Matthew Knight, Director of Business Development Siemens Energy matthew.knight@siemens.com Connecting offshore wind Lessons so far and future challenges Royal Danish Embassy London offshore wind event 6 th December 2011 Copyright Siemens. All rights reserved. Matthew Knight
Siemens Siemens covers the complete energy value chain Siemens design-and-build offshore wind connections We provide reliable & proven Wind turbine generators Offshore grid connections On and Offshore asset services HVDC interconnectors Finance for offshore wind 1 0 Renewables Oil & Gas Service Fossil Power Generation Power Transmission Power Distribution 10 Dolwin1, Germany 860 MW HVDC Interconnectors Moyle, Britned, Storebaelt Page 2 December 2011 Matthew Knight
A means to an end Safe Timely Coordinated Consented Financed Designed and built Operated To bring wind power ashore Lincs offshore substation 2011 Page 3 December 2011 Matthew Knight
Timely Build time for grid connection is LONGER than for wind farm and grid needs to be there for the first wind turbine Ideally grid is ready just in time Better for grid to be early than late Stranded asset value of wind farm 4 x value of grid 1 day loss of earnings 1% total substation capex Uncertainty over grid has implications for wind farm risk and cost of finance 4:1 Inner Gabbard substation 2010 Page 4 December 2011 Matthew Knight
Policy challenge Who designs? Who commits? Who gets consents? Who pays? Who builds? Who Maintains? And how is all this regulated, incentivised, or managed? Denmark, UK & Germany are setting the trend London Array substations 2011 Page 5 December 2011 Matthew Knight
Who should own offshore grid connections? Point of common coupling Array Cable Collector substation Export Cable Connection substation For an integrated utility this was easy Integrated utilities are unbundling ahead of 2012 EU requirement If split there are 2 obvious options Developer takes power to shore (NL, BE) Host grid operator brings grid out to meet the wind farm (DE, DK) GB projects so far have been built by developer of the wind farm GB from 2010 a new breed Offshore Transmission Owner (OFTO) The Grid Page 6 December 2011 Matthew Knight
How s it going so far? Denmark Germany Great Britain Strong coordination between wind farm and grid Grid concept part of site selection Simple radial connections and relatively small projects single AC cable False start 3 years ago when projects didn t meet financial criteria to trigger build 5 HVDC connections awarded in 1 year a real challenge for Tennet to finance BSH to certifiy Supply chain to deliver wind farms on notice of possible delay Developer build then transfer to OFTO results in low cost finance Some risk moves to wind developer So far OFTO build does not fit any party s business model Coordinated design key to large scale planned by GB Page 7 December 2011 Matthew Knight
20 (AC) offshore substations so far 2007 2008 Rodsand DK Horns Rev DK Barrow GB Princes Amalia (Q7) NL Lillgrund SW Robin Rigg 1 & 2 2009 Alpha Ventus D Horns Rev 2 DK Gunfleet GB Rodsand 2 DK Gabbard GB Thanet GB 2010 2011 Bard DE Walney 1 GB Galloper GB Belwind 1 BE Ormonde GB Sheringham GB Coming soon Gwynt Y Mor, Duddon, Humber and German N Sea Page London 8 Array 1 & 2 GB December Lincs 2011 GB Matthew Knight
Perverse incentives, odd outcomes? Examples of apparently odd outcomes. No criticism implied or intended These are capable companies doing sensible things in the circumstances Page 9 December 2011 Matthew Knight
The onshore end Thanet substation 2010 100 wind turbines Set in an array of 100 cables Fed from the grid where the source impedance / fault level may change Page 10 December 2011 Matthew Knight
EU member announced offshore wind farms UK and Germany represent ¾ of EU market Danes active in both Round 1 Round 2 Round 3 Scottish Inshore Moray Firth (1.3 GW) Firth of Forth (3.5 GW) UK 48 GW DE 25 GW F 6 GW NL 5.2 GW DK 4.2 GW ES 3 GW Sandbank 24 Nördlicher Grund SylWin Dan Tysk ROI 2.6 GW FIN 2 GW BE 1.8 GW IT 0.6 GW POL 0.5 GW GR 0.3 GW Butendiek Dogger Bank (9 GW) BorWin He Dreiht 3 Hohe See 2 1 Global Tech 1 Amrumbank West Nordsee Testfeld Nordsee Ost 2 1 HelWin Meerwind Irish Sea (4.2 GW) Hornsea (4 GW) DolWin Bard Veja Mate Borkum West 2 MEG 1 1 2 Riffgrund West Borkum Riffgrund Nordsee 1 Godewind 2 UW Hagermarsch UW Büttel Bristol Channel (1.5 GW) Anglia (7.2 GW) UW Diele UW Dörpen / West Page 11 December 2011 Matthew Knight
UK offshore wind market Let s assume Round 3 builds 3.5GW per year - for 10 years 9 zones build in 500MW blocks - less than 1 each per year A 10 year sustained market allows investment Industrialisation Cost reduction 2017 2018 2019 2020 2021 2022 2023 2024 2025 Page 12 December 2011 Matthew Knight
UK R3 is an opportunity to industrialise So far every project has been bespoke Standardisation will be key Consistent block sizes for wind farms, functional specifications Allow suppliers to optimise for a small range of sizes Best practice from lessons to date Coordinated grid design Saves 15-20% grid cost vs. radial With the scale planned by UK we can significantly reduce costs IF we have a pipeline of work and decide early enough what to build Page 13 December 2011 Matthew Knight
Reducing energy cost of grid connections Charging* Coordination Extended asset lifetime Timing / Speed of delivery Standardisation Technology Learning by doing Industry framework Technology risk (cost of finance) Delivery risk Supply chain Something radical (i.e. a new product or technique) *the way cost is allocated, not an absolute reduction. Galloper substation 2011 In some cases spending more on grid lowers Levellised Energy Cost Page 14 December 2011 Matthew Knight
Array cables Wind Turbine Generator Transition Piece waterline Monopile Page 15 December 2011 Matthew Knight
Investing in HVDC 7m 340 jobs Manchester Siemens European hub for HVDC Trans Bay HVDC converter substation, San Francisco 2010 Page 16 December 2011 Matthew Knight
Conclusions Grid is an enabler to offshore wind. It takes longer to build and is needed the day the first wind turbine arrives Different regimes apply in GB, DK and DE. None is perfect they all need to recognise trade offs between many objectives Industrialisation, cost reduction and safety go hand in hand Supplier FIDs come long before project FIDs We all have to reinforce confidence to make it work and avoid further delay which kills jobs The rewards for the UK are jobs, investment, exports. The offshore wind industry leading economic recovery Page 17 December 2011 Matthew Knight
Matthew Knight, Director of Business Development Siemens Energy matthew.knight@siemens.com Connecting offshore wind Lessons so far and future challenges Royal Danish Embassy London offshore wind event 6 th December 2011 Copyright Siemens. All rights reserved. Matthew Knight