Editor’s Note: SubCableWorld recently had the pleasure to speak with Ditlev Engel, CEO of DNV GL’s Energy business area, just prior to the International Offshore Wind Partnering Forum (IPF) held by the Business Network for Offshore Wind last week and at which Ditlev was a panel member.  As we began discussing offshore wind, Ditlev said to me that, “The question we get about offshore wind all the time at DNV GL is “How is this going to pan out?” 

I could relate to that as I have heard that question more than a few times. At SCW, we responded with our Offshore Wind Cable Almanac to specifically address cable issues. DNV GL has gone much further, producing the Energy Transition Outlook, which is a must read for anyone interested in any aspect of the offshore wind market and can be downloaded at https://eto.dnvgl.com/2017/download

SCW: Ditlev, could you tell us something about the Energy Transition Outlook and your views on the future of offshore wind in the US and globally?

Ditlev: At DNV GL, we are 12,500 people working within 5 different areas – Maritime, Oil & Gas, Energy, Business Assurance and Software.  The reason I mention that is because people know us from many of these different areas, but do not realize that 70% of all the business we do is energy related – energy runs across all our business areas. 

The question we get about offshore wind all the time at DNV GL is “How is this going to pan out?”  So we said the best thing we can do is to sit down and make a detailed study of this. And that became the Energy Transition Outlook. 

Our Energy Transition Outlook is basically driven by one thing– the cost. It is very hard to predict policies in the world, but we do believe that people respond to the cost of energy. Just looking at a cost perspective, how will it evolve? 

This is very important regarding offshore wind. Basically, what we are looking at in those scenarios is that we are heading towards a world that will electrify much faster than ever before. We have to distinguish between the growth of electricity generation and the growth of energy overall.  And in the growth of electrification we see the uptake of renewables growing very, very fast. It will happen in three main areas: solar, onshore wind, offshore wind. 

The mix of those renewables will vary greatly depending on conditions. If you look at offshore wind today, it is mainly a Northern European business. But there are some very large companies involved – huge utility companies. They all have aspirations to go global with the knowledge they have built up in offshore wind. 

When we look at the cost curve which also relates to the uptake, we see that the cost of offshore wind generation in Europe is dropping so fast that the market interest in taking it on has radically changed.  The latest auctions in Europe without subsidies has really illustrated that the cost has come down so fast that it is much easier for people to look at the attractiveness of offshore wind. And if you realize that the total wind picture offshore is at two percentage points of all the generation in the world, you can see the potential. A lot has happened in Northern Europe but if you look at the global picture, you are only touching a very small portion of that potential. 

So looking at North America today, basically very little has been installed, but we should look at what the potential is. The same in Asia. There is a lot of activity going on in Taiwan, while Mainland China is also quite active. So there are a number of places where people are seeing that the economic dynamics are changing rapidly. That is also why we predicted in the Energy Transition Outlook that there will be a huge uptake for onshore and offshore wind because of the cost coming so rapidly down. 

When you go to conferences, people say “How could we have known that prices would come down so fast?” This is what we are doing in our Energy Transition Outlook. We are trying to look at the expected reduction of cost and technologies and then frontload them into the model. This means that we are projecting that the cost of batteries and other components are coming down rapidly, accelerating further a justification of offshore wind development. The factors driving the model are quite aggressive. 

Renewables scale very fast. Once you decide to build it and get the permits in place, it actually doesn’t take such a long time to install it. So you can scale this technology quickly and install it very fast compared to a lot of other energy generating technologies. 

From an insurance point of view and a reliability point of view, we are now at a level where there is much more confidence among the capital markets as the technology becomes more mature. This is also important when you have the discussion of the large investment that will be made in North American in the next few decades. 

When you look at the wind sector in North America, what a lot of people tend to forget is that production really took off in onshore wind about 10 years ago. That means that some of competences that are required to build the supply chain are already there and look at how much economic activity onshore wind already has provided. Along with a lot of know-how that has been brought in from Europe, there is a good understanding of the wind industry and good experience in how to operate this kind of equipment and manufacture it at a high quality. 

That is a much better starting point for offshore than onshore had. When onshore wind started in North America there was nothing. You had to build the whole thing up. So for offshore, I think there is a much better starting point now. 

The interest that you see at this conference (IPF) for agreements between American and foreign companies are very important for technology sharing and to make the best use of technology that has been developed and made use of elsewhere. Building into the point of scaling, sharing will make it much easier and much faster to scale than, I think, most people will realize. 

SCW: Floating offshore wind technology is still developing but it appears to have tremendous potential.  What are your views of its future? 

Ditlev: In the North Sea and Northeast United States, the water depths are not great, so fixed wind turbines are an option.  Off many places, such as California and Japan, the depths are much greater so they have to look at floating offshore wind. It is a new technology and people are learning from it – some of the first projects have been done. Of course it is not yet as mature as the fixed turbine technology that we use today, but it is something people are working on and it is important to remember that in some of these countries, as you are further developing this technology. I see it as similar to the way the oil and gas industry has evolved. You look at how they are moving into deeper water with the ability to drill in different directions. 

I see floating wind technology developing in a similar way. DNV GL has been involved in some of the early floating wind projects and we see how the industry learns from each one and applies that knowledge to the next project. I think it is a natural development as technology evolves.  But in the short term, it will be more the traditional fixed installations. 

SCW: Sometimes cables for offshore wind applications seem to get less attention than they deserve, unless something goes wrong.  What are some of the important things to remember about offshore wind cabling and, for that matter, other critical infrastructure in the offshore wind supply chain? 

Ditlev: At DNV GL, we work both with advisory and we work with certification. When we talk about the certification of these major projects to whatever extent of the value chain that we talk about, then obviously that is very important to have in place.  The cable is a very important part of the infrastructure and the overall performance of the project, so therefore it is important to make sure that cable issues are properly addressed and certified going forward. We all know that failures on the ocean come at a completely different cost than failures onshore. If you make a mistake onshore, you can rectify it at a reasonable cost. If it happens offshore, then weather conditions and so forth make it very difficult to rectify and even sometimes impossible for a long time with the ocean conditions. When you go offshore, you have to have a very high degree of confidence from the point of quality and to certify everything in the value chain because making mistakes is very, very costly.