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How Can Offshore Wind Contribute To The European Energy Portfolio?

Uffe Vinther Schou, Sales Director, Vestas Offshore A/S

2 | How Can Offshore Wind Contribute To The European Energy Portfolio, April 21, 2023

• Introduction to Vestas Wind Systems and Vestas Offshore A/S

• Future expectations to the European offshore wind market

• Offshore wind drivers

• Offshore wind barriers

• Future offshore trends and challenges

• Recommendations for the support of offshore wind

Content

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Facts

Vestas Wind Systems:• Employed 21,000 people by the end of 2008

• Delivered 6,000 MW

• Target: Manufacture, ship and install 10,000 MW in 2010

Vestas Offshore:• Global headquarters in Denmark

• Independent business unit since 2006

• Offshore focus only

• Sales, construction and O&M

• Offices in DK, UK and NL – more to come

• Has grown from 50 to 400 employees in 4 years

“People before MW”:• No specific allotment of turbines for offshore projects

• I.e. no restrictions to no. of MW!

• Need people before ramping up on projects

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W

Under

construction

Service

Service

180 MW Under

construction

528 MW Under 5-year

service

182 MW in operation for 5+

years

In operation for

5+ yrs

Vestas Offshore – Track Record

321 MW Contracted

Service

Service

Service Service

In operation for

5+ yrs

In operation for

5+ yrsIn operation for

5+ yrsIn operation for

5+ yrs

Contracted

Contracted

5 | How Can Offshore Wind Contribute To The European Energy Portfolio, April 21, 2023

Future Expectations to the European Offshore Wind Market

Offshore wind will gain a higher share of the total European wind portfolio

The European offshore wind market will grow at a steady pace – faster than on

shore

• Main future markets:• UK (~20GW by 2020) and

• Germany (~17GW by 2020)

• Additional focal markets: • North Sea and Baltic Sea

• Emerging markets: • Mediterranean,

• China/ASP,

• US/Canada Third-blade installation, V90-3 MW Robin Rigg, UK

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Two Main Drivers for Offshore Wind

Political Support:• Political support for offshore wind has never been better!

• The European Commission:• Proposal to invest € 3.5 billion in energy in 2009-2010

• €500 million earmarked for offshore wind

• National initiatives (examples):• UK renewable legislation package

• Increased German offshore tariff

• National credit agencies backing large infrastructural projects, e.g. offshore wind

Committed Customers:• Improved cooperation and learning • Improved organizational skills• Are earmarking capital specifically for offshore wind

V80-2.0 MW, Q7, The Netherlands

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Barriers to Offshore Wind

Financial crisis• The credit crunch will leave a stronger and more

stable industry• Prices will stagnate or even decrease

Legislation and political framework• Lack of effective, tangible support mechanisms• Long, complex and uncertain permitting procedures

Resources• Lack of people, knowledge and skill sets

Supply chain elements• Long lead times and supply shortage for

components, cabling, etc.• Lack of suitable installation harbours• Lack of installation vessels

V90 Turbine

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Moving further up the learning curve• Benefit from previous experience – implement Lessons

Learned• Increased efficiency (design, construction)• Development of new ideas, methods, tools etc.

Investment in innovation/infra structure• Installation vessels, production facilities, harbour areas

Attraction of new players to enter the market • Mitigate bottle necks• Increase competition

Industrialisation and standardisation of products and methods

• Increased efficiency, cost-effectiveness and speed

Attracting qualified and experienced staff• Staff will continue to be the bottleneck

Current and Future Challenges for the Offshore Wind Industry

V90-3 MW, Robin Rigg, UK

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Looking Towards Future Trends in the Offshore Industry

Cost of Energy (CoE)• A narrowing gap between CoE for onshore and offshore wind

• Total CoE more important than MW rating

• More reliable and robust WTG’s.

• The industry will mature and move up the learning curve

Health and Safety• Safety is key when going offshore.

• Industrial injuries down by 47% since 2005 in Vestas.

V90-3.0 MW, Kentish Flats, UK

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Recommendations for the support of offshore wind

Sustainable market:• Clear, well defined and short permitting process• Committed targets• Transparent development process:

• Political priorities – Radar, marine traffic, defence, aviation etc.

• Infra structure:• Onshore grid connection capacity (e.g. UK and Germany)• Suitable harbours (UK)

• Economics• Appropriate subsidy systems and suitable tariff levels (e.g. DK, Sweden) • Protectionism (local requirements) => sub optimisation• Attract new players and increase competition• Industrialise products and methods -> improve efficiency and decrease costs• Push investments in innovation

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Recommendations to wind farm developers:• Focus on reducing rather than splitting risk

• Sub contractors must be allowed to make a profit

• Price pressure increases the risk of sub contractors going into administration

• Offshore wind is competing against offshore oil and gas for the same suppliers. Only competitive prices and terms will attract large and professional players

• Increased staying power enables a move up learning curve, investments, innovation etc.

• Impose demands on H&S, planning, contingency plans etc.

Recommendations for the support of offshore wind

Turbine pre-assembly, Ijmuiden, Q7, The Netherlands

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• Offshore wind will gain a higher share of the total European wind portfolio

• ‘Cost of Energy’ is more important than turbine size

• Political support is needed to create market growth and business case certainty

• Certainty attracts more players, enables innovation, drives industrialisation and creates learning

• A more professional supply chain is required to fulfil the potential of offshore wind

In conclusion

V90-3 MW, Robin Rigg, UK

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