ANNUAL REPORT 2012
STATKRAFT CASE
FROM WATER BY KRISTIAN KOLIND
COMPANY FACTS Based in Norway and owned by the Norwegian state, Statkraft is the European leader within renewable energy. Present in more than 20 countries, Statkraft’s power plants have a total
Statkraft has a total annual power production of 51.5 TWh, renewable percentage of 91%
installed capacity of about 17,000 MW. The bulk of the company’s energy production is generated through hydropower, but Statkraft also generates gas power, wind power and district heating and is a major player on the European energy exchanges.
20% THE EU AIMS TO GET 20% OF ITS ENERGY FROM RENEWABLE SOURCES BY 2020
W
ith a hundred years of experience from developing and operating hydropower plants, Statkraft expanded into wind power more than a decade ago, starting with onshore and later moving into offshore. In this process, a number of key questions were considered, including: Which technical choices have to be made to reduce lifetime costs to a long-term sustainable level? Which choices should be made in the supply chain to further drive reductions in investment costs?
Do we have (or can we build) the skills required to handle the increased technological risks and capitalise on alternative supplier and partner models (e.g. insourcing or taking out the contractor link)? The long-term bet
Statkraft’s home turf of Norway was well suited for the first onshore wind projects, and a number of projects in all stages from operation to development have been established in Norway, Sweden and the UK. The next leap is to take the turbines to the sea. Statkraft chose Norfolk for its first project, the Sheringham Shoal Offshore Wind Farm, built in co-operation with Statoil, which came into operation in 2012. Another project not far from this, the Dudgeon Offshore Wind project, is under development. The big, long-term bet, however, is the Dogger Bank project, which Statkraft and three partners have a licence to develop. It's the world’s largest offshore wind zone currently under development, placed far from shore in the shallow areas of the North Sea basin, roughly midway between the UK and Denmark.
QUARTZ+CO
PERSPECTIVE
constant winds and room for larger wind farms. During the past couple of years, most large utilities have entered the scene, and sizable subsidy programmes have been put in place. In Northern Europe, especially, where coasts are dominated by shallow waters and powerful winds, many governments see offshore wind as the preferred option in the large-scale green energy transformation that's needed to meet the CO2 reduction targets. Naturally, the Americans and the Chinese are also looking to offshore wind as one of the future energy providers, and the industry is expected to grow to five times its current size by 2016. But establishing offshore wind farms is a huge undertaking with a complex supply chain and stakeholder landscape. This equals high risk and uncertainty. Therefore, the key challenge for wind farm owners is to manage this risk exposure while still working towards reducing lifetime costs.
FINDING THE RIGHT VALUE CHAIN PLAY IN OFFSHORE WIND The world’s ever-growing energy consumption and the introduction of binding CO2 reduction target agreements drive further momentum of green energy sources such as offshore wind. But despite the positive outlook, the industry is not yet mature. Of the total 227 GW global cumulative wind power capacity reached in 2011, only 2% were produced by offshore wind turbines. In the long term, however, it’s estimated that more development will take place offshore, with improved utilisation of stronger and more
Establishing offshore wind farms is a huge undertaking with a COMPLEX supply chain and stakeholder landscape. This equals HIGH RISK and uncertainty
are time consuming to produce and difficult to transport, both on- and offshore. In addition, there’s a substantial risk of unforeseen complications and errors due to the difficult circumstances under which the up to 200 metre tall turbine towers are erected, 200 km from shore and 50 km below the ocean surface. And imagine, once the turbines are in place, to be faced with the chilling task of boarding the turbine from a small boat bounced up and down by three-metre high, freezing waves to attach the array cables that connect the mills.
Supply chain complexity
However, this is by no means a walk in the park. An offshore wind project involves numerous challenges from turbine development and installation methods to cable-laying, mostly in high waves, far from shore. A clever supply chain strategy was needed to help Statkraft deliver on its ambitious growth plans. Understanding the convoluted supplier landscape was the first step, including considerations on how and when to pick the right suppliers and how to build the in-house support organisation. The next step is to map the road towards reducing lifetime costs, which is crucial to make offshore wind a long-term sustainable industry which isn’t dependent on subsidies. The offshore wind supply chain is quite complex: The industry contains only a few main suppliers of turbines, and many components
44% THE OFFSHORE WIND INDUSTRY IS EXPECTED TO GROW BY A CAGR OF 44% FROM 2011 TO 2016. SOURCE: MAKE CONSULTING
At this point …
Entering the offshore wind industry isn’t done in a flash. Statkraft and its partners expect to receive the consent for the first 1.2 GW project in 2014 and will then be ready to start pre-construction work. To achieve this, however, supplier choices must be considered already now for Statkraft to be prepared to move into new waters.
SUCCESSFUL ESTABLISHMENT OF OFFSHORE WIND FARMS REQUIRES SMOOTH CO-OPERATION THROUGHOUT THE ENTIRE SUPPLY CHAIN
Onshore substation
Onshore cable
Port
Offshore export cables
Offshore substation Substructure
Wind turbine manufacturers
Structural fabricators
Electrical suppliers
Marine contractors
Topside steelwork
Array cables
Substructure
Wind turbine manufacturers
Equipment
EPCI contractors
Cable installers
Cable suppliers
Port operators