greater wind resource, the cost implications and practicalities of towing turbines to site will need to be carefully evaluated. For fixed-bottom offshore wind installations, multiple turbines can be loaded on each trip. By contrast, typically two tugs are required to tow each floating turbine to site and where towing distances become larger, the programme and cost constraints of such activities increase. Contractors may want to consider future proofing any envisaged vessel supply issues by reinforcing their tug fleet sizes to facilitate upsizing of floating projects in the same way we are seeing new jack-up vessels being ordered to handle the 'supersized' turbines of the future. As floating wind opens up more markets to offshore wind and other offshore wind markets begin to mature (in particular, China and other large Asian markets and the USA), supply chain issues are only likely to increase, making this kind of forethought and planning ever more important.

Export of Power

Another area where new thinking is being deployed is in how power generated by a project is exported to the grid.

As fixed-bottom projects have migrated further offshore, the industry has moved from HVAC cabling to the more expensive HVDC cables. HVDC is already a new technological advancement in offshore wind, but the dynamic cabling required for floating windfarms will require further innovation or even entirely new solutions. One interesting such solution involves the export of power to offshore ‘energy islands’; integrating energy storage, electrolysers for conversion to green hydrogen and interconnector transmission to grid networks. The Danish Government has already approved plans for the world’s first energy island 100km off the coast of Denmark, which is eventually planned to connect up to 10 GW of offshore wind and host energy storage and hydrogen production technologies, HVDC transformers for transmission and interconnection as well as accommodation and O&M facilities (see here). This opens up exciting opportunities for offshore wind-generated green hydrogen production – a major potential export opportunity for the UK, as will be further explored in our next article in this series. As another benefit, offshore ‘energy islands’ provide a credible solution to the issues highlighted in our earlier article concerning ‘point-to-point’ connections for the ever-increasing numbers of offshore windfarms (which will be further exacerbated as floating wind substantially increases the offshore sites available). 

Operation and Maintenance

Whilst towing floating turbines to site is generally regarded as being beneficial for construction and installation activities, the situation is less clear when it comes to O&M. On the one hand, the ability to return a floating turbine to port to carry out maintenance has similar benefits to those considered above; including reduced reliance on expensive heavy lifting vessels, reduced requirement for transport and accommodation of service personnel offshore, and the benefits of carrying-out maintenance activities in a controlled environment. However, the cost benefits and practicalities of towing floating turbines back to shore will depend on factors such as the complexity and cost of disconnection / reconnection to the array, distance to shore, availability of capacity in the port servicing the windfarm, and the type of maintenance activities required. In many instances, it may prove to be more cost effective to leave turbines connected and find innovative solutions to facilitate effective onsite maintenance instead.

One of the main complications with carrying out onsite maintenance for floating offshore wind is that the jack-up vessels typically used for heavy maintenance in fixed-bottom offshore wind are unusable in the deeper waters likely occupied by floating wind projects. One possible solution for heavy maintenance activities (such as major component replacement) could be the use of self-climbing crane technology, where the turbine tower itself is used as the crane’s point of support as the crane climbs the tower to lift and lower loads. Enercon is already trialling self-climbing cranes developed by Lagerwey on its onshore wind turbines[6], and the technology is thought to be scalable and potentially suitable for use in an offshore environment. Another related complication is how to efficiently transport and accommodate service personnel far offshore, where the traditional use of Crew Transfer Vessels may become too costly and impractical. Instead, use of helicopter transport and accommodation in ‘offshore hotels’ may be required, a solution already seen on the furthest offshore fixed-bottom windfarms such as Hornsea Two. The use of drone technology may also be used to significantly reduce the cost of inspection activities and recent demonstrations even show that some remote maintenance activities may be possible through next generation drones. In particular, a recent UK demonstration has successfully trialled a six-legged, blade walking, ‘inspect-and-repair’ bot called ‘BladeBug’, which they say could allow cost reductions of up to 30 per cent on lifetime blade maintenance (see here). These developments are not being devised specifically for floating wind and are already being considered for fixed-bottom offshore wind; as such, they are likely to quickly become prevalent in the industry, which will assist deployment on any floating wind projects.

Opportunities for change?

There have been suggestions that the development of floating offshore wind presents an opportunity to move away from the multi-package contracting approach typically adopted in fixed-bottom offshore wind. With ‘port-side’ construction and the potential for greater integration between turbine suppliers and floating foundation designers in the future, there may be more appetite from developers and contractors to pursue an alternative procurement approach with fewer packages. The developer would benefit from lessening their exposure to project risk whilst a contractor may improve profitability by offering a more commoditised solution. However, whilst such an approach may benefit new market entrant developers, large players in the fixed-bottom offshore wind sector are already driving the early development of floating wind and this trend is set to continue. We therefore consider it unlikely that sophisticated developers, used to managing the greater exposure to project risks in return for substantial up-front cost savings, would look to move away from this multi-contract model.

The potential market for floating offshore wind is undoubtedly huge and we are already seeing steps towards commercialisation and large-scale adoption of the technology. Whilst this next stage of the sector’s development will require much innovation, as highlighted above in relation to ports, O&M, and wider technological development, the thought process around the shape of floating wind and the opportunities to pull together innovative learned solutions are there. By advising on a number of the early floating wind projects, including Salamander (as mentioned above), we are already helping to shape these projects and support those who are embracing the challenges. We look forward to continuing our work in this fast-maturing sector.

We would be happy to discuss any queries or thoughts you may have on any points raised above or on either of our two previous articles in this series (Offshore Wind - A brief appraisal of offshore wind, 20 years from the first project) and (Offshore Wind - Next Wave Supply Chain Challenges and Evolution). Our construction team and wider offshore wind team is well placed to advise on all aspects of a project from cradle to grave. Please get in touch with Lloyd James or your usual Burges Salmon contact.

Article drafted by Lloyd James and Craig Bruce.

[1] https://prod-drupal-files.storage.googleapis.com/documents/resource/public/FWJIP_Phase_2_Summary_Report_0.pdf

[2] https://www.bbc.co.uk/news/uk-scotland-north-east-orkney-shetland-56496355#:~:text=The%20world's%20first%20full%2Dscale,miles%20(25km)%20off%20Aberdeenshire.

[3] https://prod-drupal-files.storage.googleapis.com/documents/resource/public/FWJIP_Phase_2_Summary_Report_0.pdf

[4] https://www.dnv.com/focus-areas/floating-offshore-wind/commercialize-floating-wind-report.html

[5] https://ore.catapult.org.uk/wp-content/uploads/2021/01/FOW-Cost-Reduction-Pathways-to-Subsidy-Free-report-.pdf

[6] https://www.windtech-international.com/product-news/enercon-increases-capacity-of-the-lagerwey-climbing-crane

Key contact

Lloyd James

Lloyd James Partner

  • Construction and Engineering
  • Energy and Utilities 
  • Infrastructure

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