Supply Chain Opportunities and Management of Risk Ian McCarlie
Supply Chain Opportunities and Management of Risk INTRODUCTION
Supply Chain Opportunities and Management of Risk I see offshore wind as a significant energy and industrial opportunity for the UK, and one that I am determined to seize. I believe the UK will remain the world s most attractive offshore wind market for many years to come. We have abundant natural advantages and a world-leading marine engineering base. David Cameron, 2011
Supply Chain Opportunities and Management of Risk Getting new capital into projects like offshore wind farms is the difference between getting them off the drawing board and into the water, creating jobs and stimulating growth. Charles Henry, 2011
Offshore Wind Map
Table of Statistics Round 1-2001 Site Developer MW Capacity Status Round 1-2001 Barrow DONG Energy & Centrica 90 Operational Beatrice Demo SSE Renewables 10 Operational Blyth E.ON UK Renewables 4 Operational Burbo Bank DONG Energy 90 Operational Gunfleet Sands I & II DONG Energy & Marubeni 173 Operational Lynn & Inner Dowsing Centrica Renewable Energy Ltd 194 Operational Kentish Flats Vattenfall 90 Operational North Hoyle RWE Npower Renewables 60 Operational Rhyl Flats RWE Npower Renewables 90 Operational Robin Rigg E.ON UK Renewables 180 Operational Scroby Sands E.ON UK Renewables 60 Operational Teesside EdF 62 Under Construction Cirrus Array (Shell Flats) N/A 270 Withdrawn Cromer N/A 108 Withdrawn Scarweather Sands N/A 108 Withdrawn
Table of Statistics Round 2-2002 Site Developer MW Capacity Status Round 2-2002 Thanet Vattenfall 300 Operational Walney I DONG Energy / SSE Renewables/ Ampere Equity / PGGM 183.6 Operational Walney 2 DONG Energy / SSE Renewables/ Ampere Equity / PGGM 183.6 Operational Greater Gabbard SSE Renewables, RWE Npower Renewables 504 Operational Ormonde Vattenfall 150 Operational Sheringham Shoal Scira Offshore Energy Ltd 317 Operational Gwynt Y Mor RWE Innogy / SWM / Siemens 576 Under Construction Lincs Centrica 270 Under Construction London Array I DONG Energy / E.On Renewables / Masdar 630 Operational Humber Gateway E.ON UK Renewables 300 Approved West of Duddon Sands Scottish Power/DONG Energy 389 Approved Westermost Rough DONG Energy 240 Approved Dudgeon Statoil & Statkraft 560 Approved Race Bank Centrica 580 Approved London Array II DONG Energy / E.On Renewables / Masdar 370 Conditional Approval Triton Knoll RWE Npower 900-1200 Submitted PINS Docking Shoal Centrica 540 Refused
Scottish Territorial Waters - 2009 Site Developer MW Capacity Status Scottish Territorial Waters - 2009 Beatrice SSE Renewables / SeaEnergy 1000 Submitted to Marine Scotland Neart na Gaoithe Mainstream 450 Submitted to Marine Scotland Inch Cape Repsol / EDP Renováveis 905 Exclusivity Agreement Awarded Islay SSE Renewables 690 Exclusivity Agreement Awarded Argylll Array Scottish Power Renewables 1800 Exclusivity Agreement Awarded
Round 3-2010 Site Developer MW Capacity Status Round 3-2010 Moray Firth Repsol / EDP Renováveis 1300 First Project Submitted Marine Scotland Firth of Forth Dogger Bank SeaGreen Wind energy Ltd (SSE Renewables, Fluor) Forewind Consortia (SSE Renewables, RWE Npower Renewables, Statoil and Statkraft) 3465 First Project Submitted Marine Scotland 9000-12800 Site Awarded Hornsea Smart Wind Consortia (Mainstream Renewable Power, Siemens Project Ventures) and DONG Energy 4000 Site Awarded East Anglia East Anglia Offshore Wind Ltd (Scottish Power Renewables and Vattenfall) 7200 First Project Submitted PINS Rampion E.On Climate and Renewables 665 Site Awarded Navitas Bay Wind Park Eneco New Energy and EDF 900-1200 Site Awarded Bristol Channel RWE Npower Renewables 1500 Site Awarded Celtic Array Centrica & DONG Energy 4185 Site Awarded
Round 1 & 2 Extension Sites - 2010 Site Developer MW Capacity Status Round 1 and 2 Extension Sites - 2010 Galloper Wind Farm SSE Renewables, RWE Npower Renewables 504 Submitted PINS Kentish Flats 2 Extension Vattenfall 51 Submitted PINS Burbo Bank Extension DONG Energy 234 Site Awarded Walney Extension DONG Energy 750 Site Awarded
Demo Sites - 2010 Site Developer MW Capacity Status Demo sites - 2010 Gunfleet Sands 3 - Demonstration Project DONG Energy 12 Under construction Methil Offshore Wind Farm Demo site 2B Energy 6 Approved European Offshore Wind Deployment Centre Scotland Vattenfall, Technip and AREG <100 Submitted to Marine Scotland Blyth Offshore Wind Demonstration site NaREC <100 Submitted to MMO
Northern Ireland - 2012 Site Developer MW Capacity Status Northern Ireland - 2012 First Flight Wind DONG Energy, RES, B9 600 Site Awarded
So how is this all going to be delivered?
Supply Chain Opportunities and Management of Risk Existing projects have [proven] offshore wind works BUT Poor availability Lower than forecast access levels Serial defects and actual O&M costs higher than budgets They have also provided invaluable lessons for the industry Current situation is less favourable: High capital costs Equipment Shortage / Prototypes Finance/investment shortages EMR uncertainties
Supply Chain Opportunities and Management of Risk Completion Risks Capabilities and Resources of Key Project Participants Site Characterisation Wind Waves/Currents Site Investigation Contract Structure Turbine Supply Availability Supply Chain Cost Reduction Task Force
Supply Chain Opportunities and Management of Risk Contract Structure EPC versus Multi-Contract Both have their benefits and drawbacks Is there a single developer/sponsor or is the Project being undertaken by a joint venture? Is the allocation of responsibilities and risks clear and workable? Is each party playing to its strengths and experiences? How are design and construction interfaces handled, and by whom? Agree realistic programme with contractors: Consider weather risk and long lead items (cables, transformers and turbines) Adequacy of Liquidated Damages and Caps Both need to be significantly higher than onshore
Understand Risk in the Supply Chain
Supply Chain Opportunities and Management of Risk Operational Risks Capability and Experience of the Project Operators Site Characterisation Technology Selection Energy Yield Prediction Design Life Technology Risks Availability & Access O & M
Cost Reduction Task Force Reduce bottlenecks to entry Use best practice Target and support SME opportunities Standardisation across all aspects of windfarm development Promote alliance concept Common knowledge forum
Oil & Gas
Supply Chain Opportunities and Management of Risk What Skills? Offshore oil & gas Offshore renewables FEED Foundations & Piles Offshore assembly Cables & Connections Survey & Seismic Maintenance, Mods & Ops Support Vessels Decommissioning
Supply Chain Opportunities and Management of Risk Transferable Competence? Offshore oil & gas Offshore renewables Marinisation - encapsulation Marinisation air conditioning Marinisation - coatings Restricted access Specialist training Offshore regulations Safety / Security Marine support spread
Predictions? Collaboration Knowledge sharing Joint Ventures Pooling resources Who Dares Wins? first mover status
Thank You Ian McCarlie Partner For Pinsent Masons LLP Princes Exchange 1 Earl Grey Street Edinburgh T +44 (0)131 777 7135 F +44 (0)131 777 7003 ian.mccarlie@pinsentmasons.com enquiries@pinsentmasons.com www.pinsentmasons.com
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