The growth of floating offshore wind
Floating offshore wind is expected to undergo significant growth in the next ten years, with estimates of anywhere between 5 and 30 GW of capacity installed by 2030. This would represent a huge expansion of the sector, which had almost no production in 2008 and only produced 57 MW in 2018.
The move for growth in floating solutions is partly driven by the lack of suitable shallow water sites in countries such as the US and Japan. Presently, fixed-bottom foundations are typically only considered viable up to a depth of 50 to 60 metres. However, even where there are sufficient sites for fixed-bottom turbines, these face comparatively higher environmental risks owing to invasive activity on the seabed during installation and can come into conflict with aviation, shipping routes and other stakeholders.
Domestically, the UK has pledged to use floating wind to generate at least 2 GW of its 40 GW target of offshore wind capacity by 2030 as part of its efforts to fight climate change. In support of this pledge, the government has announced a review of the Contracts for Difference (CfD) Scheme which is likely to see floating wind included in the next round of auctions in 2021. Access to the CfD Scheme would enable projects to bid to enter into contracts with the government which would see the projects subsidised when energy prices sit below an indexed rate (known as the “strike price”), insulating them from uncertainty over feed-in prices for the first 15 years. The government has also suggested that traditional fixed-bottom projects may move to a separate pot of funding, clearing the way for floating wind projects to compete for funding against other less-established technologies at a better strike price.
Floating wind does offer a number of benefits, being relatively unconstrained where depths would be unsuitable for fixed-bottom turbines which allows for more flexibility in locations that offer stronger and more reliable wind speeds. There are potentially reduced overheads and installation risks due to being able to conduct more assembly on land and less risks to the equipment in situ owing to issues such as poor weather or damage from bird strikes. Depending on the design, repairs can also potentially be conducted by allowing for the entire structure to be transported back to shore, which reduces the inherent risks relating to those repairs.
Whilst the costs of floating wind projects are currently noticeably higher than fixed-bottom turbines, it is anticipated that as production moves to a greater scale and the availability of suitable shallow installation sites reduce, the project costs of floating platforms are also likely to become more economical in comparison to fixed-bottom turbines.
The drive towards floating wind presents its own challenges however. Being situated further from land means that the installation and connection of power cables will require further design consideration and there may be additional maintenance concerns, particularly with the practicalities of being attached to a mobile structure.
It should be noted that the types of floating platforms currently available and in development can vary a great deal in complexity and suitability for different sites. These presently range from semi-submersibles, that are easy to install and adaptable to seabed geology but are relatively complex to manufacture and can be affected by tidal movement, through to spar buoys. These have sizable ballast-stabilised spars that necessitate being positioned in greater depths and being transported with a specialised vehicle. However, spar buoys are a simple design making it less complex to manufacture.
Location may also lead to the offshore farms being more vulnerable to adverse weather conditions – particularly with the relatively long lifespan of the turbines and the growing effects of climate change leading to more extreme weather around the world.
Whilst the figures in the context of the overall power generation may seem comparatively low, production from floating wind will still become a noticeable part of the make-up of renewable energy projects and the technology is new and developing, making it a relatively novel risk for insurers.
Insurers will need to take significant care to ensure that proposed projects are sufficiently robust to meet the unique challenges presented.
Insurers may also need to consider that some of the benefits of assembly and repair are only likely to be realised where land-based facilities are in sufficient proximity to the project. In absence of this, there may be increased risks in conducting repairs further from nearby ports.