Strategic Partnerships in Offshore Project Installations and Wind Farm Operation

Transcription

1 Presentation Document Strategic Partnerships in Offshore Project Installations and Wind Farm Operation Track: Policy, Industry, Markets & Regulation EWEA Annual Event, Brussels, March 14, 2011 Speaker: Thomas Karst, MAKE Consulting 1

2 MAKE Consulting A/S MAKE Consulting is an advisory company specialized in the renewable energy market with particular focus on intelligence and strategy for the wind energy market. MAKE Consulting employs a team of professional and independent advisors with documented experience from the international wind energy industry providing an inhouse detailed market intelligence which we make every effort to translate into a product that provides the players with a competitive advantage. MAKE Consulting has offices in Aarhus, Denmark and in Chicago and Boston, USA and Tianjin, P. R. China. MAKE Consulting A/S, Speaker: Thomas Karst. Masters in Chemical Engineering 12 years experience in wind energy from NEG Micon, Vestas and MAKE Consulting. 2

3 Contents 1. The Offshore Opportunity 2. Owners and Suppliers 3. Some of the Key Risks in Offshore Projects 4. Historical Changes to Contracting Structure 5. Why move to Strategic Partnerships? 6. Different Cases of Recent Partnerships 7. Advantages in Strategic Partnerships 8. Qualifying the Risk Reduction 3

4 The Offshore Opportunity Suppliers of WTGs, Foundations, Vessels, and Cables are most important players Offshore Market Outlook Historical Offshore Cost Split CAR insurance Substation 2% 7% Man. 2% Eng. 1% Electrical grid 7% WTG 44% Foundation 22% Installation vessels 15% WTG Foundation Substation Management Installation vessels Electrical grid CAR insurance Engineering 4

5 Owners and Suppliers Diversification among Owners but relatively few WTG OEMs Owner Market Shares (2013) WTG OEM Market Shares (2013) 5

6 Some of the Key Risks in Offshore Projects Strategic Partnerships draws on combined Lessons Learned to minimize risks Development & Contracting Survey & Planning Installation Testing & Commissioning O&M Financing Ground/soil Cables Accessibility Installation vessels WTG Reliability New WTG technology Substation Damage to equipment Delays Interface problems Partnerships establishment Qualification of partner Planning in unison Risk definition Specification of common contingencies Minimization of fiscal warranties Adequate time allocation Common lessons learned Partnerships execution Partner steering committee Performance driven execution Risk management and mitigation process Common communication route Litigation management process Controlled execution at less cost 6

7 Historical Changes to Contracting Structure Moving from EPC and Multi-contracting towards Strategic Partnerships Present Future EPC/Turnkey Multi-contracting Strategic Partnerships OWNER Low risk Low Low influence OWNER High risk High High influence OWNER Balanced Risk Low High influence Contractor High risk High High influence Main suppliers Lower risk Medium Medium influence Partners Balanced Risk Low High influence Suppliers High risk High Low influence Sub suppliers Lower risk Medium Low influence Non- Partners Lower Risk Medium Low influence 7

8 Why move to Strategic Partnerships? Two recent quotes from the offshore wind industry (February 2011) Fluor on Greater Gabbard Crown Estate on Cable supply Project delay due to monopile welding defects Subsea cable installation company Subocean went bankrupt There is a consensus that when Round 3 construction begins in 2015 there will be a significant shortage of HV cables Flour reported total losses on the project of o $ 163 million in Q3, 2010 o $ 180 million in Q4, 2010 Seaton, who became CEO last month, said Greater Gabbard was an expensive lesson and that Fluor would insist on controlling marine assets in future projects. [Bloomberg] Most [cable] suppliers have expansion plans in place but are currently unwilling to invest without a firm commitment The report calls for industry to work towards framework agreements. [renews] Need for more control, risk reduction, and larger financial entities Need for industry cooperation, better planning and greater transparency 8

9 Different Cases of Recent Partnerships Complementing expertise and strong synergy effects Case 1: Beluga Hochtief Case 2: A2SEA/DONG/Siemens Beluga Shipping GmbH is the world s leading project and heavy goods shipper with a fleet of around 70 multipurpose heavy lift carriers. A2SEA was established in 2000 Since then they have installed approximately 60% of all offshore wind turbines HOCHTIEF Construction AG is the fourth largest provider of construction-related services in the world with 68,000 employees. The joint venture Beluga Hochtief was formed in April 2009 in order to develop heavy-lift jack-up vessels for loading, transporting and installing huge offshore wind modules and undertake maintenance of offshore facilities Combining complementing expertise, the joint venture also provide access to technology, logistics, equipment and investment services DONG and Siemens have a long history together with many offshore projects erected from 1991 and onwards With a purchase of A2SEA a strong trinity with several synergy effects could be created In July 2009 A2SEA was acquired 100% by Danish utility DONG Energy Power in November 2010 Siemens Wind Power entered as part-owner buying 49% of A2SEA from DONG. 9

10 Different Cases of Recent Partnerships Complementing expertise and strong synergy effects Case 3: SMart Wind Ltd. Case 4,5,6, and 7 SMart Wind Ltd. is a joint venture between Mainstream Renewable Power and Siemens Project Ventures GmbH put in place in order to deliver the 4GW Hornsea Zone by 2020 Mainstream Renewable Power was formed in February 2008 a has a portfolio of 5.5GW offshore across Scotland, England and Germany, as well as over 3.5GW of onshore projects in Canada, Chile, S.A. and the US. Siemens Project Ventures brings in the Siemens Energy network, including Siemens Wind Power which is the leading supplier of offshore wind turbines, and Siemens Transmission and Distribution Also cooperating with Beluga Hochtief Gamesa and Northrop Grumman Corporation A large onshore WTG OEM setting up joint R&D facilities with America s largest shipbuilder and leading U.S. defence company Scottish and Southern Energy and Mitsubishi Cooperating on low carbon energy development including a range of new technologies for offshore wind farms, etc. AREVA/ALSTOM/GE Conglomerates capable of handling every aspect of an offshore project on their own Know-how transition from other technologies BARD Group An alternative strategy with in-house WTG and tri-pile foundation manufacturing - together with own installation jack-up and O&M vessel. Also offering financing and insurance. 10

11 Advantages in Strategic Partnerships Cooperation will bring down costs and create synergies using Risk Management Reduce accumulated contingencies 1. Identify Risks 2. Risk Assessment Reduce fiscal warranties and bonds Reduce time slack and waiting cost in planning Reduce litigious environment 5. Control and Monitor WTG OEM Installation Vessel Provider Foundatio n Supplier Offshore Cable Supplier 3. Plan Mitigations Improved project cost and cash flow 4. Implement Actions 11

12 Qualifying the Risk Reduction The effect of Strategic Partnerships Strengthening the supply chain by adding new elements Combining complementary expertise Gaining volume and larger financial impact Thereby covering interface problems and creating synergy Thereby increasing technological know-how and skills Thereby increasing project robustness and feasibility 12

13 Thank you! 13

14 Reports and notes recently compiled by MAKE Consulting: 2H 2010: Global wind turbine order activity at highest level in two years (research note, February 11, 2011) MAKE Consulting Aarhus, Denmark (Head Office) Tianjin, P. R. China Chicago, USA Boston, USA Copyright 2011 MAKE Consulting A/S. All rights reserved. Reproduction or distribution of this report in any form without prior written permission is strictly forbidden. Violation of the above restrictions will be subject to legal action under the Danish Arbitration Act. The information herein is taken from sources considered reliable, but its accuracy and completeness are not warranted, nor are the opinions, analyses and forecasts on which they are based. MAKE Consulting A/S cannot be held liable for any errors in this report, neither can MAKE Consulting A/S be liable for any financial loss or damage caused by the use of the information presented in this report. French offshore tender too little, too late?? (flash note, January 31, 2011 Wind Turbine Trends 2010 (market report, December 29, 2010) Goldwind marks major milestone with Mainstream (flash note, December 23, 2010) Wind power to receive support in China's 12th Five Year Plan (flash note, December 7, 2010) Competition intensifies in low wind speed WTG segment (flash note, November 30, 2010) Wind power blows into Eastern Europe (research note, November 22, 2010) Chinese onshore WTG pricing drops to all-time lows (flash note, November 19, 2010) U.S. tower manufacturers face dubious future (research note, November 18, 2010) 14