An outlook of the Floating Offshore Wind Industry: Opportunities to accelerate deployments

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MEC Case Article: Floating offshore
wind – Ready for commercialization?
An Outlook of the Floating Offshore Wind Industry: Opportunities to accelerate
deployments
Aug 2018
Despite 23GW pipeline, development of floating offshore wind farms is slow.
Floating wind technology is regarded as a game changer in offshore wind market. The technology
provides flexibility in offshore installations across sea-depths opening up exploitation of large
resources. However, commercialization is slow. Since 2010, seven demonstration floating projects
have been installed and three are under-construction across the globe. All these projects, except
Hywind pilot which is 30 MW, consist of a 1-2 turbine unit installation. One gigawatt of pipeline is in
various stages of project development and can be expected to move into advanced stages by 2030.
Another 22 GW of floating OW projects are marked out in form of development zones but have no
clear timelines.
Figure 1: Floating offshore wind projects globally
A clear need is visible in few countries and support for pre-commercial
development is in place
Floating offshore wind technology is regarded as a sub-type of offshore wind projects. Hence, no
zones are specifically carved out yet for specific exploitation of the resource. Nearly 23 GW of sites
across development zones of ten countries are suitable for installation of floating offshore wind
technology. However, these sites are in early stage of development and no commercial activity is
taking place on the sites. To assess when can these sites be activated, a three-fold analysis was
initiated.

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Firstly, countries were ranked by site conditions, political support, and incentive for the development
of offshore industry. Political support is measured in terms of definitive target, mechanism clarity,
transmission grid connection plan and capital funding to supply chain development in the country.
Based on the comparison of floating potential to fixed potential, Japan, US and Norway top the list.
Figure 2: Countries by their floating OW potential and regulatory support for the industry
Secondly, “deep dives” were conducted on select countries with high pipeline to ascertain the cost
benefit of exploiting floating technology vs fixed bottom due to site conditions and status of supply
chain activity. This provides a starting point to understand which costs, geographies or projects have
highest impact on commercialization.
Thirdly, the gap in the ability of the supply chain to support the business case for floating offshore
wind projects were analyzed. This was assessed in three areas: technology (in terms of both reliability
and scalability), installation of farms, and operations in context of offshore wind technology. Knowing
this would help to understand where to focus their resources and energy to bring the fastest possible
change. This analysis was done across all segments of the project i.e. turbine, foundations,
electricals, cables, port, and vessels.
Figure 3: Sample slides || country analysis to assess the demand for the floating offshore wind and the drivers
impacting the demand

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Figure 4: Four components of the installation need major upgrades for application in the floating set up
Figure 5: Sample slides || Supply chain analysis on floating platforms (sample)
Conclusion
Almost all the countries have a funding mechanism for technology development in place. An approval
process, like the one for fixed bottom projects, is present in all countries. However, two countries,
France and Taiwan, have concrete targets, incentives and grid connection plan, laying the ground for
the project development in the country. The activity in pipeline also confirmed interest to develop the
projects to understand risks with some of the players steadily increasing activity. Yet, a “focused”
commitment to exploiting the technology from any of the large balance-sheet players is not yet visible.

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The cost of installing a MW of floating OW today is as high as 400% of the fixed bottom. On the other
hand, there are no clear or sufficient incentives for the floating technology in the potential markets.
Turbine, floating platform, substation and cables emerged to be the key areas of major structural and
technological difference from the fixed bottom offshore wind projects. A key insight was that the
companies are working in silos in their own technology areas. There has been no evidence of
collaboration between different technology players, or between a developer and a set of technology
players. Expectedly, the most proactive segment in the entire value chain are the floating platform
companies. This silo approach is leading to slower than expected development in proving the
feasibility of technology. In our opinion, even if the technologies do get to be available, the lack of
coordination between installation and operations part will hamper the growth.
About MEC Intelligence
MEC Intelligence is a market advisory and consulting firm with vast experience in wind energy sector.
In power sector services, we have worked with leading utilities, energy retailers, industrial companies,
turbine OEMs and private equity firms on projects like strategy support, opportunity scanning in
regional markets, business model assessment. MEC Intelligence has conducted an analysis of ~15
countries on nearly 10 attributes to determine the renewables’ impact on the power mix.
To know more, please visit www.mecintelligence.com
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