The Big League Offering Lowest Offshore Wind Prices (Interview with Vattenfall)

When you are talking with people working in real estate, there is a small chance you would not hear them saying: “Location, location, location!” at some point. In offshore wind, the same could be said for cost reduction.

Speaking about parts of the European offshore wind industry that need special attention, Gunnar Groebler, Vattenfall’s Head of Business Area Wind said: “Cost reduction, cost reduction, cost reduction”, thus emphasising the very epicentre of the sector’s movements lately, as the industry strives to make offshore wind an inexpensive source of power.

“If you just look at the trajectory that we have seen in offshore wind, you will see that it is remarkable. We have delivered a 40% reduction from Horns Rev 3 to Danish nearshore from 103 to 64 Euros. This is 40% down in a similar support scheme, and that has to continue!”

Whether the trend is going to continue at the same speed is still left to be seen, but it needs to continue in order to match political and public expectations, according to Groebler. “Reducing vulnerability from the support schemes is one of the key things our team focuses on.”

Danish nearshore won amid political uncertainty

The Swedish-headquartered wind energy developer won the Danish nearshore tender last month. The company placed a remarkably low price of 0,475 kr/kWh for Vesterhav Syd and Vesterhav Nord sites.

However, this happened amidst Danish government’s contemplation on removing subsidies for nearshore projects.

Commenting on the matter, Groebler said: “This is still an open question. It is a political process and I believe we have delivered all the arguments we could to convince people that offshore is moving into low-cost energy. Now it is up to the government to pick up the ball and make it reality.”

Vattenfall has put in all the learnings gained throughout its recent projects and bids to file the winning bid at the tender, he said.

The siting that the company carried out significantly reduces the wake effects so there are many full-load hours and a large amount of yield on the wind farms, which are to be installed across two North Sea sites with extremely good wind conditions.

The company plans on bringing the two nearshore wind farms to realization by 2020.

The big league

Vattenfall and DONG Energy are currently at the forefront of the industry as the two companies which are able to bring forward two lowest-priced offshore wind projects after the outcomes of Danish Vesterhav Syd and Vesterhav Nord nearshore tenders and Dutch Borssele I & II.

Vattenfall is one of the 26 bidders in the latest Dutch tender for Borssele III & IV, launched after the previous one resulted in DONG Energy offering the lowest price.

Both wind energy developers are also participating in the tender for Danish Kriegers Flak, and Offshore WIND wanted to know what are Groebler’s predictions as the winner is expected to be announced in December. “The list of competitors that we have seen pre-qualifying for Kriegers Flak comprises well known and renowned companies. It is going to be a fierce competition since this is a very attractive project in the Baltic Sea. May the best win!”

EOWDC well on track

Meanwhile, Aberdeen Offshore Wind Farm, against which Donald Trump has unsuccessfully fought several times, is well on track both onshore and offshore.

After taking the Final Investment Decision for Aberdeen Offshore Wind Farm (the European Offshore Wind Deployment Centre) in July, Vattenfall initiated all preparation works for the offshore construction, including a recently launched campaign to test installation of the suction bucket concept.

“We are very happy with the outcome of the trial. We are going to do another test installation later this year with bigger cans so that we are fully prepared for the real offshore work to be started next year,” Groebler said.

EUR 5 billion for wind energy and more than 250 new employees

Vattenfall hired around 140 people in the last year and will employ some 130 people more in the next twelve months. This is a direct result of the company being on a growth path, according to Gunnar Groebler. A substantial amount of the company’s ongoing offshore wind activities makes this growth even more evident.

Not only is the wind energy giant set to employ more people, but will also invest more than EUR 5 billion in wind energy by 2020, with a big chunk of the money earmarked for offshore wind projects.

In addition to Horns Rev 3, the amount is used for Aberdeen Offshore Wind Farm, the two Danish nearshore wind farms, and several onshore wind projects.

The company also intends to use its big renewables budget to cover Borssele III & IV, Kriegers Flak, as well as the projects for which it plans to bid in Germany and the Netherlands.

In August, Vattenfall has also acquired German Global Tech II.

When it comes to projects, the company is increasing the number of staff with a focus on value-adding parts, as Groebler refers to them. “We add value to a project by employing people with higher qualifications and expert knowledge, be it on siting, wind data analysis or big data analysis.”

Nevertheless, the need for more employees does not only come with new projects, but also with running assets. “With a couple of running assets where the DNP period [Defects Notification Period] is nearing expiration, we are taking on the operations and maintenance part ourselves, so we are increasing the number of staff on these sites.”

Sharp business strategy

Given that major renewable energy companies such as E.ON, DONG Energy and RWE (Innogy) have split their businesses to have stand-alone companies dedicated to renewables, Gunnar Groebler was asked if Vattenfall plans to follow suit any time soon.

“No, we do not think this is the right way for Vattenfall to go forward. What we have done though is that we have clearly sharpened our strategy towards more renewables and defined some of our assets as non-core,” Groebler said.

This had led Vattenfall to divestment of the lignite business, which the company closed at the end of September.

“We should not forget that our lignite business involves roughly 7,000 people, but this still does not mean that we will split the company. There is no need to do this, neither from the financial nor from the strategic perspective. Hence, we are not going to follow that path.”

Offshore WIND Staff

Photo: Gunnar Groebler, Head of Business Area Wind at Vattenfall