What do floating wind turbines mean for investors?

The completion of Hywind Scotland is a big moment for floating wind farms, but DNV GL says more must be done to de-risk projects for investors. [NB. This is an updated version of an article that appeared in our Finance Quarterly report in October 2017]

The fifth and final turbine for the 30MW floating scheme Hywind Scotland completed its trip across the North Sea last August. It was an important moment for the floating wind sector.

The scheme is 75% owned by Norway’s Statoil and 25% by Masdar, and was commissioned in October. This is the first time such large turbines – 6MW Siemens Gamesa machines – have been used on floating foundations, and is also the world’s first full floating wind farm. In addition, earlier this month Statoil reported that Hywind Scotland had achieved a 65% capacity factor between November and January.

Previously Statoil’s 2.3MW Hywind 1 off the coast of Norway and Principle Power’s 2MW WindFloat project with EDP off the coast of Portugal were the highest-profile deployments of floating turbines. Hywind Scotland is the first in a 348MW pipeline of floating projects planned in European waters, according to WindEurope.

This also opens up new opportunities for investors. We spoke to Magnus Ebbesen, senior consultant at DNV GL, about the opportunities and risks for investors in floating wind projects.

Head-to-head above water

Floating wind turbines draw heavily on systems widely used in the oil and gas sector.

There are currently three main types of floating foundations being used in wind: spar buoy, semi-submersible and tension-leg.

Statoil has used the spar buoy on Hywind, with the key benefits of simple construction, a low centre of gravity and a small cross-section at the water surface to minimise wave loading. Meanwhile, Principle’s WindFloat is a semi-submersible foundation, which gains its stability from its low centre of gravity and wide water plane area. The benefit of this structure is a low draft which allows for a wide area of sites and simple installation.

The third type, tension-leg platforms (TLPs), are tethered to the seabed with taut tendons. The key benefits with TLP is the low weight of the substructure. While this has not yet been used for floating wind, it has been deployed widely in oil and gas since the 1980s.

But despite this experience, there are big differences between supporting an oil platform and a 6MW wind turbine.

These turbines create large forces that must be considered in design and stability calculations. For example, the Hywind system is 258 metres tall, of which 178 metres are above water and 80 metres are beneath.

“There are strong winds and waves impacting the structures that cause complex dynamic behaviour, and that affect both the turbine and the substructure design,” says Ebbesen.

These turbines need new types of controllers to angle the blades and control drive train torque so they can control the motion of the turbine and the floater, maintain optimal production, and reduce wear and tear. Failing to do this could affect their energy yield and required maintenance and repair, which would affect investors’ returns.

Ebbesen says turbine manufactures may be reluctant to offer performance and defect warranties at the same level as conventional wind. This could affect the developer’s chances to obtain financing on similar terms. And there are other technical challenges, including the dynamic cables and new maintenance processes. The industry has a lot of work to do to commercialise the technology.

But it is worth doing. There is great potential for floating wind to benefit from some of the cost reductions that are helping fixed-foundation schemes, including larger turbines. The floating sector should also enable developers to use simpler and less costly vessels, and thus reduce the cost of building at sea.

Ebbesen adds floating foundations are nearly commercially viable:

“When you have several floating demonstration parks in different areas, I think you are very close to having something commercially viable. My understanding is that it’s more than five years away, but there is great interest in the market.”

Making the investment case

For now, floating foundations are more expensive than fixed foundations, but for how long? In January, the UK’s Carbon Trust said floating wind could be cost-competitive in the next decade.

It said these projects could achieve a levelised cost of energy of around £85/ MWh by 2026, assuming there were enough developments to commercialise the sector. But this was before low-price offshore wind won government backing in the UK and Germany, and many of the assumptions in those projects – notably the falling cost of offshore turbines – would also help the floating sector.

Last June, WindEurope said costs would fall rapidly, with up to 50% reductions possible by 2050, and could fall faster if projects with floating foundations follow their fixed counterparts. It added that turbines of between 12MW-15MW could fit on floating foundations.

Ebbesen is confident this change is coming. The UK’s Carbon Trust has said that 80% of the offshore wind resource in Europe and Japan is on sites that would need floating foundations, and 60% in the US, particularly off the west coast. Hypothetically, there is potential to install projects of 7,000GW globally.

“There are huge markets that it opens up and I think the next few years will be the dawn for floating wind. You have projects that will de-risk the technology, show opportunities for cost reduction, and improve the total interest in floating wind,” says Ebbesen.

Hywind Scotland’s final turbine has completed its travels but the journey for floating wind is just starting.

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