In the past year, in the UK and other European markets, costs have fallen significantly and rapidly, which put Europe's offshore wind industry on a trajectory of subsidy-free power generation within a matter of years.
Competitive auctions by governments have been crucial in galvanising the industry into aggressively reducing costs. Tender processes have adapted and changed as the industry has gained experience in developing and building projects.
According to WindEurope, for an offshore wind tender to be effective, it has to achieve competitive prices and high realisation rates. In addition, tenders should incentivise research and innovation efforts and allow for the development of cutting-edge wind technologies.
Triton Knoll is an 860 MW offshore wind farm project in UK waters in the latter stages of development, which secured Contract for Difference (CfD) subsidy support from the UK government in September 2017.
Preferred suppliers include MHI Vestas Offshore Wind, which plans to use 90 of its V164-9.5 MW turbines.
The award of the CfD has been attributed to a business case designed through collaboration with the supply chain to focus on cost reduction, low-cost generation, and UK content of at least 50% over the project’s lifetime.
MHI Vestas has been producing offshore wind turbine blades at its Isle of Wight factory for the past several years. According to Triton Knoll’s developer, Innogy, MHI Vestas' continued investment in the UK has been a key factor in its selection as a preferred supplier to the project.
Innogy has been involved in the development, construction and operation of offshore wind farms, from the industry’s inception, throughout Europe, from North Hoyle and Galloper in the UK to Nordsee One, off the German coast.
"In the last few years, the offshore wind sector has been consistently driving down costs, with the pace of cost-reduction not just continuing, but accelerating," says Jon Darling, senior project manager for Innogy at Triton Knoll.
During the latest CfD auction round, Innogy made the decision to bring its key contractors on board as an integral part of its team, adopting a bottom-up, supplier-led approach.
"The key to maximising value from our projects is in bringing the different experts in their respective fields together around a table at an early stage, and identifying new and innovative approaches," says Darling.
For example, the foundations at Triton Knoll will be supporting what are currently the largest turbines on the market. However, Innogy is working with its contractors to address foundation design and reduce the weight of monopiles by at least half compared to those used at existing offshore sites.
Innogy is also exploring a "dynamic" rating system to optimise the wind farm’s power export, achieving more megawatts through the network.
Using advances in power flow modelling, the company has reduced infrastructure at the project’s on- and offshore substations.
As experience of previous wind farm projects has accumulated, large developers with established track records in offshore wind farm development are opting for approaches where they contract and interface directly with suppliers, rather than paying a premium for engineering, procurement and construction (EPC) contractors to take on these risks.
The result is leaner costs across all supply contracts. Innogy has been optimising its contracts between itself and suppliers for about two years, through reducing the number of interfaces and ensuring they sit with the appropriate parties.
Darling says: "We’re working much more collaboratively and closely with our contractors so that we can each identify and understand where project risks can best be managed, and, crucially, which party or contractor is the best placed to manage them."
This approach shares out the responsibilities and gives a greater degree of ownership of delivery of the project as the best team for the specific job takes on that risk.
The reward of such an approach makes the project a much stronger proposition, with risk managed appropriately, and driven by an optimised contracting strategy and business case, according to Darling.