Offshore wind is a growing business in the Netherlands and it’s set to get even bigger, reports Elaine Maslin.
A SIF monopile foundation installed offshore. Photo from SIF.
This year, the Dutch government put out to auction the 700MW Borssele 1 and 2 offshore wind zones, off Zeeland. Some 38 bids were submitted, including one from a consortium including oil major Shell. Mid-July, Danish energy firm DONG Energy has laid claim to winning both. A further round of sites, Borssele 3 and 4, will be auctioned in September. The two farms will have 350MW capacity each, 22km off the coast of Zeeland, in 14-38m water depth.
Taken alongside the approval of a law which paves the way for new transmission infrastructure, enabling up to 3.45GW of capacity by 2020, and the ongoing construction of the mega-600MW Gemini park (OE: September 2015), it’s all looking very positive for Dutch offshore contractors.
However, Dutch firms haven’t waited for work off their own shores before getting stuck into this market. And, according to a report by Dutch bank Abn Amro, by taking on board lessons learned in Denmark, Germany and the UK, the Dutch can now take a leap forward in terms of efficiencies and costs in a more mature offshore wind market.
Following an increasingly popular model, Dutch contractors are also becoming shareholders in projects, deepening their commitment to the business. Van Oord, for example, has a 10% stake in the Gemini wind park, which it is not surprisingly also a large contractor on. It is also part of the consortium with Shell, which submitted one of the bids for the Borssele areas, with partners Shell and Eneco.
Companies are also consolidating their expertise. Van Oord took over Ballast Nedam Offshore to integrate into its offshore wind business unit, as it saw the opportunities in the market, says business consultancy EY. More recently, Boskalis completed the acquisition of the offshore wind activities of VolkerWessels, who it had been working in 50:50 partnership with as Offshore Windforce, which Boskalis now owns outright.
Companies are also working together. Earlier this year, the GROW program (Growth through Research, Development and Demonstration in Offshore Wind) was launched. It is a consortium of about 20 organizations in the Dutch offshore wind sector, which aims to reduce the cost of offshore wind energy and reach 7 eurocents per kWh by 2030, reflecting a 50% reduction compared to 2014. It hopes to make offshore wind able to compete with other renewable and fossil energy sources – without subsidies.
With the downturn in oil and gas, being able to move over to offshore wind has offered a new source of revenue for some firms, says EY. “One of the main alternative sources of revenue for fleet usage is offshore wind,” it says.
Damen’s head of business development Peter Robert certainly sees the opportunity. “Wind turbine capacity has grown 41.1% from 2010 to 2015,” he says. “In 2015, the average capacity of new wind turbines installed was 4.2MW, a significant increase from 3MW in 2010, reflecting a period of continuous development in turbine technology to increase energy yields at sea. The deployment of 4-6 MW turbines seen in 2015 will be followed by the gradual introduction of 6-8 MW turbines closer towards 2018.”
But, Arno van Poppel, managing director VBMS, now part of Boskalis, says, “The biggest challenge is reducing the levelized cost of energy (LCOE). This cannot be achieved by just one party. It has to be achieved by the entire supply chain. This requires different ways of cooperation within the supply chain. There’s no one party that can delivery everything. We are looking for the long-term. If we support this, if we can achieve growth with a LCOE that can compete with fossil fuels, without support from subsidies, it will be a step change.”