Floating Wind may be going through a low after too much hype, but there are clear positive signs and the industry is working to seize the exciting opportunity.
As you already know, from time to time we bring guest contributors to Windletter to provide us with new topics and different perspectives on the industry.
This time, I have the pleasure of introducing Luis González-Pinto Barrenetxea. Luis has been promoting floating wind energy for over 12 years (it’s hard to find someone with as much experience in floating technology) and considers himself passionate about renewable energy and creative innovation.
Luis describes himself as a motivated executive, an engineer by training, constantly striving to have a more open mind, always seeking different viewpoints and new perspectives. Additionally, he believes in the power of collaboration among diverse individuals to make the world a better place.
A few weeks ago, Luis published an article on his LinkedIn account about floating wind energy that caught my attention, and he has kindly agreed to bring it to Windletter.
We seem to live in a dopamine addicted world, where various apps are available to provide almost instant gratification. The business world, as it is formed by people, has been contaminated with this mood which is reinforced by even shorter business cycles. This has introduced the hype-drama cycle in almost all industries.
I think this is very much the case for Floating Wind.
When I started working in Floating Wind (this way of starting already makes me feel old) as a Technology Developer we use to chase developers which showed very little interest, who looked at us as if we were selling Nuclear Fusion (always 30 years down the line).
That taught me patience to wait for the moment and calm when things started to progress.
Forwarded this email? Subscribe here for moreWindstory #8 – Floating Wind and Dopamine. A hype and drama storyFloating Wind may be going through a low after too much hype, but there are clear positive signs and the industry is working to seize the exciting opportunitySergio Fdez MunguíaJul 1 READ IN APP Hello everyone and welcome to a new issue of Windletter. I’m Sergio Fernández Munguía (@Sergio_FerMun) and here we discuss the latest news in the wind power sector from a different perspective. If you are not subscribed to the newsletter, you can do so here.Windletter is sponsored by: Tetrace. Specialized services in operation and maintenance, engineering, supervision, inspection, technical assistance, and distribution of spare parts in the wind sector. More information here. RenerCycle. Development and commercialization of solutions and specialized services in the circular economy for renewable energies, including comprehensive dismantling of wind farms and waste management, refurbishment and sale of components and wind turbines, management and recycling of blades and others. More information here.Windletter está disponible en español aquíAs you already know, from time to time we bring guest contributors to Windletter to provide us with new topics and different perspectives on the industry.This time, I have the pleasure of introducing Luis González-Pinto Barrenetxea. Luis has been promoting floating wind energy for over 12 years (it’s hard to find someone with as much experience in floating technology) and considers himself passionate about renewable energy and creative innovation.Luis describes himself as a motivated executive, an engineer by training, constantly striving to have a more open mind, always seeking different viewpoints and new perspectives. Additionally, he believes in the power of collaboration among diverse individuals to make the world a better place.A few weeks ago, Luis published an article on his LinkedIn account about floating wind energy that caught my attention, and he has kindly agreed to bring it to Windletter.I leave you with him.Floating Wind and Dopamine. A hype and drama storyBy Luis González-Pinto BarrenetxeaWe seem to live in a dopamine addicted world, where various apps are available to provide almost instant gratification. The business world, as it is formed by people, has been contaminated with this mood which is reinforced by even shorter business cycles. This has introduced the hype-drama cycle in almost all industries.I think this is very much the case for Floating Wind.When I started working in Floating Wind (this way of starting already makes me feel old) as a Technology Developer we use to chase developers which showed very little interest, who looked at us as if we were selling Nuclear Fusion (always 30 years down the line).That taught me patience to wait for the moment and calm when things started to progress.Windfloat AtlanticAs the Industry progressed with our first prototypes and precommercial projects, the mood started to hit up and all developers wanted to develop a XX GW floating wind pipeline never mind where.The main reason for the interest of Floating Wind is that the market has the potential to become a scale of magnitude bigger than the one of bottom fixed Offshore Wind. At the same time, everybody was sending projections on very optimistic cost reductions, based mainly on scale and optimization.Scaling is the chicken-egg problem for any new industry: how to invest in scale if there is no enough demand and how to generate a demand if cost is too high due to lack of scale.To make things worse, three things happened:War and instability make everything more expensive, pushing inflation.To stop inflation, governments raised the interest rates.Western WTG OEMs were losing a lot of money.The increase of cost has either cancelled projects or required governments to renegotiate and increase support payments. Most governments struggle to reset the financial baselines of the auctions as all previous projections showed a continuous cost reduction.While governments were seeing inflation coming up, interest rates were raised making projects more costly to finance.To keep business cases alive, developers needed Western OEMs to continue increasing turbine sizes, which challenged industrialization while spending vasts sums of money on new wind turbine platforms.DemoSATH prototypeThe implications of these three factors were triple:Floating projects started to become less competitive due to cost increases, not having achieved the promised cost reductions.Floating wind projects seemed less interesting to investors as it was perceived that similar returns could be made with less risky projects.Western OEMs decided to focus on main markets and reduce their involvement in Floating Wind being more selective.The drama-lovers will claim now that hype is down, that Floating Wind is dead and that it is too complex. Someone could argue that the competition is PV + Batteries but I think this could be argued also with bottom-fixed offshore wind. Plus I think that we are discussing a different value proposition on both cases.I think the fundamentals for Floating Wind are still there and a successful deployment in low wind areas such as Japan and Korea could be replicated almost anywhere in the world.So, which are the possible outcomes in front of the current drama:New technologies are/have to be developed. Bigger turbines present different challenges so new techs are needed not only regarding floaters but also regarding O&M (cranes, inspections, connectors) mooring systems or export dynamic cables.New players (EPCI contractors) coming from the Oil & Gas field, will try to integrate semi-standard designs and bring scale to projects by using their technical and financial strengths. Probably these designs may not be as optimized as the one provided by technology developers, but they could be more suited to absorb risk and introduce scale than technology developers. So far, from EPCI contractors in the Oil & Gas industry, only SBM Offshore has multi-MW turbines on water (Provence Grand Large pilot project in France), but the discussion about whether a similar approach to the commoditization of monopiles and jackets could be a solution for semi-submersible platforms is on the table.Provence Gran Large floating wind farmChinese OEMs may take the space not taken by Western OEMs. If Western OEMs don’t want to supply turbines others will. It should be noted that the majority of the coasts in the world are both deep and low wind speed. The parallelism to onshore wind is to be considered there.Vertical Integration of a Floating Wind Turbine. From a bankability perspective having a single contractor-supplier for the turbine, floater and mooring would be a significant advantage. Furthermore, the optimization that can be obtained by this holistic approach playing with the WTG controller is very relevant. Honestly, I struggle to see Western OEMs going through this path, but I wouldn’t rule out Chinese OEMs. (Still far from commercialization Mingyang’s Ocean X).Source: WindpowermonthlyTo sum up, I think that Floating Wind may be going through a low after too much hype, but there are clear positive signs (GreenVolt, AO5, etc.) and the industry is working to seize the exciting opportunity.Let’s just keep our dopamine at healthy levels and develop some strategic patience!PS: Concrete floaters can definitely reduce cost but they require a significant scale to produce it. |
