The North Sea is the most prolific location in the world for building offshore windfarms. So much so, that the world's largest wind developer, DONG Energy, has turned the region's shallow waters and strong winds into an incubator for the entire industry.
On the US side of the Atlantic, while companies like GE put up 52,000 onshore turbines over the last 15 years, offshore wind was considered dead in the water, especially after the ambitious Capewind project off of Cape Cod, Massachusetts, was killed in 2015. The coup de grâce: after years of NIMBY pushback, utilities balked at paying a premium for carbon-free electricity.
Now prospects on both sides of the Atlantic are looking way up. Encouraged by falling costs, countries bordering the North Sea just pledged to install 60GW of new offshore wind over the next decade, five times more than currently exists. At the same time, a huge market in the US just opened up for DONG after US developer Deepwater Wind's first, small offshore wind farm began sending electricity to Block Island, 13 miles off the coast of Rhode Island.
"The project made offshore wind a reality,” Jeffrey Grybowski, Deepwater CEO, told the New York Times. “Conversations changed with utilities, who want to know you can deliver.”
As Deepwater plans two larger but still modest projects, Massachusetts utility Eversource Energy is partnering with DONG — and its potential economies of scale — to replace thousands of megawatts lost to coal plant closures and natural gas conversions, skewing the grid's fuel mix.
To understand the forces DONG helped to unleash in Europe, which are now blowing to the US, look no further than Liverpool Bay, England, where the developer just turned on 32 MHI Vestas 8MW turbines at its 258MW Burbo Bank Extension, which powers 230,000 homes.
Each 195m tall turbine puts out more than twice the power of the Siemens 3.6MW turbines DONG installed ten years ago at nearby Burbo Bank.
That jump in productivity comes as DONG retires its first offshore windfarm — the world’s oldest — after 26 years of operation. It will dismantle 11 small 450kW turbines that dribble electricity to 2,200 homes.
Compare that proto-windfarm to the emormous size of a current project. Foundations are being laid for the new 1.2GW Hornsea Project One, where 171 of Siemen's newest 7MW turbines will supply power to one million homes in 2020 (read press release), capping off a run developing 18 offshore wind farms filled with 1,000 turbines.
Gambling on the future
How did the Danish powerhouse grow so quickly? While still a state-owned firm, and after completing its first windfarms off the coast of Denmark, DONG made risky bets when it entered the UK's offshore market.
In 2009, coming off the success of the first Burbo Bank project, DONG gambled on the future, buying rapid growth in the form of 500 3.6MW Siemens turbines, long before it had enough commitments to deploy them; in 2012, DONG doubled down and bought 300 more, according to the Financial Times.
To get that expensive machinery into the water, DONG gambled again, deciding to finance its own projects instead of waiting to lock-in deep-pockted partners, a practice avoided by the rest of the industry. The turbine overhang shrank, and Siemens revved up R&D on the next generation 6MW turbine.
Shortly afterwards in 2013, when the first 6MW prototypes pushed capacity from 30 to 42 percent, the same synergy that propelled Microsoft and Intel during their Wintel glory days reduced DONG's costs as unneeded foundations and towers vanished, along with redundant blades and the undersea cables that link turbines to shore-bound transmission.
Aided by the growth of other developers, a robust industrial ecosystem grew around the North Sea, creating important economies of scale. As clusters of factories making turbines, towers and blades continued to grow, logistics innovation launched a new generation of installation vessel that can quickly install, connect, and test each turbine in 24 hours, lopping days off the costly process.
Maintenance costs are reduced too. Once DONG's Hornsea Project One is operational, remotely monitored sensors will flag problems and quide crews manning new service vessels, as they repair up to eight turbines a day during 28-day voyages.
Subsidy-free at last
After living with the stigma of a subsidy dependence worse than nuclear energy, DONG's growth really picked up as costs dropped to £97 MWh from 2015 to 2016. Now management predicts the company will thrive on £85 MWh by the mid 2020s. That safely undercuts the £92.50 subsidy rate awarded to Hinkley Point C, the UK's newest under-construction-and-over-budget nuclear plant.
And costs are still dropping. According Bloomberg, DONG just won a reverse auction to build its first subsidy-free offshore windfarm for 30.10E MWh in the waters off Germany. This wasn't as risky DONG's earlier bets because everyone in the industry expects turbines to hit 13MW to 15MW before construction begins.
Actually, 15MW might be thinking too small. "We're developing a bigger turbine,” Siemens Wind Power's Bent Christensen told Bloomberg. He added, “How big we don’t know yet.”
Getting into the water
DONG picked the perfect time to enter the US market in Massachussets, where surrounding water depth and wind speeds are similar to the North Sea "and provide attractive conditions," Thomas Brostrom, leader of DONG's US operations, told Masslive.com.
Given the North Sea baseline, US offshore wind is easily a decade behind Europe. That's why the five Block Island turbines cost $300 million. At 24 cents a kWh, they're too expensive to adopt up and down the East coast.
DONG will lower costs faster than Deepwater Wind, which built Block Island without the resources found around the North Sea. When seasoned offshore project managers couldn't be found in the US, which effectively stopped construction planning, successful candidates were finally tracked down in the North Sea.
DONG's home turf became the go-to resource for almost everything Deepwater needed. The heavy turbine foundations were a rare excepton, but they were built by an oil rig fabricator in Louisiana and expensively towed from the Gulf, around Florida, and up the East Coast. The next major logistics SNAFU: an installation ship, large enough to lift heavy 6MW turbines, had to be chartered thousands of miles away in Norway.
That's when the financial pain really kicked in. At $250,000 a day the ship spent two weeks crossing the Atlantic from Saint-Nazare, France, where the 6MW offshore turbines had been loaded. Afterwards, the empty ship's return doubled costs.
The 15 blades made an even longer journey. After they were trucked from their Danish factory to a nearby port, they were shipped to Aviles, Spain, loaded onto another ship along with the steel towers and finally traveled to the US.
Obviously, DONG's EU-based supply chain won't be in place soon. But conditions are ripe for a manufacturing migraton.
Skewing the energy mix
Northeastern states like Massachusetts need to bring North Sea technology to the US. Utilities want to avoid another natural gas price spike like the one that struck during the winter of 2014, following power plant conversions to natural gas. That trauma motivated Governor Charlie Baker to mandate that state utilities contract for 1,600MW of offshore wind by 2027.
That's still not enough infrastructure to convince manufacturers like Siemens to commit to offshore wind in the US — yet.
But New York may push development to critical mass. Governor Andrew Cuomo wants to develop 2,400 MW of offshore wind by 2030. That's because he's closing the 2,069MW Indian Point nuclear power plant by 2021. Adding both states together, a 4GW market becomes tempting.
A grid of girds
Even though the ocean off the US is almost completely empty, you can see the exciting future of offshore wind. Clusters of interconnected wind farms will stretch from New Jersey to Massachusetts.
Meanwhile, the Netherlands, Germany, and Denmark already plan to build an island far out in the North Sea to act as a remote base of operations. The island will also interconnect grids and share power among the three countries (watch a short demo).
Later, underwater cables will link new islands into large clusters, creating a mega-array. Since each island would connect 30 GW of wind farms together, this design could grow into a web of 70 to 100GW modules.
"We’re taking offshore wind to the next level,” Jeroen Brouwers, a spokesman from Dutch-German transmission system operator TenneT, told Ars Technica.