Poland’s offshore wind energy market is about to take off, having signed its first Offshore Wind Sector Deal in 2021. The aim is to maximise domestic production, development and installation activities, developing 5.9GW of offshore wind energy by 2030. In this article, ForteIX reflects on its extensive offshore experience in many countries and highlights 5 lessons learned from other offshore markets that Poland should carefully consider when building its own Offshore Wind capability.
1) Listen to the industry when regulating
When regulating the industry, Poland can look to the experience of other recently established offshore markets. ForteIX’s Eric Kamphues was involved at the very start of Taiwan’s wind energy industry in the early 2010s and notes some very important lessons from that period. He recalls how, initially, the Taiwanese government, out of concern for structural integrity of WTGs in a typhoon zone, prescribed that Class 1A turbines were to be used in offshore wind developments. Class 1A designation is typically used on sites with high wind turbulence which is not encountered with typhoons. This government restriction effectively ruled out all but one turbine manufacturer from supplying WTGs in Taiwan’s first offshore wind farms. Not only was Class 1A not strictly necessary given the conditions but competition, and the cost savings that can ensue, was not available to the developer.
Kamphues comments “Poland can take the opportunity to consult with the experts in the field before setting out overly prescriptive or unsuitable regulation. It also has the benefit of leaning on its EU neighbours when it comes to setting appropriate standards and metrics. It will reap the rewards of quickly incorporating any learning made in its domestic environment back into legislation and rules governing the industry. Flexibility is key to growth”.
2) Make developments attractive for investors
Next, Kamphues has us thinking about the return on investment and the appropriate size of developments. He goes on to say that for many investors, offshore wind energy initiatives can sometimes be too small to attract their attention. When thinking about a development of any size, start up costs are high and there are many unavoidable fixed costs. Understandably, there are potentially huge economies of scale when it comes to fixed costs for larger versus smaller projects.
“Investors naturally look to maximising return and it would seem that developments of 700MW to 2GB make most sense from a financial point of view”, says Kamphues.
Another way of making developments more attractive to investors is to take steps to de-risk it. Kamphues encourages Poland to look at what the Dutch do in relation to the permitting process.
“The Dutch take on the responsibility of determining the location and feasibility of a development. This prevents every developer from having to do the same, saving millions and making the whole process more efficient. Poland would do well to incorporate strategies to de-risk developments of investors in this manner”.
3) Think global, for now …
Countries that are at the start of their journey in offshore wind should realise that utilising international expertise and suppliers are the quickest route to building up a strong domestic capability. Insisting on, or favouring local resources is unlikely to advance ambitions very quickly. Here’s looking at you, France. Indeed, you may choose to focus on things you could do well, which could be foundations and towers in Poland’s case, but for the early developments let the Danish supply your turbines, and welcome talented engineers with experience in established offshore markets such as Germany, UK, Belgium etc, .
ForteIX’s Technical Director, Alan Churchill adds “Poland is competing for these resources and equipment with other burgeoning offshore wind markets across the globe. Therefore, it would do well to foster a culture of looking to focus efforts early on in projects. To be mindful of booking vessels and other equipment in advance for example.” In this way, planning can be more efficient and reliable.
This next point has a lot of practical significance. Like many industries around the world, the unofficial language of the Wind energy sector is English. Manuals are primarily written in English, the language on site on the construction site is likely to be English. Poland should ensure that its workforce is proficient in the language. ForteIX has seen this being a surprisingly frustrating issue in several international projects over the years.
4) Facilitate Onshore Pre-Assembly
It’s easy to forget that there is a huge amount of preparatory work completed onshore, away from the offshore wind farm location. The reason for this is to try and minimise the time spent on assembly activities offshore, which are at risk of delays and cost overruns due to adverse weather. Poland should facilitate and optimise onshore assembly sites as a key to gaining an advantage in offshore wind, and affording safe and timely installations.
Churchill reflects on his experience in offshore wind turbine installation and says “From the time we arrived at the offshore foundation location, our goal was to complete WTG erection and installation within 24 hours, leaving behind a fully assembled and operational asset that is capable of producing and exporting energy. Efficient onshore pre-assembly and commissioning, which minimised offshore installation activities, was absolutely critical to this success”.
Also, the location of the port to be used for the delivery, offload and load out ahead of the pre-assembly should be dedicated solely to that purpose. It should not have to compete with regular cargo movements for example. You don’t want expensive vessels sitting waiting behind a shipment of rubber ducks from China. The pre-assembly area also needs to accommodate the storage of contingency supplies and equipment.
5) Choose your partners wisely
“One sentence in an offshore contract can cost you millions. It’s never been more important to limit your exposure to risk.” says Kamphues.
For investors in Polish offshore wind energy, it’s never been more important to choose the right partners for your development. Not only do you need a technical advisor but a bridge to figuring out the commercial and legal complexities involved. The old adage of “Measure twice, cut once” could not be more true for offshore wind. The cost of mistakes made in an offshore wind energy project are hugely amplified when compared to onshore. This applies across the entire construction management process, from feasibility and permits, to hook-up and commissioning.
Fergal O’Mahony, CEO of Forte Renewables recounts a cautionary tale about failure to plan your project properly. In this early offshore Dutch project, the substation suffered delays at the pre-assembly site near Rotterdam. With the chartered transport vessel arriving imminently, the contractor had to make a very difficult decision between two equally poor options. Option one, delay the vessel and pay penalties of €100k+ per day while completing onshore assembly or option two, transport the OSS at the planned date and complete final works offshore. The contractor decided on the second option and went on to experience huge delays and costs in finishing the works due to challenges with working in more hostile weather conditions at sea. Suffering from limited equipment on site and the cost of transporting workers by helicopter. The Contractor ultimately went bankrupt. Make sure that is not you by engaging with the right partner from the outset, someone who can foresee and avoid issues like the ones seen above.
Choose someone with boots on the ground in Poland, someone that understands the business and political culture in the country, as well as the specialised environmental considerations of doing business in the Baltic Sea. Choose an expert that considers you an equal partner, that is happy for knowledge to remain in Poland and wants to grow with you.
Since 2012, ForteIX has over 1,600 MW in joint work experience on offshore projects in 20 countries including Germany, UK, France and Taiwan. They act as M&A Advisors and Owners’ Engineers having completed projects for clients such as Allianz, Vattenfall, GE, Mitsubishi and Total.
For more information about ForteIX international offshore experience and services offered to the Polish and other offshore markets please visit our website.
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