Presentation EVM Europe 2013

Early-stage Cost Estimation of Offshore Wind Farm Projects using Monte Carlo Simulation

A presentation by Joost Arnoudt and Giel-Jan Triest

This research is done within the context of a thesis for obtaining the degree of Master of Science, Applied Economics: Business Engineering - Operations

Management

Joost Arnoudt & Giel-Jan Triest

About us

• Ghent University

• Master of Science in Business Enigeering

• Major: Operational Management

• Master thesis under supervision of prof. dr. M. Vanhoucke and with support of L-P. Kerkhove

• Passionate about project management

• Clean energy believers

Joost Arnoudt

Giel-Jan Triest


Overview

• Green energy and the role of offshore wind energy

• Objective

• Project description

• Preliminary results

• Further research


Green energy is HOT

• Fossil fuel reserves are decreasing + burning them leads to global warming


• Fossil fuel reserves are decreas-ing + burning them leads to global warming

• Nuclear energy: question-nable future (concerns about radioactive waste, safety and proliferation)

Green energy is HOT



• Nuclear energy: questionnable future (concerns about radioac-tive waste, safety and prolifera-tion)

• Renewable energy: still in its infancy BUT gradually emerging

Green energy is HOT



• Nuclear energy: questionnable future (concerns about radioac-tive waste, safety and prolifera-tion)

• Renewable energy: still in its infancy BUT gradually emerg-ing

Flemisch Energy Agency: “Increase in green energy of 26% between 2010 and 2011 in Belgium”

International Energy Agency: “Building on several years of strong deployment, worldwide growth of renewable electricity should accelerate over the medium term.”

Green energy is HOT


Offshore wind energy

• Potential is enormous

European Environment Agency: “Offshore wind energy is able to meet Europe’s demand seven times over.”



• Crucial in reaching the Europe-an Climate Plan 20-20-20




• Crucial in reaching the European Climate Plan 20-20-20

• Offshore wind energy installa-tions are ever increasing




• Crucial in reaching the European Cli-mate Plan 20-20-20

• Offshore wind energy installations are ever increasing

• 90% of the 5,538 MW offshore wind energy capacity, installed globally, is located in Europe



• Enthusiasm for the development of offshore wind farms in other countries: Japan, Korea, USA, Canada, Taiwan and India (GWEC)

• “According to the more ambitious projections, a total of 80 GW offshore wind could be installed by 2020 world-wide, with three quarters of this in Europe“ (GWEC)

• By the end of 2012, companies from various countries announced plans for the development of new offshore wind turbines (see graph) (EWEA)

Future prospects


Strenghts and weaknesses

• Higher wind speeds, less turbulence and fewer environmental constraints than on land; large scale development near huge demand centers is possible

• Relatively new technology with signifi-cant opportunities for cost reduction, technical innovations and ‘revolution-ary’ developments which may change the face of renewables in some parts of the world.

• Deeper waters, longer distances, difficult soil characteristics, wave and weather conditions drive up the costs of an offshore wind farm.

• Current cost estimation techniques often fall short

• Cost estimation of offshore wind farms is relatively unpresent in academic litterature

+ -


Conclusion: good early-stage cost estimation is

really important!

Strenghts and weaknesses


Our objective

• Build a cost model for the construction and installation of offshore wind farms using the Monte Carlo simulation technique

• Offshore wind farms are far from a well-defined project.

• Theoretical model, but with a realis-tic perspective. Herefore we focus on practices used for the offshore wind farms already build at the Belgian and Dutch North Sea coast.

Why Monte Carlo simulation?

• Good technique for early-stage cost estimation

• Generates cost range instead of single-point-estimate

• Possibility to incorporate uncertain-ties arising from weather condi-tions, wave heights and currents

• Scenario analysis


Belgian & Dutch coastline

For specific parameters, we use the characteristics of the offshore wind farm proj-ects at the Belgian and Dutch coastline for the construction of our ‘general’ off-shore wind farm project.


The offshore wind farm project• We do not include financing methods of the project, design, transportation of

material to the site, material costs… Our focus is on installation and construc-tion.

• As a result, the projects falls down to 4 main steps

Scour protection

Foundation Turbine installation

Cable installation


Scour Protection

• Scour is a type of erosion

• Scour hole can reach a depth of 1.5 times the diameter of the monopile, endangering the stability of the con-struction

• To prevent this, 2 types of rock layers are dumped at the sea bed

• Rocks are usually dumped before the construction of the foundation to prevent damage to the foundation.


Scour Protection - Transport/Installation

• Transportation methods

- Side Stone Dumping Vessel

- Fallpipe Vessel (see image)

• Fallpipe Vessel is more exact, more resistant to current fluctuations and usually a larger and faster vessel with larger loading capacity

MODEL

• Amount of scour per turbine calculated with a model used in practice

• Use of fall pipe vessel• Simplification: cost per ton rock

transported from Norway and dropped at turbine


Foundation

Monopile Tripod Jacket Gravity


Foundation - Monopile

• Giant steel pipe (diameter: 4-6 meter)

• Simple design and production

• Easy transport

• Well-known installation technique in construction industry

• On top of the monopile foundation, a transition piece is attached with a ladder, deck and pipes to protect the electricity cables from waves.


Foundation - Transport/Installation

• Transportation methods

- Jack-up vessel

- Tug boat

• Monopile is positioned with a crane and hammered into the soil using a hydraulic hammer

• Transition piece is installed on top of the monopile M

ODEL

• Monopile foundation• Use of jack-up vessel• Simulate wave heights• Triangular distributed instal-

lation times with input from managers


Turbine installation

• Main components: tower, blades and rotor

• Transport and installation with jack-up vessel

• Small turbines can be transported in assembled state, however, in most of the cases the turbine is transported in pieces since turbines are getting larger M

ODEL

• Use of jack-up vessel• Triangular distributed instal-

lation times with input from managers

• Simulate wave heights and wind speeds

• Current force is of no impor-tance


Cable installation

Inner-array cable

• Laying the cable with a (relatively small) side stone dumping vessel

• Burying the cable with a trencher vessel

Export cable

• Laying the cable is done by a (bigger) side stone dumping vessel

• Burying the cable with a trencher vessel

MODEL

• Calculate inner-array cable length based on formula Kai-ser & Snyder

• Installation rates based on emperical findings of Kaiser & Snyder

• Simulate wave heights and current force


Preliminary results simulationSimulate full model for• 50 windturbines of 4 MW• average distance to shore of 45km• 100,000 runs

Results:• mean: € 83,975,532• median: € 83,214,400• std. dev.: € 3,297,755• skewness: 1.136• min: € 76,279,700• max: € 100,121,000


Preliminary results simulation

Simulate same model for• 50 windturbines of 4 MW• average distance to shore of 45km• 100,000 runsBUT excluding wind and wave influ-ence

Results:• mean: € 73,639,139• median: € 72,799,200• std. dev.: € 3,231,283• skewness: 1.233• min: € 66,913,100• max: € 88,974,200


Simulate full model

Results:• mean: € 83,975,532• median: € 83,214,400• std. dev.: € 3,297,755• skewness: 1.136• min: € 76,279,700

• max: € 100,121,000

Simulate same modelBUT excluding wind and wave influence

Results:• mean: € 73,639,139• median: € 72,799,200• std. dev.: € 3,231,283• skewness: 1.233• min: € 66,913,100

• max: € 88,974,200





Further Research

By simulating the total installation cost of an offshore wind farm, valuable insights can be obtained. However, the finish line is not yet reached:

Improve the model

• include influence of sea current• use more management input to improve cost rates of activities in order to better

reflect reality• include the installation of an offshore transformation station• include vessel and machine availability• gradually increase the complexity of the model: water depth, tower diameter,

turbine weight...• enhance the weather sensitivity: time-dependent

Further interpret results• investigate the role and influence of several parameters: number of turbines, size

turbines, distance to shore...


Thank you for your attention

Any questions?