ULSTEIN EXPERIENCES AND LESSONS LEARNED · which is China) US, Germany and China are the largest...

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

WWW.ULSTEIN.COM TURNING VISIONS INTO REALITY

WHAT IS THE OFFSHORE WIND ENERGY GENERATING INDUSTRY?

Landbased operations: Offshore based operations:


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


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


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)


POSSIBLE DEVELOPMENT PATHS FOR GLOBAL ENERGY GENERATION

Source: IRENA, 2016Onshore

80% &

offshore

20%


CAPEX AND OPEX INVESTMENTS IN EUROPEAN OWEG INDUSTRY 2010-2020


Norwegain market shares in the OWEG industry 2010-2016




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


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

)


OWEG FLEET BY YEAR (PURPOSE BUILT AND CONVERSIONS)

*Ropax vessels converted to operate in the OWEG industry



*

*****

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


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



* ** ***

Substantial effectiveness gain


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


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


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…


WHAT HAS BEEN ACHIEVED SO FAR?

Source: IRENA, 2016


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


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


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?


Good enoughMore is better Not accepted

FROM “MORE IS BETTER” TO “GOOD ENOUGH” SOLUTIONS

ULSTEIN EXPERIENCES AND LESSONS LEARNED · which is China) US, Germany and China are the largest...

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