Innovation doesn’t stop with subsidy-free tenders

In the coming years, offshore wind energy in the Netherlands will get a big boost. By 2030, the total installed offshore wind capacity is planned to be 11.5 GW. Where a few years ago, offshore wind was seen by the general public as the most expensive climate solution, it has now become one that needs almost no financial support from the Government. Technological and non-technological innovation have contributed significantly in bringing the cost of offshore wind energy down. With offshore wind being more competitive, do we still need to invest in innovations in this area? The answer is YES!

Wind Energy Magazine spoke to David de Jager, director of GROW (Growth through Research, development & demonstration in Offshore Wind), a consortium of about 20 players in the Dutch offshore wind energy industry that work towards bringing down the cost of offshore wind and increasing the role in the energy system by exchanging knowledge and intensive cooperation. De Jager previously worked for Ecofys and has been involved with the development of renewable energy for many years.

What do you see as the main drivers for having reduced the price of offshore wind?
Offshore wind has developed at a rapid pace in the past ten years. In 2010 we thought the price per kilowatt hour was 18 euro cents. With the first tender we saw a remarkable 7 euro cents plus grid connection costs, to be followed by 5 euro cents in a later tender. Everyone wondered how this happened in such short time span, including the industry itself. When GROW was initiated in 2016, we set the ambition to see the cost of offshore wind reduced to 7 euro cents by the end of the programme, in 5 years. After 3 months, the first tender result was announced that will indeed result in low cost wind energy by 2021!

For one, technical innovations, especially in turbines, have contributed significantly. These were responsible for around 40% of the realized cost reduction for offshore wind. The other 60% came from a variety of more organisational improvements, laid down in the Energy Agreement of 2013, which reduced investor risks and activated competition. Looking back, all stakeholders were ready and delivered. The industry was able to implement innovations resulting in significant cost reductions. And the Government provided the legal and institutional enabling context. I am referring to the granting of licenses, availability of subsidy schemes and the long term plans for offshore wind.

Whereas before the Energy Agreement in 2013 offshore wind policies had no clear long-term perspective and were characterised by constant changes, with the Energy Agreement there was more clarity and structure. Another element is competition. The introduction of a tender resulted in the industry having to look differently at how they spread their risks. This resulted in more competitive prices. But also small improvements have contributed, for example, the way contracts are set up. All these measures made offshore wind a less risky activity then it previously had been. When you get all faces pointed in the same direction, you can make big steps.

However, there has also been a bit of luck involved. We have seen low interest rates and low steel prices. These are external elements that have been favourable for bringing the cost of offshore wind down. We should also not forget that we were not the only country where cost reductions have been made in offshore wind. The combined European objectives, the resulting market perspective, and the constant improvements to policy instrument design, has resulted in a steep learning curve.

Can you provide some examples of innovations that have contributed in bringing the cost of energy down in the Netherlands?
Progress has been made in technological innovations and especially in the turbines. They have become more powerful and reliable, with increased full-load hours. The major turbine manufacturers have scaled-up their proven turbine types significantly. MHI Vestas Offshore Wind will be installing their V164-9.5 MW at the Borssele V innovation site while GE announced that it will be testing its 12 MW turbine at the Maasvlakte in Rotterdam. Financial institutes have now more confidence in supporting further upscaling. When it concerns the connection to the grid, TenneT took the lessons learned from its experiences with connecting offshore wind in Germany and decided to take a different approach in the Netherlands. By introducing a standardised offshore platform for the upcoming five wind farms the cost for this part of the process has been brought down.

Why should we continue to invest in innovation?
With all the favourable elements described above and the major plans for wind farms in the Dutch sector of the North Sea, the future looks bright for offshore wind. In the Climate Agreement draft it is clearly stated what we need up to 2030. However, the same external factors that have been favourable could also turn against us. Not to mention external factors that we are not yet aware of. This applies to all technologies but renewable technologies as offshore wind (and onshore wind and solar) are relatively more capital-intensive than the competing technologies.

We have been able to build relatively close to shore but space is becoming scarce in the near coast sections of the North Sea. Future wind farms will have to be built further offshore. This brings along additional costs. How are we going to bring the energy to shore, what if the wind doesn’t blow, how can we store surplus energy? Up to 2030, the current network will be able to handle our energy demand but we need to look at the far future also. These are all questions that will become more topical. That’s why it is so important to make sure we continue investing in technical innovation. Former Minister Kamp saved almost 4.5 billion euros in Government spending with the first subsidy free tender. The industry might not make the same big steps in cost reductions again but with the amounts of gigawatts planned, small percentages off here and there will still amount to a potential comparable total cost saving by 2030. Innovations made in offshore wind can also benefit other technologies. The tender system is a good example. A similar system has now been proposed in the area of large-scale building renovations.

What are the main focus areas for innovation?
We have the scale-up of wind turbines under control. There is still room for new turbine systems, like we have seen with the introduction of the direct-drive system, but most of the developments will be found in the scale-up of existing systems. However, there is improvement needed in how we can better integrate the different technologies. The increase in size and weight of the turbines and their power output have impact on all related activities. They require foundations that can carry their weight and size. Alternatives might be airborne wind energy. Due to the favourable water depths in the Dutch section of the North Sea there is no real need for floating wind. However, innovative ideas for floating wind could well serve as an export product for countries such as Norway and France. The larger turbines also affect the installation techniques and equipment used.

Image: DOT BV

As mentioned earlier, we also need to look at system integration. How do we bring the energy from far offshore wind farms to end users? This won’t be an easy task as it does not only depend on the development of offshore wind but also on that of for instance hydrogen production and infrastructure, energy storage and onshore energy infrastructure. Both the oil and gas sector and the wind sector are already exploring the synergies of offshore wind/hydrogen configurations.

Another focus area would be reducing the carbon footprint of offshore wind and making offshore wind more circular. Smarter materials are needed. Take for example blades, these are susceptible to erosion and need regular maintenance and repair. We need materials that can better withstand the harsh weather conditions, especially when we go further offshore, and are more easy to repair. More use of sensoring systems and less human interface is needed. However, we should not only look at the operational phase but also the wind farm’s end of life. In order to reduce the carbon and environmental footprint we need to think of ways to recycle the turbines once they are decommissioned. The environmental impact of offshore wind should be minimal or, even better, be positive: by adding quality to the natural diversity at sea.

At the moment, all eyes are on offshore wind. In the future, it could potentially take up a quarter of the Dutch part of the North Sea. Not everybody will be happy with this development. With more claims for space, it is important to find synergy with nature, other users like fishery, shipping industry, military, oil and gas, recreation industry, and others. It won’t be accepted if the offshore wind industry does not take this into consideration. This does not only apply to the users of the Dutch section of the North Sea but also to the users of the North Sea as a whole. The future will see a need for more cooperation with other countries. In this case we are talking more about social innovation. Fortunately, the industry is already looking into solutions for synergy.

This article appeared in Wind Energy Magazine, No 1, 2019

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