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Netherlands

Netherlands

Dutch players sail into North Sea

NETHERLANDS: Considering the Netherlands' proud maritime tradition, it is no surprise that Dutch firms have carved out a sizeable chunk of Europe's offshore wind supply chain. Marine contractors such as Van Oord, Ballast Nedam and Visser Smit have adapted their expertise to the task of building wind turbines at sea.

With more than a century of marine-contracting experience, initially in dredging, Van Oord entered the offshore wind market with cable installation, seabed preparation and scour protection. A partnership with crane and transport giant Mammoet expanded its activities to include foundation and turbine installation.

Van Oord set up an offshore wind business unit after the joint venture with Mammoet was dissolved in 2007, extending its offering to a complete engineering, procurement and construction (EPC) package to include the engineering design of a wind farm as well as contracting for the materials and services needed for its construction. "It's our bread and butter, we do it in oil and gas and to a lesser extent in dredging," says Johan van Wijland, the firm's director of offshore wind projects.

Van Oord completed EPC contracts for the Dutch 120MW Princess Amalia site in 2008 and Belgium's 165MW Belwind project in 2010. In arguably its biggest challenge to date, it has been lined up as EPC contractor for the 600MW Gemini project, which will see offshore wind construction return to the Netherlands after a four-year hiatus (see box, overleaf).

With its sights set on securing a significant slice of the offshore wind market, Van Oord needs to invest in further hardware, says van Wijland. It has ordered a jack-up vessel for installing foundations and turbines. The Aeolus is being built at the German Sietas shipyard and is due to be delivered in September 2012.

Good Foundations

Ballast Nedam's foundation installation service grew out of its experience building coastal protection works and, more recently, major bridge projects in Saudi Arabia, Denmark and Canada.

"These seagoing bridges have a huge technical similarity with wind-farm foundations," says Marcel van Bergen, director of Ballast Nedam Offshore. "You need very heavy foundations and you have to develop special tools and industrialise your construction, because sometimes those bridges consist of over 100 elements." The sheer number of foundations needed in a wind farm demands strict focus on logistics to keep the project on schedule, he says: "On a single oil or gas project a small delay may be acceptable, but if you lose time on any element of a repetitive project and multiply that by 100, you have a project that is severely delayed."

Ballast Nedam dates its involvement in offshore wind to the sector's early days, when the Netherlands was among the pioneers in building wind farms in European waters. In 1994 and 1996 the firm installed foundations at two Dutch near-shore wind farms - Lely and Irene Vorrink in the Ijsselmeer, a large artificial lake. "We invented the monopile as a new type of foundation for offshore wind," says van Bergen. "Before that there were only tripod or gravity-based foundations."

Since then, the company has been contracted to install wind-farm foundations in the Netherlands, UK, Belgium, Germany and Denmark. Its twin-hulled 8,700-tonne heavy-lift vessel, Svanen, is able to install different types of foundations - monopile, jacket and gravity-based, says van Bergen.

As wind developers move further offshore, jacket foundations are taking over from monopiles, van Bergen says. Ballast Nedam is researching designs for a new vessel capable of handling heavier structures in difficult sea conditions. It is also designing and developing new types of foundations, according to Edwin van de Brug, commercial manager at Ballast Nedam Offshore.

The Turbine Manufacturer

Also hoping to capture a slice of this growing offshore wind market is turbine manufacturer XEMC Darwind. A prototype of its dedicated offshore 5MW design is installed at Wieringerwerf in the province of North Holland. The direct-drive permanent-magnet generator design, with no gearbox, is becoming increasingly popular among offshore turbine makers. "The main reason is that direct drive requires much less maintenance," says Larry de Vaal, business development manager at XEMC Darwind. "Operations-and-maintenance costs out at sea are very high, so the fewer times you need to service the machine the better."

Hilversum-based Darwind was acquired by XEMC of China in 2009. De Vaal sees big prospects worldwide for offshore wind companies. "However, for the offshore wind industry to become competitive and get rid of subsidies we need to lower prices considerably - not only capital expenditure but also on the operations and maintenance side." The industry should be aiming for a 30-40% reduction from today's prices, he suggests.

The need to lower costs is a common theme. Pieter Tavenier, offshore wind manager at Dutch electricity company Eneco, attributes today's high costs to a lack of competition in turbine supply and "sub-optimal" wind turbines. "Basically, we have onshore turbines that have been brought to sea," he says. He is optimistic that costs will fall significantly over the next ten to 15 years as more manufacturers enter the market with dedicated offshore machines up to 7MW in size.

Offshore wind's appeal to utility investors such as Eneco lies in its potential, he says. "It's the most scalable source of renewable energy in north-west Europe; much more scalable than onshore wind or biomass."

Eneco entered the sector by acquiring the Princess Amalia project and now has more than 2GW in development in northern Europe. "We aim to develop 100MW per annum," he says. "That is quite a lot to manage. We are ... realistic about what we can develop, construct and operate." With limited potential for expanding its offshore portfolio in its home territory, most of this capacity is outside the Netherlands. Eneco owns a site licence for the Belgian 350MW Norther project and a development licence for the 900-1200MW Navitus Bay project off southern England.

The Dutch government is picking cheaper options for meeting its renewables targets, says Tavenier of Eneco. But offshore wind is still an early-stage technology and therefore has a high cost. "If you don't invest today the cost won't come down," he says.

TROUBLED WATERS SUPPORT ALLOCATION FOR DUTCH OFFSHORE PROJECTS CAUSES CONTROVERSY

Dutch utility Eneco has around 2GW of offshore wind under development in the North Sea. Its pipeline includes a Dutch project - the 130MW Q10, named after the North Sea block sited some 23 kilometres off Ijmuiden.

Eneco hopes to achieve financial close within the next 12 months, dependent on receiving financial support under the Dutch renewables incentives programme, the subsidieregeling duurzame energie (SDE). This gives producers a fixed price per kilowatt hour for their electricity.

After the government allocated financial support to German manufacturer Bard earlier this year for two adjacent 300MW projects, enough money was left in the SDE pot for a 100-150MW offshore project. "Fingers crossed, we are confident that we will be allocated to Eneco in the next few weeks," says Tavenier.

Plans for expansion

But Eneco is not alone in bidding for this residual SDE budget. Amid widespread controversy over the government's decision to award the lion's share of support to a foreign company, Bard sold its project to a joint venture between Dutch green-investment firm Typhoon Offshore and Dutch utility HVC. Now the new owners of the renamed Gemini project are bidding for the SDE money to expand it by 100MW.

So far the government has made no decision, says Michael van der Heijden, managing director of Typhoon Offshore. "But we reckon that our bid is the best and gives the taxpayer the most energy for their money."

Van der Heijden refutes accusations that by granting the SDE incentive to Bard the government effectively exported the subsidy to Germany. He says Dutch firms will be responsible for 50% of the total EUR2.3 billion investment in the project. Bard will supply the turbines.

Typhoon Offshore specialises in arranging finance for offshore wind farms and was involved in financing the Belwind and Princess Amalia projects.

"We are a young company, but our team has built a track record in bringing permitted wind farms to financial close," says van der Heijden. At that point, Typhoon sells its stake in the project. "New owners are then in the lead and contractors start building the wind farm," he explains.

This pattern will be adopted for the Gemini project, although Typhoon is considering retaining a small stake. The company claims the project financing is on track, and expects construction to start in August 2012.

In the next decade, Typhoon aims to bring five to ten wind farms to financial close. "All of these will be in other European countries," says van der Heijden.

With no immediate prospects of further Dutch government support for offshore wind, Typhoon, like its compatriots, is betting on overseas markets.

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