Opportunities in a time of uncertainty

The offshore wind industry 2010-2020

Johan Sandberg
Marine Money, Oslo - 27 May 2010
 Energy – a crash course...
Energy Consumption (Watt)
ƒ Vacuum cleaner 750
ƒ Normal household (Norway) 2,500 (2,5 kW)
ƒ Small city (100,000 people) 175,000,000 (175 MW)
ƒ Medium city (Oslo) 1,000,000,000 (1 GW)
ƒ Small country (Norway) 12,700,000,000 (12,7 GW)

Energy Production
ƒ Medium hydropower plant 400 MW
ƒ Medium coal fired plant 900 MW
ƒ Medium nuclear reactor 900 MW
ƒ Medium nuclear plant 2000 MW

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
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 Green Energy Investments

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
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 Renewable energy growth worldwide

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
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 Offshore wind – What is it?

+ =

40+ years of offshore oil

& gas experience

Onshore Wind Offshore oil & gas Offshore wind

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
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 Offshore wind – three short facts

… over 100 GW offshore wind projects under development

… will produce more than 10% of EU’s electricity, when realised
… round 3 alone involve a CAPEX investment of >156 billion USD

A moon landing! - But not rocket science…

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
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 Context – the energy reality
ƒ Energy demand increasing
- Estimated increase worldwide 2010-2020: >35% (IEA, World Energy Outlook 2009)

ƒ Energy security
- Gas supply risks from Russia to Europe
- New finds of oil and gas are decreasing

ƒ Energy risks
- Oil spill (e.g Gulf of Mexico)
- Local environmental impact (e.g. hydropower)
- Waste products (e.g. nuclear)

ƒ Climate Change
- ”It is more expensive to wait than to act now...”

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
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 Round 3 – the world’s largest offshore wind development
1. Moray Firth Zone, Moray Offshore Renewables Ltd which is
75% owned by EDP Renovaveis and 25% owned by
SeaEnergy Renewables – 1.3 GW
2. Firth of Forth Zone, SeaGreen Wind Energy Ltd equally
owned by SSE Renewables and Fluor – 3.5 GW
3. Dogger Bank Zone, the Forewind Consortium equally
owned by each of SSE Renewables, RWE Npower
Renewables, Statoil and Statkraft – 9 GW
4. Hornsea Zone, Siemens Project Ventures and Mainstream
Renewable Power, a consortium equally owned by
Mainstream Renewable Power and Siemens Project
Ventures and involving Hochtief Construction – 4 GW
5. Norfolk Bank Zone, East Anglia Offshore Wind Ltd equally
owned by Scottish Power Renewables and Vattenfall
Vindkraft – 7.2 GW
6. Hastings Zone, Eon Climate and Renewables UK– 0.6 GW
7. West of Isle of Wight Zone, Eneco New Energy – 0.9 GW
8. Bristol Channel Zone, RWE Npower Renewables, the UK
subsidiary of RWE Innogy – 1.5 GW
9. Irish Sea Zone, Centrica Renewable Energy and involving
RES Group – 4.2 GW

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
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 Round 3 – Norfolk Bank: 7,2GW
1. Moray Firth Zone, Moray Offshore Renewables Ltd which is
75% owned by EDP Renovaveis and 25% owned by
SeaEnergy Renewables – 1.3 GW
2. Firth of Forth Zone, SeaGreen Wind Energy Ltd equally
owned by SSE Renewables and Fluor – 3.5 GW
3. Dogger Bank Zone, the Forewind Consortium equally
owned by each of SSE Renewables, RWE Npower
Renewables, Statoil and Statkraft – 9 GW
4. Hornsea Zone, Siemens Project Ventures and Mainstream
Renewable Power, a consortium equally owned by
Mainstream Renewable Power and Siemens project
Ventures and involving Hochtief Construction – 4 GW
5. Norfolk Bank Zone, East Anglia Offshore Wind Ltd equally
owned by Scottish Power Renewables and Vattenfall
Vindkraft – 7.2 GW
6. Hastings Zone, Eon Climate and Renewables UK– 0.6 GW
7. West of Isle of Wight Zone, Eneco New Energy – 0.9 GW
8.
The equivalent of two large
Bristol Channel Zone, RWE Npower Renewables, the UK
nuclear
subsidiary power
of RWE Innogy –plants
1.5 GW – or 8
9. Irish average
Sea Zone, Centrica
nuclear Renewable Energy and involving
reactors.
RES Group – 4.2 GW

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
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 Round 3 – Dogger Bank; 9 GW
1. Moray Firth Zone, Moray Offshore Renewables Ltd which is
75% owned by EDP Renovaveis and 25% owned by
SeaEnergy Renewables – 1.3 GW
2. Firth of Forth Zone, SeaGreen Wind Energy Ltd equally
owned by SSE Renewables and Fluor – 3.5 GW
3. Dogger Bank Zone, the Forewind Consortium equally
owned by each of SSE Renewables, RWE Npower
Renewables, Statoil and Statkraft – 9 GW
4. Hornsea Zone, Siemens Project Ventures and Mainstream
Renewable Power, a consortium equally owned by
Mainstream Renewable Power and Siemens project
Ventures and involving Hochtief Construction – 4 GW
5. The
Norfolk Bankequivalent of 10
Zone, East Anglia average
Offshore Wind Ltd equally
owned by Scottish Power Renewables and Vattenfall
nuclear
Vindkraft reactors.
– 7.2 GW
6. Hastings Zone, Eon Climate and Renewables UK– 0.6 GW
7. West of Isle of Wight Zone, Eneco New Energy – 0.9 GW
8. Bristol Channel Zone, RWE Npower Renewables, the UK
subsidiary of RWE Innogy – 1.5 GW
9. Irish Sea Zone, Centrica Renewable Energy and involving
RES Group – 4.2 GW

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
© Det Norske Veritas AS. All rights reserved. 10
 Round 3 – the third set of projects in offshore wind in the UK
ƒ Vision and Facts
- In total, at least 32 GW
- In total, 7-9,000 large turbines - creating an industry
- 9 fields, sized between 0,6 to 9 GW
- Deeper and further from shore than ever before

ƒ Size of market
- Current (2009) CAPEX investment: 4,5 Million USD / installed MW
- Planned installation in Round 3: 32 000 MW
- Estimated CAPEX for Round 3: 156 billion USD
- Main installation activity expected in: 2015 - 2020

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
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 Round 3 – the third set of projects in offshore wind in the UK
ƒ Installation plan

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
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 How big is a wind turbine?

Rotor area: 3800 m2

- This was 2003...

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
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 How big is a wind turbine?

2009 and offshore Rotor area: 11,000 m2

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
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 How big is a wind turbine? – 2009 and offshore

Multibrid M5000
onshore test facility
near Bremerhaven,
Germany

Spot the two cars?

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
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 How big is a wind turbine? – 2009 and offshore

Tripod foundations Weight: approximately

on the way to Alpha 750 tonnes each
Ventus test site.

Spot the people?

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
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 How big is a wind turbine? – 2009 and offshore

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
© Det Norske Veritas AS. All rights reserved. 17
 How big is a wind turbine? – 2009 and offshore

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
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 A new industry – with new challenges

Utilities / onshore wind developers

- Experience in wind turbine construction
- No offshore experience
- Used to small turbines, 1-2 MW
- Relatively high availability of tools and
experienced contractors and workers

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
© Det Norske Veritas AS. All rights reserved. 19
 A new industry – with new challenges

Shipping
- No experience in wind
- No experience in offshore construction
- Large experience in maritime logistics
- Used to operating with low margins

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
© Det Norske Veritas AS. All rights reserved. 20
 A new industry – with new challenges

Offshore Oil & Gas

- No experience in wind turbine construction
- Large experience in offshore construction
- Some experience in maritime logistics
- No experience with low margins!

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
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 The industry agrees: - Acute shortage of installation vessels!
Media: Vessel Shortage critical to Current vessels not built for for
the whole offshore wind industry purpose
- Serious HSE Risks
- Serious project delays
- Serious cost overruns

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
© Det Norske Veritas AS. All rights reserved. 22
 Vessels planned or under construction

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
© Det Norske Veritas AS. All rights reserved. 23
 Vessels planned or under construction

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
© Det Norske Veritas AS. All rights reserved. 24
 Vessels planned or under construction

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
© Det Norske Veritas AS. All rights reserved. 25
 Vessels planned or under construction

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
© Det Norske Veritas AS. All rights reserved. 26
 Vessels planned or under construction

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
© Det Norske Veritas AS. All rights reserved. 27
 Market Potential for Offshore Wind Installation Vessels

Market Potential - Installation Vessels (jack-ups)

2012 2013 2014 2015 2020
Large Vessels 4-5 5-6 6-8 10-15 20-25
Medium Vessels 4-5 5-6 8-10 10-15 15-20
O&M Vessels 2-4 5-7 8-10 10-15 15-20

- In addition, several hundred vessels will be

required for support functions during
installation and operations
- Some 10,000 foundations (500-1000 tonnes
steel each) might have to be built at yards
around the world
ƒ Assumptions
- Approximately 40-50 GW constructed in 2020
- Average turbine size in 2020: 5MW
- Large vessel: Crane capacity > 1000 tonnes
of - Medium vessel: Crane capacity < 1000 tonnes
- O&M vessel: Crane <= 500 tonnes

- Significant investments in cabling, power

transmission, grid development, and other
infrastructure
Opportunities in a time of uncertainty
Marine Money, Oslo - 27 May 2010
© Det Norske Veritas AS. All rights reserved. 28
 Conclusions
ƒ Market size 2010 - 2020:
- Total Capex investment - Realizing at least 85 GW
- Optimistic – more than 250 billion USD installed worldwide

- Base case – 150 to 250 billion USD - Realizing at least 55 GW

installed worldwide
- Conservative – 100 to 150 billion USD
- Realizing at least 35 GW
ƒ Politically driven (20-20-20) installed worldwide

ƒ Strong political commitment

ƒ Assumptions
ƒ Installation activity taking off in 2013-2015 - Average cost per installed MW:
2M Euro or 2,86M USD
(approx 1/3 reduction from
ƒ Significant upside if risks can be managed 2009 cost)
- Exchange rate: 1,43 USD/Euro
as per Jan 8, (date of Round 3
ƒ Significant risks to be managed announcement)

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
© Det Norske Veritas AS. All rights reserved. 29
 Finally
Any questions
please use
contact details
below:

Email:
Johan.sandberg@dnv.com
Telephone:
+47-91877047

Opportunities in a time of uncertainty

Marine Money, Oslo - 27 May 2010
© Det Norske Veritas AS. All rights reserved. 30
 Safeguarding life, property
and the environment

www.dnv.com

Opportunities in a time of uncertainty

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