Speaker 1: Hey everyone. I remember the first time I saw an
Speaker 1: offshore wind farm. It was on a flight back to
Speaker 1: London from Portugal back in twenty fourteen. I was just
Speaker 1: sitting there looking out the window at the sunset and
Speaker 1: there it was so impressive. It just went on for
Speaker 1: what seemed like forever, what looked like hundreds of turbines
Speaker 1: spinning quietly below. Well, it turns out basically everything has
Speaker 1: changed and offshore winds in twenty fourteen. For one, the
Speaker 1: turbines has gotten a lot bigger, meaning more capacity per turbine,
Speaker 1: meaning fewer turbines are at the same output. And two,
Speaker 1: the industry is really starting to take off this year,
Speaker 1: being IF expects ten point six gigawatts to come online globally,
Speaker 1: up sixty six percent from last year, and the pipeline
Speaker 1: of new projects just keeps growing. Today on the show,
Speaker 1: we've got Image and Brown and Chelsea Jean Michelle, offshore
Speaker 1: wind analysts for ben F. They'll tell us about what's
Speaker 1: driving growth in offshore wind, some of the challenges facing
Speaker 1: an adolescent industry, and who stands to gain from all
Speaker 1: of it. This episode is based on the offshore wind
Speaker 1: market outlook for the first half of twenty twenty one.
Speaker 1: Being IF users can find this report on beanof Go
Speaker 1: on the Bloomber terminal. Being If to com and being
Speaker 1: f Mobile as a reminder of being does not provide
Speaker 1: investment or strategy advice, and you can hear the full
Speaker 1: disclaimer at the end of the show. Him Mark Taylor,
Speaker 1: and you're listening to Switch on Being a podcast. Imagin, Chelsea, Welcome,
Speaker 1: Hey Mark, Hey Mark, thanks for joining. You just mentioned
Speaker 1: this is your first time on the show. We're really
Speaker 1: glad to have you on. Excited to be here. Yeah,
Speaker 1: thanks for having us. Okay, Imagen, can you just start
Speaker 1: us off? You know why offshore wind? We have wind
Speaker 1: already on shore, why do we need to put it
Speaker 1: off shore? So? I think there's a few kind of
Speaker 1: key advantages for offshore wind that we really see. So
Speaker 1: one of the big ones is that offshore wind comes
Speaker 1: at scale. So when you're thinking about offs your wind,
Speaker 1: you're talking like giggle watch scale projects. So that's kind
Speaker 1: of a similar size to what you're talking when you're
Speaker 1: thinking about nuclear reactors, except in an offshore wind project,
Speaker 1: you don't have that nuclear waste angle, and offshore wind
Speaker 1: can be built much bigger because it's the sea, so
Speaker 1: there's kind of less space confinedness than you would have
Speaker 1: when you're building on land. At the same time, when
Speaker 1: you're building at sea, you can use much bigger turbines.
Speaker 1: So that's because you can't see them. So the typical
Speaker 1: biggest offshore wind turbine that we're seeing today is around
Speaker 1: fifty megawatts versus what you see on shore, which is
Speaker 1: around five So they're about three times the size. They
Speaker 1: during around three times the amount of power. So scale
Speaker 1: is kind of one of the biggest advantages. So the
Speaker 1: biggest advantages that it's big exactly, it's just an assumption
Speaker 1: I have. I guess it's just something in my in
Speaker 1: my mind, I guess that it's windier out at sea.
Speaker 1: Is that true? Also, Yeah, definitely that is true. So
Speaker 1: I guess if you were to take to like, for
Speaker 1: like turbines one on shore, one offshore, the one offshore
Speaker 1: would just spend more times during the year, okay, thereby
Speaker 1: producing more electricity Exactly. On the show we put out
Speaker 1: on the second of August called something like Energy Transition
Speaker 1: Fund Frenzy I believe it was called, we mentioned that
Speaker 1: there's going to be just a ton of wind projects
Speaker 1: built in the next thirty years. We put it on
Speaker 1: the order of something like sixty eight thousand wind projects,
Speaker 1: of which we think about seven thousand of those would
Speaker 1: be offshore wind. Basically, you know that that's Mark Taylor's
Speaker 1: back of the envelope calculations, But really the point is
Speaker 1: that it's going to grow like crazy. So immagrant, can
Speaker 1: you keep it going and and tell us kind of
Speaker 1: where we're at today and how big you think this
Speaker 1: market is going to get for offshore wind specifically. So
Speaker 1: where we are today, we're around thirty six gig awards,
Speaker 1: which is the equivalent to around eight thousand turbines that
Speaker 1: are currently operating in the waters. Almost all of that
Speaker 1: is currently confined to Europe. But over the next sort
Speaker 1: of ten fifteen years or so, we expect the market
Speaker 1: to grow around eleven fold to reach over four hundred gigs.
Speaker 1: So there's steep growth projected, and this scale is kind
Speaker 1: of twofold. So one is that we're expecting more markets
Speaker 1: to start building offshore wind. As I said, most of
Speaker 1: its can find the Europe at the moment, but we're
Speaker 1: expecting markets in a pack and the Americas start to
Speaker 1: build off shore and The second angle is that there's
Speaker 1: a building it currently, are just going to build more
Speaker 1: of it. So where will this growth start? You mentioned
Speaker 1: in your market outlook that you know this we're based
Speaker 1: on this discussion on you said that what ten point
Speaker 1: seven gigawatts have capacity coming online globally this year, up
Speaker 1: sixty six from last year. So where is that growth happening?
Speaker 1: Is it still just in Europe they're just building more?
Speaker 1: Is are we seeing new markets opening up? So this
Speaker 1: year in particular will be a really big year. As
Speaker 1: you touched on eleven gigawatts of of show capacity coming online,
Speaker 1: which is around growth on the existing fleet. The majority
Speaker 1: of that is actually coming online in China. So a
Speaker 1: lot of the projects in China are trying to rush
Speaker 1: to come online this year to get hold of some
Speaker 1: expiring subsidy that the government is offering, which ends at
Speaker 1: the end of the year. And we saw that last
Speaker 1: year in the Chinese market for onshore wind Right, that
Speaker 1: they were raised to get done by these subsidies and
Speaker 1: they put on what like a hundred gigs and three
Speaker 1: months or something like that. It was bonkers. It was
Speaker 1: a crazy, crazy build rush. So I think the kind
Speaker 1: of rush off shore will be exactly the same, and
Speaker 1: we're expecting China just to go crazy. Wow, that's really cool.
Speaker 1: That was always seemed to be a question in offshore wind,
Speaker 1: is that, you know wind, is China going to pick
Speaker 1: up the torch and carry forward? It seems like they've
Speaker 1: they've started. Where else are we going to start seeing
Speaker 1: growth in this sector? I think that a really great
Speaker 1: place to look for huge growth is the US. So
Speaker 1: right now, we're currently at about forty two megawatts, which
Speaker 1: is equivalent to seven turbines in the water. And so
Speaker 1: the Biden administration earlier this year put out a target
Speaker 1: for thirty gigawatts by so you can really see that
Speaker 1: the government is really shooting for a huge amount of growth,
Speaker 1: shooting for the stars. Yeah, you're you're going from essentially
Speaker 1: zero to thirty gigawatts. And so if we look at
Speaker 1: how it's going to grow, we're going to see a
Speaker 1: lot of the large scale installations happening from onwards. But
Speaker 1: that only gives you about six to seven years to
Speaker 1: achieve that thirty giga watt goal. And so what that
Speaker 1: means is the US has to average about five giga
Speaker 1: watts per year to meet that thirty giga watt target.
Speaker 1: But you look at some place like the UK, which
Speaker 1: is one of the most mature offshore wind markets in
Speaker 1: the world, and they have an average run rate of
Speaker 1: about three giga watts per year. So putting that into perspective,
Speaker 1: you can really see how large the school is. But
Speaker 1: that being said, even though it's quite ambitious, it really
Speaker 1: um sends a clear signal to developers that the US
Speaker 1: is in it and that they're in support of growing
Speaker 1: the market. What do you think so currently VNS is
Speaker 1: forecasting about twenty six giga watts by twenty so we
Speaker 1: do think that they will likely miss the target. But
Speaker 1: that being said, states already have set multiple offshore wind
Speaker 1: targets before the federal government did so. Looking at the
Speaker 1: big ones, New York nine giga watts by five, New
Speaker 1: Jersey seven and a half giga watts by five, and
Speaker 1: then you also have Massachusetts in North Carolina with pretty
Speaker 1: large targets. But you'll notice that these states set the
Speaker 1: targets for instead of and so while these states might
Speaker 1: achieve their targets, the federal government one is a little
Speaker 1: bit more ambitious. Do you think that will drive states
Speaker 1: to to raise their game or do you think they'll
Speaker 1: stick to the plan or do you think more states
Speaker 1: will come in. I guess there's a few more coastal
Speaker 1: states that could be candidates here. Well, I guess you
Speaker 1: could think of it kind of two fold. So one
Speaker 1: is that there's no there's no set way that a
Speaker 1: state is going to achieve their target. It might happen
Speaker 1: that New York achieves nine giga watts by two so
Speaker 1: they hit it three years earlier. It all depends on
Speaker 1: how much capacity they procure and each solicitation that they have.
Speaker 1: But then kind of thinking about the new states point
Speaker 1: that you mentioned, North Carolina recently announced their target for
Speaker 1: eight giga watts by and two point eight giga watts
Speaker 1: by twenty thirty, I believe earlier this year, and this
Speaker 1: is after states had already been announcing many of these targets.
Speaker 1: So North Carolina is a fairly new state in this respect.
Speaker 1: Then you can also pivot to looking at the west coast.
Speaker 1: So California they have a bill where they're looking to
Speaker 1: set off shore wind targets. They've walked back a few
Speaker 1: of them. Initially they were going quite big, ten gigawatts
Speaker 1: by but they walked that back and so states are
Speaker 1: definitely interested in offshore wind. New Or States especially or
Speaker 1: again also has a bill that they recently passed looking
Speaker 1: to procure three gigawatts by So you have a lot
Speaker 1: of different things, a lot of different elements in play here,
Speaker 1: but the moral of the stories that states are interested
Speaker 1: in offshore wind and they're shooting for the stars with
Speaker 1: these targets, that's amazing. I mean, like we were just
Speaker 1: commenting before we started recording that TELSA, you are an
Speaker 1: offshore wind analyst based in New York, right, and just
Speaker 1: a couple of years ago that would have been an
Speaker 1: oxymoron to have an offshore wind analysts in the US.
Speaker 1: It's it's really a testament to to where the industry
Speaker 1: is going. I think, yeah, I agree. And when you
Speaker 1: look at the history of offshore wind in the US, right,
Speaker 1: it's really plagued by false starts, delays. You think of
Speaker 1: Cape Wind, which was initially conceived in the early two
Speaker 1: thousands and went through over a decade of trying to
Speaker 1: get permits, trying to get on tracks, trying to simply
Speaker 1: get through the courts right and to get this project built,
Speaker 1: and it just didn't end up happening. But I think
Speaker 1: what's different now is that you know, states are on board,
Speaker 1: governments are on board, developers are interested in the market.
Speaker 1: The stars are kind of aligning for US offshore wind now.
Speaker 1: So it's I think it's ready to take off. Now.
Speaker 1: The history is sad, but you know, I think it's
Speaker 1: kind of like a redemption story for US offshore wind,
Speaker 1: and you know, I'm ready. I'm excited to see what happens. Well,
Speaker 1: there you go, that's all you need. Let's talk a
Speaker 1: bit about how this is going to get done before
Speaker 1: we get into any other markets. I want to stick
Speaker 1: on the US for just a second. So Charles Barkley
Speaker 1: always says this thing, no free pub you know, no
Speaker 1: free publicity. There's this really fantastic podcast I've been listening
Speaker 1: to lately called Windfall from Outside in from what New
Speaker 1: Hampshire Public Media. They do a great job. They did
Speaker 1: a deep dive on Cape wind, you know, and who
Speaker 1: stands to gain and and not from from offshore wind
Speaker 1: in the US. And one thing that they talked about
Speaker 1: was how this market will be supplied so that most
Speaker 1: of the you know, developers for these initial projects are
Speaker 1: coming over from Denmark. Some of the ships you know
Speaker 1: that they're coming over to do the installations are also
Speaker 1: going to be coming from Denmark. Two questions, is the
Speaker 1: industry globally big enough to support these ambitions in the
Speaker 1: US and elsewhere? And second, if the ships are going
Speaker 1: to come over from Europe to supply US projects on
Speaker 1: the East coast, who's going to supply the ones in
Speaker 1: the West Coast? Are they going to be able to reach,
Speaker 1: you know, and and go through the I guess the
Speaker 1: Panamenna Canal or I don't know how how is that
Speaker 1: going to work? Mark? You touched on a really interesting point,
Speaker 1: and I think that's something that a lot of people
Speaker 1: in the industry are curious about right now. So with
Speaker 1: the US supply chain question, there's going to need to
Speaker 1: be massive build out, right, Like we imagine talked about
Speaker 1: the massive growth that we're expecting. In order to realize that,
Speaker 1: you have to have a supply chain to make that happen.
Speaker 1: And so, for example, let's let's look at this shipping question.
Speaker 1: So right now, there are already a lot of US
Speaker 1: ports that are being developed to support the growing offshore
Speaker 1: wind industry. And in the US there's also an interesting
Speaker 1: tidbit called the Jones Act, which essentially means that if
Speaker 1: you're traveling between any two points in the US, that
Speaker 1: ship needs to be U S crewed, US flag, US owned,
Speaker 1: US built, and so that adds a whole other dimension
Speaker 1: to the U S story. So there's already a wind
Speaker 1: turbine installation vessel being built by Dominion that's going to
Speaker 1: be used in the first couple of oshore wind projects
Speaker 1: in the US. But even then, you know, as all
Speaker 1: of these projects start cropping up, and then you have
Speaker 1: the European ships that that also need to build projects,
Speaker 1: there's going to be a squeeze in resources that we
Speaker 1: still need to address in terms of the East Coast
Speaker 1: VERSUS West Coast question. You know, I think that's that's
Speaker 1: still up for debate. It's still up for grabs, especially
Speaker 1: when you start to think about places like YI that
Speaker 1: already has some interesting offshore wind areas that the Bureau
Speaker 1: of Ocean Energy Management has identified. How are they going
Speaker 1: to build off shore wind They're very very far out
Speaker 1: from the US mainland, but also any other any other place,
Speaker 1: So that that brings up another interesting question for a
Speaker 1: supply chain. So that really seems like an opportunity on
Speaker 1: one angle and also a squeeze on the other You know,
Speaker 1: the President Biden said, what a couple of weeks ago,
Speaker 1: there no reason a wind turbine couldn't be made in
Speaker 1: Pittsburgh instead of Beijing, right, is are we seeing that
Speaker 1: to our US developers stepping up for their market or
Speaker 1: are we seeing Japanese developers stepping up for the Japanese market?
Speaker 1: You know, how's the who's winning and supply or who's
Speaker 1: stepped to win and supply? Yeah, I guess speaking a
Speaker 1: little bit more about the U S angle, developers are
Speaker 1: committing to local jobs, local manufacturing. So there's a monopile
Speaker 1: factory that's being built in New Jersey. I believe what's
Speaker 1: a monopile factory? Sorry, oh yep, let me backtrack. So
Speaker 1: when we talk about off shore wind going to star
Speaker 1: it that over. When we talk about offshore wind, there's
Speaker 1: two types of foundations, bottom fixed as well as floating foundations.
Speaker 1: And for bottom fixed foundations, one of the most widely
Speaker 1: used ones is the monopile. So think of the turbine
Speaker 1: being connected to a connector piece known as the transition piece,
Speaker 1: and then connected to the monopile, which is essentially the
Speaker 1: long foundation think of it as like a long pole
Speaker 1: that's then hammered into the sea floor. So in that case,
Speaker 1: the monopile factory would be built in New Jersey, as
Speaker 1: I mentioned. And then there's also a steel factory that
Speaker 1: was recently announced by um U s Wind, who is
Speaker 1: a developer that's planning on building a project off the
Speaker 1: coast of Maryland. So to answer your question, yes, there's
Speaker 1: there are some elements that will be built in the US,
Speaker 1: but again it's still has to be built out widely,
Speaker 1: and the earlier projects will likely depend a lot on
Speaker 1: European manufacturing and supply chain. The ships have to take
Speaker 1: as long as the projects themselves. I assume are there
Speaker 1: enough ships to install all of these projects globally. Well, again,
Speaker 1: it's another interesting point, and I think I'll pivot to
Speaker 1: image and who maybe might know a little bit more. Sorry,
Speaker 1: I'm just I'm just going down a rabbit hole here.
Speaker 1: This is this is fascinating guys. Sorry. So the biggest
Speaker 1: problem with the ships is that they're not big enough
Speaker 1: to install the latest, greatest, biggest turbines that are hitting
Speaker 1: like fifteen megawats, right, something like that, Exactly when they
Speaker 1: hit fifteen megawats. The big thing is they get much taller.
Speaker 1: So in order to install them, in order to lift
Speaker 1: them on top of that monopile piece that Chelsea was
Speaker 1: talking about, you have to have this big crane that
Speaker 1: does it. And the ships today essentially are not big
Speaker 1: enough to lift them high enough to actually get them
Speaker 1: on top. Okay, so the upshot is so the upshot
Speaker 1: is we need to build more ships, but more more
Speaker 1: fun ships too. I don't know if you if you've
Speaker 1: seen these ships, they're definitely worth googling. They look like
Speaker 1: kind of like robots that are stuck in the water.
Speaker 1: The way they operate is that they sail out to
Speaker 1: sites with their legs kind of stuck on the bow,
Speaker 1: and I get to the project site, they put their
Speaker 1: legs and then pushed them down and put them in
Speaker 1: the seabed, and then they jack up the bow of
Speaker 1: the ship so that they're kind of like a stable
Speaker 1: letting playing field for the ship, and they lift the
Speaker 1: turbine tower on top of the foundation piece. Wow, have
Speaker 1: you seen this? Have you? Have you gone out and
Speaker 1: you know, watched this happen in person? In my next
Speaker 1: life mark in your next life, man, you should go
Speaker 1: do it. I mean back when I was I used
Speaker 1: to be a geo thermal analyst and there's just so
Speaker 1: much value in going out to the actual sites and
Speaker 1: seeing them build the thing. Anyway, for another day, Um,
Speaker 1: and we'll do a podcast on location. How about that.
Speaker 1: Let's do that. It sounds good. Let's talk about who's
Speaker 1: who's paying for all this for a second, so you know,
Speaker 1: I any reference to earlier, but again, August two, we
Speaker 1: did a show energy Transition Fund Frenzy, and in it
Speaker 1: we talked about how, you know, there's been thirty billion
Speaker 1: raised in the past couple of months for renewable energy
Speaker 1: or transition fund raised by asset managers right to invest
Speaker 1: in renewable energy projects really kind of specifically. And my
Speaker 1: question is, first, you know, do they have an appetite
Speaker 1: for offshore wind or is it just onshore? And if not,
Speaker 1: you know who is paying for these these offshore wind projects? Yeah.
Speaker 1: So offshore wind, I think is a funny one because
Speaker 1: it hasn't been around for that long and it's still,
Speaker 1: in many eyes, a relatively risky asset class for many people.
Speaker 1: So having said that, the industry is maturing and we're
Speaker 1: seeing more and more projects get built, So those kind
Speaker 1: of risks are essentially being taken away, and so we're
Speaker 1: starting to see the spectrum of investors that are coming
Speaker 1: into the industry broaden. Traditionally it used to be kind
Speaker 1: of closed club of critique players, your likes of Asted
Speaker 1: for example, who kind of took hold of the industry.
Speaker 1: Now we're seeing it kind of broadened out, and we're
Speaker 1: starting to see new players like all in Gas come
Speaker 1: into the sector and start investing the projects. So are
Speaker 1: these mostly going to be done on balance sheets rather
Speaker 1: than you know, somebody coming in and providing debt or
Speaker 1: equity to these projects, because I imagine BP is just
Speaker 1: going to pay for you know themselves or Equino or whatever. Right,
Speaker 1: I think it will still be a combination actually of
Speaker 1: the two. So when we do outlooks, we kind of
Speaker 1: look at the split between project finance and balance sheet finance,
Speaker 1: and project finance is taking more of the more of
Speaker 1: the pie as we go forward, but I think balance
Speaker 1: sheet finance will still be part of it, particularly as
Speaker 1: you've mentioned with these big players that are starting to
Speaker 1: come in that can from them. Can you talk about
Speaker 1: that just for a second. I mean, one thing to
Speaker 1: just caught my eye, I was looking at where was
Speaker 1: I linked in, and I just saw a post from
Speaker 1: a former colleague that just said, Hey, we're hiring a
Speaker 1: hundred people for offshore wind at BP. Come come join us.
Speaker 1: You know, as it go out, that's that's quite a
Speaker 1: bit in one chunk, and my thoughts went to, well,
Speaker 1: they must be doing that to compete with what the
Speaker 1: Norwegians with Equinora, right, is that right? Or what's going
Speaker 1: on with these oil and gas players getting into this
Speaker 1: market specifically? Well, BP is a funny one because it's
Speaker 1: actually partnered up with Equino, so I guess particularly in
Speaker 1: the US, so it's uh, maybe not as much a yeah,
Speaker 1: a foe as a friend. But I think the whole
Speaker 1: transition of these oil and gas guys coming into offshore
Speaker 1: wind is the fact that they under pressure from shareholders
Speaker 1: to kind of realign businesses right and invest a lot
Speaker 1: more in renewables, and they see offshore wind as a
Speaker 1: really attractive way of doing that because, as I touched
Speaker 1: on before, offshore wind brings scale, so you can buy
Speaker 1: large scale projects or invest in large scale projects, which
Speaker 1: brings gigga watts into your portfolio. So if you've got
Speaker 1: a giggle wat target like BP of fifty gigawatts. By
Speaker 1: by developing gigga wat scale assets, you can kind of
Speaker 1: accumulate them quite quickly. Yeah. I'll also just add that
Speaker 1: there's often an element of knowledge sharing that oil and
Speaker 1: gas companies like to talk about. So if you look
Speaker 1: at building an offshore oil and gas rig, a lot
Speaker 1: of oil and gas companies see that as an opportunity
Speaker 1: to leverage knowledge that they've learned there in the offshore
Speaker 1: wind industry. And if you look at the eighty eight
Speaker 1: megawatt high wind camping project that's being built off of
Speaker 1: Norway right now by equinor those offshore wind turbines are
Speaker 1: actually being used to power an offshore oil and gas rig.
Speaker 1: So that's an interesting tibit there that I think that
Speaker 1: oil and gas companies also see an opportunity. Okay, that
Speaker 1: makes sense. Okay, let's close up this section and just
Speaker 1: say like, okay, I just want your take. So, given
Speaker 1: what we've talked about, you know that we're saying like
Speaker 1: the industry has all these targets, you know, and growth,
Speaker 1: ambitious growth plans, all this stuff, but there's also it
Speaker 1: seems to be potential shortage to supply. I don't know,
Speaker 1: what do you think. Do you think this is this
Speaker 1: is a fad? Do you think it's here to stay?
Speaker 1: Do you think this growth is sustainable? Do you think
Speaker 1: you know these markets can reach the stars as they're
Speaker 1: as they're trying to do. Yeah, I think it's I
Speaker 1: think it's his to stay. I think we're seeing a
Speaker 1: lot of ambition from government pivot towards offshore wind, which
Speaker 1: is really exciting for the sector. At the same time,
Speaker 1: when we talk about think about just a number of
Speaker 1: turbines in the water. Although we're projecting large scale gigawats,
Speaker 1: because the turbines are getting much bigger, what that actually
Speaker 1: means is you need fewer of them. So in terms
Speaker 1: of actually supply challenges of getting more turbines in the water,
Speaker 1: there's actually a few essentially of them that would otherwise
Speaker 1: be needed. So for us, I think, yeah, we're seeing
Speaker 1: real ambition from government stepping up to set these goals,
Speaker 1: and we're actually seeing more developers want to come in
Speaker 1: and develop these projects. So I guess it's good news. Yeah.
Speaker 1: I also think when we look at what happened last
Speaker 1: year with the pandemic, we kind of saw that the
Speaker 1: supply chain was really ready to ramp up for a
Speaker 1: huge year of installations, and so at least in the
Speaker 1: in the global wind industry, and so I think that
Speaker 1: there's definitely opportunities for you know, us to be surprised,
Speaker 1: for us to see supply chain really step up to
Speaker 1: the plate to realize these projects. Now, it's not going
Speaker 1: to happen by magic, of course, but there's there's potential
Speaker 1: for growth and for it to be realized. If you
Speaker 1: didn't know what a monopile was before passing play on
Speaker 1: this podcast, we're going to take a short break and
Speaker 1: when we come back, we're going to talk about some
Speaker 1: of the tech involved in offshore wind. So we'll talk
Speaker 1: about monopiles, we'll talk about floating wind, all of it.
Speaker 1: Stay with us. So in the top we just briefly
Speaker 1: mentioned that these turbines can hit what fifteen megawatts apiece? Right,
Speaker 1: those are giant? Can you try to put that in
Speaker 1: perspective for us, You know, how big are these things?
Speaker 1: So a fifteen megawat turbine today is around two hundred
Speaker 1: and sixty ms high from the base of the turbine
Speaker 1: to the blade tip when it's right at its top
Speaker 1: and for reference, the Eiffel Tower is around three high. Okay, wow,
Speaker 1: so we're talking pretty big. The big thing here is
Speaker 1: we expect them to get bigger. So we did some
Speaker 1: estimates at benf and we expect turbines to get to
Speaker 1: around three seventy five ms high by okay, so taller
Speaker 1: than the Eiffel Tower. Eiffel Tower exactly wow, and quite
Speaker 1: a bit taller. Geez. Is that the limit? You know?
Speaker 1: Is there a limit to how big these things can get?
Speaker 1: When you're looking at a three eight meter turbine, how
Speaker 1: much power output do you think that would would you
Speaker 1: expect that to produce? So the key thing about offshore
Speaker 1: turbines is they're not really constrained in size. So unlike
Speaker 1: turbines onshore, you're kind of constrained in size because people
Speaker 1: don't like to see them. So you don't like to
Speaker 1: see a huge turbine in your backyard. But at the
Speaker 1: same time, you're kind of constrained in size because you
Speaker 1: have to transport the turbine components via road, which means
Speaker 1: that sometimes it's almost impossible to get them under bridges
Speaker 1: or just almost impossible to get them through various corners
Speaker 1: of roads. Whereas offshore you just need to transport them
Speaker 1: by a ship and there's less constraints there. When we're
Speaker 1: talking about a turbine that's in heights, we're suggesting that's
Speaker 1: around thirty five megawats, which is pretty big. So if
Speaker 1: you're looking at a gigger what scale projects that we're
Speaker 1: looking at the moment, you only need around thirty turbines.
Speaker 1: I heard that in the you Know the Outside in
Speaker 1: podcast I mentioned earlier, is that when they had to
Speaker 1: reassess the Vineyard wind project because it hits some hit
Speaker 1: some snags, the technology it advanced and they went from
Speaker 1: having to do a hundred turbines down to like sixty
Speaker 1: seven or sixty two or something like that. So bigger
Speaker 1: outputting more output turbine, fewer turbines. That's that's pretty cool.
Speaker 1: How does that impact cost? You know, are these turbines?
Speaker 1: Are these projects more expensive? With bigger turbines are even
Speaker 1: out as it cheaper? How does that work? No, that's
Speaker 1: one of the big drivers reducing the cost of offshore wind.
Speaker 1: So bigger turbines means you need fewer of them, So
Speaker 1: that means you need fewer cables, you need fewer monopiles,
Speaker 1: you need fewer you need less time offshore constructing them,
Speaker 1: and that ultimately means that the cost of the project
Speaker 1: is lower. So bigger turbines are the key driver behind
Speaker 1: reducing costs in the industry. Can you talk about that
Speaker 1: just a bit more, like, how does that relate to
Speaker 1: the cost of other renewable technologies like solar or on
Speaker 1: shore wind. Offshore wind is around double as expensive as
Speaker 1: an onshore wind project. But do you make up for
Speaker 1: it because the ind is blowing harder and and more
Speaker 1: often you know, out at sea, or how does that work? Well?
Speaker 1: The key thing is that because they are more expensive,
Speaker 1: governments have had to subsidize them. They've done that in
Speaker 1: kind of two ways. Governments are either subsidizing projects by
Speaker 1: paying developers a premium for the power that they're actually generating.
Speaker 1: Or movements have subsidized the projects by paying for some
Speaker 1: of the upfront costs of the project that the developer
Speaker 1: would otherwise would have had to have paid for. Traditionally,
Speaker 1: they kind of have done this by paying for the
Speaker 1: transmission element of the projects. That's the big cable that
Speaker 1: like brings the power back to shore from the offshore
Speaker 1: wind farm, and that's actually a pretty substantive cost, particularly
Speaker 1: as these projects get further from shore, that cable can
Speaker 1: be around a third of the total capex of the project.
Speaker 1: Know how far out at sea are these projects? How
Speaker 1: long is that cable? You know? Because I guess there's
Speaker 1: a question of are they and I sor you know,
Speaker 1: and you know, visible from shore and all that stuff.
Speaker 1: Where do you have to put them? So projects getting
Speaker 1: built today are around two kilometers from shore. That's the
Speaker 1: furthest we've seen so pretty far. And they're getting further
Speaker 1: from shore because you can access better wind speeds there.
Speaker 1: A lot of the early projects were close to shore.
Speaker 1: Um that's one because they were using smaller turbines so
Speaker 1: they weren't as much of an aysore. But it was
Speaker 1: also easier to operate them close to shore obviously. So
Speaker 1: my instant question when you mentioned how how far out
Speaker 1: they are from shoes that cheese doesn't the sea floor?
Speaker 1: Isn't the sea floor like pretty pretty far down there
Speaker 1: at that point? Like I remember one time I was
Speaker 1: in where was like Turks and Caicos and you can
Speaker 1: see the continental shelf just drop off and it just
Speaker 1: goes down forever. Does that make things more expensive or
Speaker 1: does it open up for things like like floating wind.
Speaker 1: Well Mark, You're exactly right. As projects move further out,
Speaker 1: usually you're dealing with a lot deeper waters, and so
Speaker 1: with deeper waters you can't necessarily use a monopile or
Speaker 1: a bottom fixed foundation anymore. You do have to pivot
Speaker 1: to floating wind. And the threshold that we usually um
Speaker 1: look to is about sixty or two feet, and so
Speaker 1: that's kind of when you think, okay, I can no
Speaker 1: longer use bottom fixed let me pivot to floating and
Speaker 1: floating wind is essentially think of it as like a
Speaker 1: turbine on a boat, and so instead of it being
Speaker 1: fixed to a foundation that's then fixed to the sea floor,
Speaker 1: it's instead fixed to a foundation that's kind of somewhere
Speaker 1: along sea level, and then it has a counter weight
Speaker 1: to balance out the weight of the turbine itself. Depending
Speaker 1: on the design, it might be underneath the underneath sea level,
Speaker 1: kind of working around the surface of the sea, and
Speaker 1: then that's then attached to mooring cables which are then
Speaker 1: anchored into the sea floor. So it's a lot more
Speaker 1: complex engineering wise, and it's also a lot more expensive
Speaker 1: than bottom fixed foundations. However, as image and mentioned, the
Speaker 1: further out that you go, you can also achieve greater
Speaker 1: wind speeds, more consistent wind speeds, and so there's some
Speaker 1: benefits there. So it just seems like a big job
Speaker 1: for the people that are figuring out the optimization between
Speaker 1: line losses, water depth, turbine size. Basically, the engineers of
Speaker 1: figuring out the optimal locations and specs for these projects.
Speaker 1: Right countries around the world usually have opted for bottom
Speaker 1: fixed right because it's more mature, it's cheaper, it makes sense.
Speaker 1: But then you also have some regions, so take the
Speaker 1: west coast of the US where bottom fixed foundations are
Speaker 1: not an options. You have that steep drop off the
Speaker 1: continental shelf that you mentioned, and if they want offshore wind,
Speaker 1: they're going to have to install floating and so it's
Speaker 1: kind of you know that that narrows down the engineering
Speaker 1: question a little bit more when you when you have
Speaker 1: to ask yourself, what's possible for us to do with
Speaker 1: our geography. Flitting wind opens up a whole load of
Speaker 1: new markets the west coast of the US, some sites
Speaker 1: in Japan, South Korea, some sites in Mediterranean, in France, Scotland.
Speaker 1: So floating wind is a kind of alternative technology which
Speaker 1: could potentially grow the sector much further than what bottom
Speaker 1: fix could. Okay, so I got one more question on
Speaker 1: on tech or you know, project engineering. Once I was flying,
Speaker 1: I hated relative thing, back to personal whatever. But I
Speaker 1: remember one time I was flying from what Portugal back
Speaker 1: to London and I just noticed these giant offshore wind
Speaker 1: farms that were just taking up a lot of space.
Speaker 1: So can you comment on just like how much I
Speaker 1: guess see area, I don't even know what you call
Speaker 1: it that these projects take up. Yeah, these four projects
Speaker 1: can be huge. So the biggest one in the UK,
Speaker 1: which is owned by sec Equano or in any spans
Speaker 1: pretty much the area of Greater London. So that's over
Speaker 1: one kilometers squared. If you were to put that into
Speaker 1: football pitches or soccer pitches for you guys in the US,
Speaker 1: that's over two hundred thousand soccer pitches. And so does
Speaker 1: that mean are we going to see at some point
Speaker 1: We're probably gonna see a repowering of plants like that
Speaker 1: right where you'd have bigger turbines, you know, they take
Speaker 1: down all the old turbines and rep raced them with
Speaker 1: bigger ones that get the same output for with a
Speaker 1: smaller footprint. Is that right? Or is they're going to
Speaker 1: leave those there forever. So turbine technology now kind of
Speaker 1: lost around thirty years. A lot of the sites are
Speaker 1: taken for thirty years. So we'll see projects repowered on
Speaker 1: that basis, and I guess in thirty years time we'll
Speaker 1: let you know how big turbines are at that point.
Speaker 1: There you go. Hey, I got one more question for
Speaker 1: you guys. So you're not an offshore wind analyst, you're
Speaker 1: not any analyst at all, but you're still an offshore
Speaker 1: wind what's the one job you choose. I'm a turbine technician, definitely.
Speaker 1: Oh I was going to choose carabine technician. I'm standing
Speaker 1: on the top of this fifteen megawat turline and maybe
Speaker 1: fixing the gearbox. Yeah, you just have to go out
Speaker 1: there and fix the turbines and you get to be
Speaker 1: on top of the world amongst these huge structures. It's
Speaker 1: kind of great. Okay, So both of you turbine technician.
Speaker 1: All right. I think the main thing we've learned today
Speaker 1: then everybody, is that neither Imagen nor Chelsea are afraid
Speaker 1: of heights. Okay, Imagen Chelsea. Thanks for joining. Thanks so much, Mark.
Speaker 1: It was a lot of fun. Thanks Mark. This week's
Speaker 1: show was produced by Ava Gonzalez E SLA and edited
Speaker 1: by Rex Warner of gray Stoke Media. Bloomberg an E
Speaker 1: app is a service provided by Bloomberg Finance LP and
Speaker 1: its affiliates. This recording does not constitute, nor should it
Speaker 1: be construed, as investment advice, investment recommendations, or a recommendation
Speaker 1: as to an investment or other strategy. Bloomberg an E
Speaker 1: should not be considered as information sufficient upon which to
Speaker 1: base an investment decision. Neither Bloomberg Finance LP nor any
Speaker 1: of its affiliates makes any representation or warranty as to
Speaker 1: the accuracy or completeness of the information contained in this recording,
Speaker 1: and any liability as a result of this recording is
Speaker 1: expressly discla