Speaker 1: You're listening to Switched on the Bloomberg any F podcast.
Speaker 1: I'm Dana Perkins. The game for floating wind here is
Speaker 1: not to make sure the tab wines don't fall over.
Speaker 1: That's not the concern the concerned Attornia Costa. Each week
Speaker 1: we speak with a different b ANF analyst about recent
Speaker 1: research and what it all means. Note that BNF does
Speaker 1: not provide investment or strategy advice, and you can hear
Speaker 1: our full disclaimer at the end of today's show. This week,
Speaker 1: our podcast is going to focus on topics in two
Speaker 1: separate areas and two separate research notes that we wrote,
Speaker 1: one on floating wind and another on airborne wind. So
Speaker 1: they're titled Floating Wind Drifts Towards Viability and Airborne Wind
Speaker 1: Energy Waiting for Takeoff. They're available for BENNF clients on
Speaker 1: BNF dot Com or at b NF go on the terminal.
Speaker 1: My inner geek really loves to hear about new technologies
Speaker 1: in the spaces that we cover, and today is no exception.
Speaker 1: We're gonna be joined today by Tom Harry's senior associate
Speaker 1: and member of our wind analyst team, who has a
Speaker 1: particular emphasis on offshore wind. Hi Tom, thank you for
Speaker 1: joining us. Hey Dana, nice to be here. So today
Speaker 1: we're going to talk about floating wind and airborne wind.
Speaker 1: Of these two, let's get started more with the floating
Speaker 1: wind side of things, um, since I guess that's the
Speaker 1: more established of the two technologies, and I'd love for
Speaker 1: you to paint a picture in my mind of what
Speaker 1: that really looks like. Sure, it's basically a wind turbine
Speaker 1: at sea, sitting on a boat like structure in most cases,
Speaker 1: so there are a few different designs, but in essence
Speaker 1: you've got a wind turbine which is exactly like a
Speaker 1: winter one on land and like other offshore two ones,
Speaker 1: but in the floating case it's sat on either a wide,
Speaker 1: shallow structure or slim, long, thin structure. Um. And there's
Speaker 1: a few different designs in between the two. Who was
Speaker 1: basically a choices and these ones are much further off
Speaker 1: shore than the wind turbines that were used to seeing
Speaker 1: off shore today. Correct, absolutely, while the demos they're close,
Speaker 1: but in future, yes, they should be further from shore.
Speaker 1: And the idea here is essentially floating wind operates in
Speaker 1: water depths beyond fifty deep and to get the fifty
Speaker 1: ms you've got to go far from shore. Now. I've
Speaker 1: seen some of these at the Closet coast of Kent
Speaker 1: and they are huge. Are the floating ones bigger smaller?
Speaker 1: They won't be smaller. Bigger is better, and offshore they're
Speaker 1: going to stay big and they're probably gonna get much bigger.
Speaker 1: I think we've actually run out of comparison buildings for
Speaker 1: offshore turb ones anyway. No, Look, they're gonna get bigger.
Speaker 1: They're going to be at the same scale as normal
Speaker 1: offshore wind turbines. But in reality, if they tap these
Speaker 1: deeper waters, then you probably won't see them from shore.
Speaker 1: After about fifty kilometers from shore, you shouldn't be able
Speaker 1: to see an offshore wind turbine. And they're probably going
Speaker 1: to beyond fifts. So will we lose a lot of
Speaker 1: electricity and the transmission distribution bring it back? No, not much,
Speaker 1: very little actually, And there's already offshore wind farms operating
Speaker 1: at those distances in some countries like Germany, even even
Speaker 1: up to a hundred kilometers even beyond that now, so
Speaker 1: the distance isn't a new thing, it's the depth doesn't
Speaker 1: new Okay, So pivoting over to airborne wind. Can you
Speaker 1: tell me a bit about what these look like and
Speaker 1: how far along some of this technology actually is. Yeah,
Speaker 1: this stuff is pretty cool. Um, and they look there's
Speaker 1: two different well totally different designs. So one looks like
Speaker 1: an airplane with lots of little rotors on it, and
Speaker 1: the other looks like a kite serving kite. Ultimately, so
Speaker 1: one looks like a soft material like structure and the
Speaker 1: other one is a rigid structure. Okay, so these things
Speaker 1: go up into the sky. How do we get them
Speaker 1: up into the sky to begin with? Some need help,
Speaker 1: so some need to essentially be lifted high up. That
Speaker 1: could be maybe drones in future. Brothers can basically operate
Speaker 1: themselves upwards and then once they're high enough they start generating.
Speaker 1: So literally one so one technology type generates electricity in
Speaker 1: the ear, so the wind comes in, it spins a
Speaker 1: rotor which generates electricity and they send it to the ground.
Speaker 1: The other one doesn't generate electricity in the ear. It
Speaker 1: pulls a cable which generates electricity on the ground. So
Speaker 1: if you're the one that can generate on board, you
Speaker 1: have the ability to act like a motor when you're
Speaker 1: on the land. Lifting yourself up and then once you're
Speaker 1: high enough, you switch to generating and you start generating power.
Speaker 1: The other one gradually comes down to earth and then
Speaker 1: needs help get them back up again, and then it
Speaker 1: gradually comes down to earth and then back again. So
Speaker 1: how do we keep these from falling out of sky
Speaker 1: and squishing people? Um, don't ask me no. Look there
Speaker 1: in the process of sorting this out, there's demonstrations, there's prototypes,
Speaker 1: it's all R and D work, and this is one
Speaker 1: of the issues they have to solve. You have to
Speaker 1: solve the safety issue because I mean, logically, you're looking
Speaker 1: at these things, and then again they're they're flying devices,
Speaker 1: so they're probably going to be under the regulations similar
Speaker 1: to airplanes. They need to be safe. Eventually, they're meant
Speaker 1: to operate autonomously, so that they need to prove that
Speaker 1: that they can operate day in day out without human intervention. Um,
Speaker 1: and I guess they're going to have to prove that
Speaker 1: their systems have got redundancies. If one cable snaps, is
Speaker 1: there another cable to help it come back down to ground.
Speaker 1: So definitely issues to be solved. So you're mentioning they
Speaker 1: look like airplanes what about airplanes? Are they going to
Speaker 1: get in the way? Are they not quite that high up?
Speaker 1: Most they're not trying to get that high up. We're
Speaker 1: talking hundreds of meters in height, maybe a hundred to
Speaker 1: four hundred in most cases. Some are looking in a
Speaker 1: thousand meters and beyond mark, which again would be low
Speaker 1: enough to not impact aeroplanes and so on. But look,
Speaker 1: potentially these devices might be in areas where they're out
Speaker 1: of flight paths. For example, some are looking at nuclear
Speaker 1: plant facilities where they typically have a no fly zone,
Speaker 1: so maybe that opens up a market for them. And
Speaker 1: again others are looking at maybe off grade there is
Speaker 1: more mountainous areas. Because if you think about these devices,
Speaker 1: unlike wind turbines, they're actually thinking of tapping the smaller
Speaker 1: scale market. So disaster relief for example. So there's been
Speaker 1: a natural disaster somewhere, could be anything hurricane, mud slides, whatever,
Speaker 1: and they're off grid. Power has been cut off. Now
Speaker 1: you can turn up with a lorry with a trailer
Speaker 1: one of these things in the back, or two of
Speaker 1: these things, or five of these things, and you can
Speaker 1: unload it and deploy it pretty quickly. I mean these
Speaker 1: things used ten of the material of a wind turbine,
Speaker 1: and therefore you can get quick power on which makes
Speaker 1: them also theoretically cheaper to manufacturer. Correct in principle, yes,
Speaker 1: but they will use more expensive and complex materials. So
Speaker 1: winterbines lots of steel, lots of very easily accessible, fairly
Speaker 1: cheap material. These are going to operate a bit like aeroplanes,
Speaker 1: so they're going to have light ware. They're gonna need lightweight.
Speaker 1: In hence you can imagine some crossover with the supply
Speaker 1: chain of the aerospace industry. So the people are doing
Speaker 1: the R and D for these airborne wind energy systems.
Speaker 1: Are they largely also a material scientists? Are they looking
Speaker 1: more at the engineering part of it? Yeah, a good question.
Speaker 1: I mean they're probably are anautical engineers. These are not
Speaker 1: winterbine engineers crossing over to the dark side. This is this,
Speaker 1: This is gonna be a whole new set of engineers. Actually,
Speaker 1: a lot of the ideas have come from existing technologies,
Speaker 1: maybe from sailing boats for example, or really high up
Speaker 1: antenna and so on and so forth. There's some crossovers
Speaker 1: with other industries. So yeah, you'd say it's a whole
Speaker 1: new batch of engineers and designers and R and E people. Okay,
Speaker 1: but so you can set them up in reasonably small
Speaker 1: amounts of space. Am I going to be able to
Speaker 1: get one of these from my house someday? Probably not. Um.
Speaker 1: I can't imagine them being on households, and even if
Speaker 1: they are, that's probably further afield. Again. Um, Like as
Speaker 1: a household, you want something probably a bit simpler and
Speaker 1: with less moving parts because you're not going to maintain that.
Speaker 1: You don't want to become a specialist in fixing wind
Speaker 1: turbines and kites and so on. But like a disaster
Speaker 1: relief even maybe utility scale, you know, mega wat's worth
Speaker 1: of power, that could be the future. But we think
Speaker 1: you're probably looking at five years minimum, more like ten
Speaker 1: before we see any of these emerging any significant scale. Okay,
Speaker 1: so five to ten years for this. How far in
Speaker 1: the future is floating wind today? It's now. I mean
Speaker 1: people are already building floating winter one. Where can I
Speaker 1: see one? So you could travel north, you could go
Speaker 1: to Scotland. You could see five floating turbines there. Floating
Speaker 1: winter tourism. I'm ready for it. Ask a local fishermen
Speaker 1: to take you on. There's a floating turbine of France.
Speaker 1: It was one of Portugal Japan A looking at it
Speaker 1: and look into the future. France are looking pretty big
Speaker 1: on floating wind. If you go to the Mediterranean side,
Speaker 1: very deep waters, and also nobody wants to be closer
Speaker 1: short you don't want to see winter wines when you're
Speaker 1: somewhere there on the beach, so generally they're looking further
Speaker 1: from shore, deeper waters opened the door floating wind, and
Speaker 1: then further afield. There's some interesting crossovers. So if you
Speaker 1: look at somewhere like Japan very deep waters, or someone
Speaker 1: like Career where they have lots of ship building expertise,
Speaker 1: and you've got to think about floating wind as more
Speaker 1: like ships than conventional foundations. So there's lots of skill
Speaker 1: crossovers there. Now, floating wind the use cases offshore, but
Speaker 1: you can also have some of this airborne wind off shore.
Speaker 1: So should the floating wind manufacturers be worried that the
Speaker 1: airborne manufacturers are going to come and eat their lunch
Speaker 1: or they largely different use cases. That's a good one.
Speaker 1: There's probably enough lunch to go around. But I would
Speaker 1: say look as early doors for airborne wind, they're not competitors.
Speaker 1: Yet there's probably a use case for both and everyone's happy.
Speaker 1: But right now, actually, when it comes to the offshore
Speaker 1: side of airborne wind, there's more of a discussion around
Speaker 1: repowering decommission sites. So if you think about the early
Speaker 1: offshore wind farms, those turbines now look like toy turbines.
Speaker 1: I mean, compared to the scale of today, the minuscule.
Speaker 1: So let's say you chop off the turbine, you're left
Speaker 1: with a platform. Let's see, it's way too small to
Speaker 1: put on today's big turbines. So incomes air born wind, smaller,
Speaker 1: lighter kites. They could potentially reuse these platforms and basically
Speaker 1: repower old offshore wind farms. So it's a good use
Speaker 1: case there. So these are these are pretty cool technologies
Speaker 1: we're talking about because they're really emerging. And I think
Speaker 1: for a while, you know, we're talking about wind turbines
Speaker 1: and it was just like, oh, they'll get bigger and
Speaker 1: they'll generate more. But now we're completely rethinking what this
Speaker 1: stuff looks like. Are there other technologies aside from these
Speaker 1: two that maybe we're not ready to write a research
Speaker 1: note about, but you feel are definitely bubbling under the
Speaker 1: surface in this kind of R and D sort of world.
Speaker 1: So floating wind and kites, air kites and okay, okay, fine,
Speaker 1: I don't know. I don't think so. I mean, look,
Speaker 1: normal wind it's getting very cheap, right, So you've got
Speaker 1: to think about the incentive of trying to find a
Speaker 1: new technology you for generating from. But wind, and there's
Speaker 1: not that many use cases. Float Airborne wind works really
Speaker 1: well in places that have low wind speeds close to ground.
Speaker 1: So if you got higher and higher and higher, you
Speaker 1: could tap stronger and more stable wind speeds. So it's
Speaker 1: really good for markets where wind speeds close to the
Speaker 1: ground too low to make wind economic. Floating wind opens
Speaker 1: up a use case where waters are too deep for
Speaker 1: bottom fixed let's say turbines fixed the sea then, and
Speaker 1: what's left in between where the market I don't know.
Speaker 1: I think for now, that's enough home floating home wind.
Speaker 1: There we go. That's that's what it is. Maybe we'll
Speaker 1: get there someday. Um, So who's that skin in the
Speaker 1: game on these sorts of technologies and who's developing them? Sure?
Speaker 1: I mean, let's start with the wind kites, right, So
Speaker 1: they started off and are still largely dominated by R
Speaker 1: and D people, technology developers, entrepreneurs and so on and
Speaker 1: so forth. But we've recently seen the utilities in the
Speaker 1: oil and gas sector get involved. So shall have invested
Speaker 1: in the Google owned McConney technology Now that looks like
Speaker 1: an airplane. They've got a six water I think device
Speaker 1: currently being tested. Then you've got Eon. Eon have invested
Speaker 1: in Ampics and again they're looking at potentially repowering their
Speaker 1: offshore wind farms. And then you've got Saipem, an Italian
Speaker 1: oil company. They've invested in kai Chen. So there's a
Speaker 1: real mixtair of huge players and these local, smaller R
Speaker 1: and D players trying to make the market work. And
Speaker 1: so you'd think the nimbleness of the small companies, combined
Speaker 1: with the balance sheet and the understanding of the big
Speaker 1: old and gas companies, could accelerate the sector. Now, is
Speaker 1: it the same sorts of companies that are looking at
Speaker 1: offshore wind? Is it? Is it oil and gas also
Speaker 1: looking at that? Yeah? Yeah, absolutely, I mean well off
Speaker 1: shore floating wind. Sorry I've got to specify specified, Okay, yeah,
Speaker 1: I mean three years ago, people thinking that floating wind
Speaker 1: was a totally separate sector to normal offshore wind, normal
Speaker 1: offshore wind being the stuff fixed the seabed in reality,
Speaker 1: is the same players wanting to do both. Okay, because
Speaker 1: what floating wind does is offers more growth opperto unities
Speaker 1: to normal offshowing developers. Everyone's interested in terms of who's
Speaker 1: sort of been leading the floating market. Then you've got Echono,
Speaker 1: big Norwegian player. They installed the first ever float in
Speaker 1: turbine and they've installed a floating demonstration park. Are they're
Speaker 1: looking at new markets to open up for floating wind.
Speaker 1: You've got a number of small technology players, but even
Speaker 1: the French utilities. If France becomes a big floating market
Speaker 1: like we believe, and these guys on their doorstep, they've
Speaker 1: got huge potential. So they're looking to get expertise and
Speaker 1: I guess build up their knowledge and move up the
Speaker 1: learning curve of floating wind. Let's talk a little bit
Speaker 1: about the costs here, because I think that's you know,
Speaker 1: you've talked a little bit about the companies that are
Speaker 1: actually interested in investing in this technology, and there definitely
Speaker 1: is that market opportunity. But having read both of these
Speaker 1: research notes back to back, what I'm seeing is floating
Speaker 1: wind super expensive and airborne wind fairly cost competitive as
Speaker 1: soon as they get the technology going in the next
Speaker 1: couple of years. Although I guess we're talking about a
Speaker 1: bit of a kind of a mythical creature here since
Speaker 1: it's not fully fully developed technology. Um, what are your
Speaker 1: views on the big hurdles for kind of both of
Speaker 1: these industries and becoming cost competitive. Yeah, I mean everything
Speaker 1: starts expensive, right. So these projects and these these technologies
Speaker 1: are all at the demonstration stage. You're building small projects.
Speaker 1: You've got no economies of scale, you've got no price
Speaker 1: in power, et cetera. Now we're probably thinking everyone wind
Speaker 1: minimum five years more like ten years away. Anything utility
Speaker 1: scale floating wind is very close. We've already got operating
Speaker 1: demonstration projects and markets and governments already looking at supporting
Speaker 1: floating wind at some serious scale, you know, three hundred
Speaker 1: five hundred megawatson beyond what government? So which which locales? France, Okay, Japan,
Speaker 1: potentially Korea, the US off the west coast, maybe the
Speaker 1: UK and all these markets either because they don't have
Speaker 1: enough shallow waters for normal offshore wind, or because they're
Speaker 1: looking to diversify, or because it's industrial strategy. Maybe they
Speaker 1: want to ex bought some of the skills they have
Speaker 1: frof shore deep water expertise safe in Norway, for example,
Speaker 1: with all the oil and gas platform expertise, there's a
Speaker 1: direct cross over the floating wind. Most floating wind technologies
Speaker 1: have all come from oil and gas. There's online gas
Speaker 1: platforms already sitting on floating platforms. So it all sounds
Speaker 1: really new and glamorous, but in reality it's tried and
Speaker 1: tested tech, so so that the game for floating wind
Speaker 1: here is not to make sure the turbines don't fall over.
Speaker 1: That's not the concern here. The concern is trying to
Speaker 1: get costa and right now, bigger turbines is better. The
Speaker 1: bigger the better frofshore wind every time, bigger the better. Okay, now,
Speaker 1: what are some of the maybe people were thinking these
Speaker 1: aren't going to necessarily be possible. What are the barriers?
Speaker 1: I mean, we've talked about cost being definitely something is
Speaker 1: going to have to come down do this at scale.
Speaker 1: But we've seen this story over and over again in
Speaker 1: the renewable industry, and you know, it's it's sort of
Speaker 1: kind of the tread and true barrier that somebody has
Speaker 1: to cross. What are some of the technical puzzles that
Speaker 1: maybe they haven't yet solved. It's funny, actually it is
Speaker 1: a physical muzzle. So these things are massive. The floating
Speaker 1: platforms are huge. They could be thirty in dimensions, they
Speaker 1: can be up to a hundred meters deep. And essentially
Speaker 1: building lots of these things close to shore where you
Speaker 1: can drag them out to your wind farm is tricky
Speaker 1: and untested. So there needs to be production lines that
Speaker 1: are bigger, because even though conventional offshore wind is massive,
Speaker 1: these floating platforms are bigger. So new production lines, a
Speaker 1: new supply chain, and the ability to build lots and
Speaker 1: lots of these things. And then once you've got them
Speaker 1: out there, for example at the wind farm operating, how
Speaker 1: do you maintain them? So for example a blade breaks
Speaker 1: or a gear box blows up, whatever it is normally
Speaker 1: in bottom fixed offshore wind, take out one of these
Speaker 1: huge vessels. They stick their legs into the ground, they
Speaker 1: raise off the sea floor and they can then change
Speaker 1: the gear box, change a blade from a fixed stationary platform.
Speaker 1: You can't do that in deep orders and by definition
Speaker 1: floating winners and deep worters, So there are challenges on maintenance.
Speaker 1: Do you drag them back to shore to change your blade.
Speaker 1: Sounds good and logical, that's tricky. You've got to unplug stuff,
Speaker 1: plug stuff back in. Doing things offshore is always difficult. Um,
Speaker 1: so those things need to be ironed out, and really
Speaker 1: those things will be solved or hopefully solved in the
Speaker 1: next few iterations of projects. So look, we're expecting a
Speaker 1: few more demos off France, a decent sized project in Norway,
Speaker 1: maybe a few other smaller demos, and these should iron
Speaker 1: out the problems. So you've said that bigger is better
Speaker 1: in the wind space, Are we going to see the
Speaker 1: end of regular onshore wind because these offshore things are
Speaker 1: definitely either offshore grounded or offshore floating are a lot bigger, right, Yeah, Look,
Speaker 1: we're still going to see a mix of both, and
Speaker 1: obviously there are some countries of our coastline, so there
Speaker 1: you go. And even the ones with coastlines, onshore wind
Speaker 1: is generally quite cheap in most places around the world,
Speaker 1: so we'll see a mix. And maybe you've got a
Speaker 1: lack of land in some places, particularly some Asian markets,
Speaker 1: were actually they're looking at the sea because there's more
Speaker 1: space there. But generally it will still see a mix,
Speaker 1: but I expect to see a larger share of floating
Speaker 1: and all show in the future. Thank you very much
Speaker 1: for joining us today and talking about airborne wind energy,
Speaker 1: waiting for takeoff and floating wind drifts towards viability. It's
Speaker 1: really good having you here today. Yeah, thanks to ask
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