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ULSTEIN EXPERIENCES AND LESSONS LEARNED�
DR. PER OLAF BRETT
ULSTEIN INTERNATIONAL AS
26TH MARCH 2017
V1.0
Norwegain Energy Partners:Offshore Wind Expert Workshop in Ålesund 28-29 March 2017
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WHAT IS THE OFFSHORE WIND ENERGY GENERATING INDUSTRY?
Landbased operations: Offshore based operations:
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OWEG INDUSTRY REFLECTIONS�Strengths:
It is possible to make the industry subsidy
free&
The trial and error period is about to end,
but more experimentation is necessary
The structure of the industry is about to
settle
Seems to grow even at political and
economical turbulent times
Fewer and bigger players take the lead
What is a good enough solution seems to
emerge as the guiding fleet strategy
LCOE-focus
Learning quickly from different industries
Weaknesses:
A subsidy dependent industry as of yet
Still a rather immature industry/shipping segment
It is a small and niche oriented offshore industry
Undeveloped spot market opportunities
Campaign driven
Still adopting too much Offshore O&G thinking
Still too much focus on more complexity and high
cost solutions
Too much LCOE and too little focus on the revenue
making capability of the vessels
On our way into a quasi-oriented offshore O&G
regimen?
Politicians and industry organisations pursuing the
Offshore Oil & Gas track wrt rules and regulation
Risk = Consequences x likelyhood (frequency) of occurence
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AT WHAT PACE IS THE OWEG DEVELOPMENT TAKING PLACE?
Source: IRENA, 2016
Growth rate: x 3.5
Growth rate: x 1.8
Source: BP, 2015
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WHERE DOES IT TAKE PLACE?
Northwest Europe has currently the
largest installed capacity of OWEG
energy, accounting for more than
90% of the world capacity. Asia is
following Europe with 7% (80% of
which is China)
US, Germany and China are the
largest markets with forecasted
OWEG capacity installed during the
period 2016 – 2025
Source: Douglas-Westwood, DW Global Offshore Wind Market Forecast 2016-2025,
(February 2016)
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POSSIBLE DEVELOPMENT PATHS FOR GLOBAL ENERGY GENERATION
Source: IRENA, 2016Onshore
80% &
offshore
20%
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CAPEX AND OPEX INVESTMENTS IN EUROPEAN OWEG INDUSTRY 2010-2020
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Norwegain market shares in the OWEG industry 2010-2016
Norwegain market shares in the OWEG industry 2016-2020
Norwegain market shares in the OWEG industry 2010-2016
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80's 90's 2000 2001 2002 2003 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
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YEAR OF ENTRY IN OWEG SERVICE –DEDICATED OWEG VESSELS
No new vessels between 2003 and 2008
In 2020 it is expected that the
need of new tonnage per year to
the OWEG industry is about 20
units
In 2026 it is expected that the
need of new tonnage per year to
the OWEG industry is about 30
units
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THE OWEG FLEET –SHIPS IN OPERATION AND NEW ORDERS
Sample of the most relevant vessels working
in the OWEG industry
*Ropax vessels converted to operate in the OWEG industry
**Just cable laying vessels (CLV) that have worked in OWEG projects
***Does not include all CTVs in operation
*
Length overall (LOA)
Be
am
(B
)
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OWEG FLEET BY YEAR (PURPOSE BUILT AND CONVERSIONS)
*Ropax vessels converted to operate in the OWEG industry
**Just cable laying vessels (CLV) that have worked in OWEG projects
***Does not include all CTVs in operation
*
*****
Installation vessels (WTIV) were the
frontrunner of the purpose-built OWEG
fleet, followed by CTVs and lately SOVs
The introduction of service vessels (SOVs)
came with the entrance into production of
windfarms far from shore
The slow down in the offshore oil & gas
industry has lead to the influx of some non-
purpose-built vessels (OSVs) into the
OWEG market (as example, 9 vessels
have started working on OWEG contracts
in 2016)
The early purpose-built SOVs entered the
market in 2014. Before that, two converted
vessels started operations in 2013
Less vessels added
to the existing
fleet
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OWEG FLEET BY YEAR ACCUMULATED (PURPOSE BUILT AND CONVERSIONS)
Installation vessels (WTIV) were the
frontrunner of the purpose-built OWEG
fleet, followed by CTVs and lately SOVs
The introduction of service vessels (SOVs)
came when windfarms were moving far
from shore
The slow down in the offshore oil & gas
industry has lead to the influx of some non-
purpose-built vessels (OSVs) into the
OWEG market (as example: 9 OSVs have
already started working on OWEG
contracts in 2016)
The early purpose-built SOVs did enter the
market in 2015. Before that, two converted
vessels started OWEG operations in 2013
*Ropax vessels converted to operate in the OWEG industry and one
jack-up platform
**Just cable laying vessels (CLV) that have worked in OWEG projects
***Does not include all CTVs in operation
* ** ***
Substantial effectiveness gain
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NEW CHALLENGES FOR THE OWEGFLEET OF VESSELS
Design and operational dilemmas:
Specialisation – Versatility
Capacities - Cost
Capabilities - Usability
Competitiveness – Market situation
Vessel design philosphy:
Medium/Large sized (+) capacity
Full world wide operational standard or standards adapted to benign or special waters
European or Asian equipment/system makes standard
High/Low accommodation standard
High/Low class notation standard
Vessel possible upgrade by:
Offensive extra functionality
Defensive extra functionality
Ulstein OWEG-vessel portfolio
Heavy Lift Vessel
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IN WHAT DIRECTION DO WE WANT THE INDUSTRY TO DEVELOP?
Levelized Cost Of Energy (LCOE) – what is it?
Measurement of the energy production cost over the life time at wind farm level– Includes all costs: construction, financing fuel, maintenances, taxes etc.
It is measured as lifetime cost divided by expected lifetime power output (EUR/kWh)
LCOE is applied as a financial measure: A relatively low LCOE installation means that electricity can be produced at a low cost, with higher likely returns to the investor
Parts within Ulstein’s business areas
Ulstein focus
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THE CENTRAL CHALLENGE: REDUCE LCOE IN
THE OWEG INDUSTRY – ALL VALUE CHAIN
ACTIVITIES�Why?
In order to be competitive with other
energy generation sources (coal and
gas), OWEG should at least achieve
from 30 to 60% reduction in the
overall production cost
How?
The vessel related costs contribute
with ~ 10% reduction of the overall
wind farm costs
Ulstein’s target cost-effectiveness
improvement for the OWEG vessel
portfolio is 30% by 2017
- 33%
Target cost
reduction in
OWEG
- 61%
100€/MWh is the target
for the EU by 2020
80€/MWh is the
target by 2025
*The production costs (LCOE) of offshore wind farms in
operation are between 140 to 250 €/MWh (Eia, 2015)
*
Source: Siemens, 2014
Source: Ulstein International AS, 2016
Source: Wind Power Offshore (2016)
Source: Wind Power Offshore (2016)
But not loosing track of revenue making opportunities…
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WHAT HAS BEEN ACHIEVED SO FAR?
Source: IRENA, 2016
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FLEET COMMERCIAL STRATEGY AND TACTICS –APPROACHES TO TAKE�
Increase revenue
Reduce costs
Improve results
Increase utilisation in existing markets
Find new applications in new markets
CAPEX
Increase the T/C rates of exising ships
VOYEX
OPEX
Increase revenue
Reduce costs
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ALTERNATIVE B: SERVICE OPERATION VESSEL(SOV)
Offshore crane
2 ton
Modular acc. 30
cabin. 30 Pax
Gangway
Second hand 3200
ton PSV = Approx.
10 MUSD
Heli deck
Construction
Extras, overhead ,
profit
Estimated price = Approx
20 MUSD
New build price = Approx
30 MUSD
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MORE IS BETTER � STRATEGY –LEADS TO Over-specified vessels
Todays trend is to design vessels with
the strategy «more is better» rather
than “good enough” solutions. As
example vessels are designed with
many class notations even the class
notations is not applied in operations
Over the last 5 years 40% of PSVs
operating in the North Sea are
designed with Ice(1C) or equivalent –
is it necessary?
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Good enoughMore is better Not accepted
FROM “MORE IS BETTER” TO “GOOD ENOUGH” SOLUTIONS
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