GLOBAL WIND ENERGY SHIPPING AND LOGISTICS SUPPLY CHAINS WITHIN DIFFERENT LIFE-CYCLES OF AN OFFSHORE WIND FARM M A R C H 1 3, 2 0 1 5, C O P E N H A G E N, D E N M A R K Prepared for the Global Wind Conference
Agenda - 1. Background and introductions 2. Wind market sizing and outlook 3. Logistical challenges 4. Wind energy supply chains 5. Wind energy supply chain costs 6. Global similarities and differences 7. Conclusion D E P A R T M E N T O F M E C H A N I C A L A N D M A N U F A C T U R I N G E N G I N E E R I N G - S H I P P I N G & L O G I S T I C S 2
Background and introduction 3
Introduction Thomas Poulsen Aalborg University, Copenhagen Campus Department of Mechanical and Manufacturing Engineering Contact info tp@m-tech.aau.dk www.en.m-tech.aau.dk DelCon Research interest: Global wind energy shipping and logistics Past employers Select consulting clients Background: 25 years of global shipping, logistics, and SCM experience having lived in 8 different countries working at practical, strategic, general management, and consulting level GLOBAL WIND ENERGY SHIPPING AND LOGISTICS AALBORG UNIVERSITY 4
AAU research organization 4 faculties 2,300 staff 20,000 students Humanities Social sciences Medicine 4,000 5,000 1,000 Esbjerg Aalborg Non-Danish students make up 10 % From 100 countries Copenhagen Engineering & science Research: By faculty staff By Ph.d. students By Master students 5
AAU wind thought leader Energy net Smart grid Active networks WTG BOP R+D Industry vision Weather (waves, currents) 6
Wind market sizing and outlook 7
10 largest onshore wind markets up Top 10 global onshore markets Ranking Country Cumulative until 2013 2013 new 1 China 91460 16052 2 USA 61292 1084 3 Germany 34468 2729 4 Spain 22637 175 5 India 20589 1987 6 UK 10946 1028 7 Italy 8448 450 8 France 8128 535 9 Canada 7813 1599 10 Portugal 4557 196 Rest-of-the-world Grand total 51221 10299 321559 36134 Cumulative percentage distribution 1,4% 15,9% 2,4% 2,5% 2,6% 3,4% 6,4% 7,0% 10,7% 28,4% 19,1% China USA Germany Spain India UK Italy France Canada D E P A R T M E N T O F M E C H A N I C A L A N D M A N U F A C T U R I N G E N G I N E E R I N G - S H I P P I N G & L O G I S T I C S Source: BTM Consult part of Navigant (2013) and own construction 8
Onshore and offshore distribution Cumulative distribution ultimo 2013 (MW) 6.832 Installed distribution in 2013 (MW) 1.721 321.559 Onshore Offshore 36.134 Onshore Offshore D E P A R T M E N T O F M E C H A N I C A L A N D M A N U F A C T U R I N G E N G I N E E R I N G - S H I P P I N G & L O G I S T I C S Source: BTM Consult a part of Navigant (2014a) and own construction 9
Number of offshore annual MW and wind farms installed up to and including 2013 MW D E P A R T M E N T O F M E C H A N I C A L A N D M A N U F A C T U R I N G E N G I N E E R I N G - S H I P P I N G & L O G I S T I C S Source: BTM Consult a part of Navigant (2014a) and own construction 10
5 critical offshore wind factors 1. Distance to shore 2. Water depth 3. Number of wind farm turbine positions 4. Weight and dimensions of WTG and foundation 5. Seabed conditions Near shore Offshore Far offshore D E P A R T M E N T O F M E C H A N I C A L A N D M A N U F A C T U R I N G E N G I N E E R I N G - S H I P P I N G & L O G I S T I C S 11
Logistical challenges 12
Race for larger WTG output - and importance of shipping/logistics/scm Source: Upwind Project (design limits and solutions for very large wind turbines) and Aalborg University Copenhagen photos 13
Research and development (R+D) Transport industry always caught back-footed need to get in front of industry R+D trends Prototypes several OEMs R+D 5-10 OEMs 10 MW R+D GE USA 15 MW R+D university + industry 20 MW 20+ MW 7-8 MW Onshore NOW 2 MW Offshore NOW 3-4 MW 5-6 MW Wind industry technology R+D leaps 1 MW First WTG serial production 1979 14
Sample Weight Dimensions Nacelle weight (t) Blade Length (m) Siemens 2.3 MW 82 45 Wind R+D Repower 6.15 MW Siemens 6 MW Samsung 7.5 MW 325 61 364 75 83 Implications on: - Transport equipment - Assets - HSSEQ Transport Equipment Trucks, trains, roads, bridges, storage facilities, lifting equipment, ports, vessels Makers of wind turbines (OEMs): The pioneers The other Europeans Examples of the Asian newcomers Source: AAU research, DHL Global Forwarding, Renewable Energy Solutions 15
Dimensions Logistics challenges D E P A R T M E N T O F M E C H A N I C A L A N D M A N U F A C T U R I N G E N G I N E E R I N G - S H I P P I N G & L O G I S T I C S Source: Danish Shipowners Association, courtesy Siemens Wind Power 16
Involved parties... GLOBAL WIND ENERGY SHIPPING AND LOGISTICS AALBORG UNIVERSITY 17
Wind energy supply chains 18
End-to-end life-cycle focus Shipping & logistics Two different flows: Onshore and Offshore GLOBAL WIND ENERGY SHIPPING AND LOGISTICS AALBORG UNIVERSITY Source: LogMS conference paper, 2013, Singapore 2013, Poulsen et.al. 19
Onshore and offshore - logistics Offshore Rail BOP Onshore D E P A R T M E N T O F M E C H A N I C A L A N D M A N U F A C T U R I N G E N G I N E E R I N G - S H I P P I N G & L O G I S T I C S 20
Installation & commissioning GLOBAL WIND ENERGY SHIPPING AND LOGISTICS AALBORG UNIVERSITY Source: AAU research, DHL Global Forwarding, Renewable Energy Solutions 21
Outbound I&C offshore double-port supply chain set-up Source: Own construction using Chambers et al (2010) framework D E P A R T M E N T O F M E C H A N I C A L A N D M A N U F A C T U R I N G E N G I N E E R I N G - S H I P P I N G & L O G I S T I C S 22
Wind energy supply chain costs 23
Different ways to estimate LCoE D E P A R T M E N T O F M E C H A N I C A L A N D M A N U F A C T U R I N G E N G I N E E R I N G - S H I P P I N G & L O G I S T I C S Source: DONG Energy 24
LCoE cost break-down GLOBAL WIND ENERGY SHIPPING AND LOGISTICS AALBORG UNIVERSITY Source: BVG Associates for the UK Crown Estate, 2014 25
Key levers for LCoE 1 CAPEX 2 OPEX 3 Yield 4 Cost of capital Distribution between CapEx and OpEx for an offshore wind power plant (Levelized Cost of Energy) OpEx 25-30% 2 1 CapEx 70-75% Installation 20% Other 10% Cables 5% Foundations 20% 45% WTGs Approximate split of CapEx GLOBAL WIND ENERGY SHIPPING AND LOGISTICS AALBORG UNIVERSITY 26 Source: DONG Energy
Reduction of LCoE is critical LCoE reduction targets from the Danish Wind Industry Association: 1) Newly built offshore wind farm must be able to produce roughly 25% more electricity per MW 2) The costs per installed MW must be reduced by approximately 40% 3) The cost of operation and maintenance per installed MW must be reduced 50% GLOBAL WIND ENERGY SHIPPING AND LOGISTICS AALBORG UNIVERSITY Source: DWIA 27
DWIA LCoE reduction targets - shipping and logistics implications Bigger MW output - Turbines get to be a lot larger Installation costs - Shipping and logistics is a big part O&M costs - Wind farms move further away from shore Bigger modules - Weight - Size / Dimensions Efficiencies - Faster, better - More uptime Technicians and parts - Optimized ways to get people, parts, and modules to the farms GLOBAL WIND ENERGY SHIPPING AND LOGISTICS AALBORG UNIVERSITY Source: www.windpower.org 28
Wind scenario model tool Main Model Structure Uses >20 different, independent, and verified sources Core data Hypothesis Triangulation Calculates total shipping / logistics / supply chain spend up to 2050 Supply chain split into different subsegments Contains additional information Profiles of OEM s and operators OEM data by market/market share Listings of key suppliers Logistics flows and hubs Model Mechanics Starts by outlining the total MW per year Up to and including 2010, fairly accurate actuals could be generated From 2011 through 2030, a good market estimate is available From 2031-2050, three different scenarios were created Views MW data in different ways By country/region (geography view) Onshore versus offshore Number of wind turbine units By OEM Technology / R+D Market value Source: Renewable Energy Solutions 29
Wind Scenario Model tool Total logistics spend: NPV (2050) = EUR 200B Intermediary Ports Land Shipping GLOBAL WIND ENERGY SHIPPING AND LOGISTICS AALBORG UNIVERSITY Source: Renewable Energy Solutions 30
Global differences and similarities 31
Case study efforts Number of companies Time spent Extent of case study scope Depth Width Europe Offshore, simple and easy cases Asia Offshore, one case Americas Onhore, rail focus D E P A R T M E N T O F M E C H A N I C A L A N D M A N U F A C T U R I N G E N G I N E E R I N G - S H I P P I N G & L O G I S T I C S 32
Case study: Anholt Offshore wind farm Fact box Operator: DONG Energy Ownership: DONG Energy, PKA, and PensionDanmark in JV Construction cost: DKK 11.5B Number of positions: 111 WTG s WTG type: 3.6 MW geared Siemens Wind Power Foundation type: MP/TP Total windfarm output: 400 MW Area covered: 88 km2 Distance from installation / service port (Grenå): 15 km Water depth 15.5 18 meters D E P A R T M E N T O F M E C H A N I C A L A N D M A N U F A C T U R I N G E N G I N E E R I N G - S H I P P I N G & L O G I S T I C S Source: DONG Energy, MTH, AAU research (meetings and site visits), EAWE conference paper, 2013 (Poulsen et.al.) 33
Main supply chain constituencies Phase Contract party Product/service Country Development & consent Geo Geotechnical and geophysical investigations Denmark Installation & commissioning Siemens Wind Power Nacelles/hubs Denmark Installation & commissioning Siemens Wind Power Towers Denmark Installation & commissioning Siemens Wind Power Blades Denmark Installation & commissioning Siemens Substation control systems Denmark Installation & commissioning Siemens Offshore substation electrical equipment Denmark Installation & commissioning Nexus Array cables Germany Installation & commissioning MTH/Bladt Industries MP and TP Denmark Installation & commissioning MTH/Ballast Nedam MP installation - HLV "Svanen" Holland Installation & commissioning MTH/Jumbo Shipping TP installation - HLV "Jumbo Javelin" Holland Installation & commissioning Visser & Smit Marine Array cable installation Holland Installation & commissioning A2SEA Wind turbine installation Denmark Operations & maintenance Hvide Sande Skibs- & Baadebyggeri Service vessels Denmark Operations & maintenance Port of Grenaa and misc. companies 35-50 jobs over coming 25 years Denmark D E P A R T M E N T O F M E C H A N I C A L A N D M A N U F A C T U R I N G E N G I N E E R I N G - S H I P P I N G & L O G I S T I C S Source: DONG Energy, MTH, AAU research (meetings and site visits), EAWE conference paper, 2013 (Poulsen et.al.) 34
Anholt offshore wind farm timeline D E P A R T M E N T O F M E C H A N I C A L A N D M A N U F A C T U R I N G E N G I N E E R I N G - S H I P P I N G & L O G I S T I C S Source: DONG Energy, MTH, AAU research (meetings and site visits), EAWE conference paper, 2013 (Poulsen et.al.) 35
Initial phases - A closer look... Tender phase: - April 2009: Release of tender specifications - April 2010: Tender submission - July 2, 2010: DONG Energy concession confirmed Development & consent phase: - July 2010: Geological surveys commenced Installation & commissioning phase: - Autumn 2011: Shore landing cables (export cables) commenced - January 2012: Offshore construction commenced 2012 2013 Jan Mar Jun Sep Oct July (time) 1. 2. 3. 4. 5. 6. Foundations Transformer platform Array cable laying start WTG erection start First electricity Fully operational Source: DONG Energy, MTH, AAU research (meetings and site visits), EAWE conference paper, 2013 (Poulsen et.al.) 36
China offshore wind China offshore wind initial study tr the need is adamant D E P A R T M E N T O F M E C H A N I C A L A N D M A N U F A C T U R I N G E N G I N E E R I N G - S H I P P I N G & L O G I S T I C S 37
Offshore wind - official 12th 5 year plan targets Cumulative MW in 2012 Cumulative target for 2015 Cumulative target for 2020 320 MW 2 GW 10 GW D E P A R T M E N T O F M E C H A N I C A L A N D M A N U F A C T U R I N G E N G I N E E R I N G - S H I P P I N G & L O G I S T I C S 38
South Korea at a glance Offshore wind sector overview: The first installations for the offshore sector were launched in 2013 Offshore sector with exponential growth rates towards 2017 Onshore installations with moderate growth Cumulative offshore installations to overtake cumulative onshore in 2017 Market highlights: 2019 target: Korean government offshore targets of 2.5 GW offshore wind power capacity 2030 target: A total of 23 GW capacity of which 7.5 GW will be offshore Onshore barriers due to limited land capacity Aim to boost the use of renewable energy to 11% of total power supply by 2030 (2% today) D E P A R T M E N T O F M E C H A N I C A L A N D M A N U F A C T U R I N G E N G I N E E R I N G - S H I P P I N G & L O G I S T I C S Source: BTM a Part of Navigant 2013, Aalborg University research 39
South Korea wind status - as of February, 2013 (onshore and offshore) D E P A R T M E N T O F M E C H A N I C A L A N D M A N U F A C T U R I N G E N G I N E E R I N G - S H I P P I N G & L O G I S T I C S Source: Korea Wind Energy Association (2013) 40
Conclusion 41
Key points of today LCoE must come down We do not know the exact share which shipping and logistics comprises To be able to impact costs, we must know the levers and handles to pull We look at the stakeholders, their business models, and what it takes to win D E P A R T M E N T O F M E C H A N I C A L A N D M A N U F A C T U R I N G E N G I N E E R I N G - S H I P P I N G & L O G I S T I C S 42