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Speaker 1: Hi, I'm Dana Perkins and you're listening to Switched On,

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Speaker 1: the b n OF podcast. So a few years ago,

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Speaker 1: offshore wind was in the same camp as other conceptual

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Speaker 1: renewable energy technologies like aerial turbines. In fact, we did

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Speaker 1: a podcast episode on it back in July of twenty

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Speaker 1: nineteen titled because why Not Floating an airborne Wind. This

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Speaker 1: was actually one of the really early episodes of the podcast,

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Speaker 1: and I was pretty new to the process back then.

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Speaker 1: We did the whole podcast without me actually hitting the

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Speaker 1: record button in the studio, So let me just tell you,

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Speaker 1: it was not all that pleasant to go back to

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Speaker 1: my guest and let them know that we had to

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Speaker 1: have the entire conversation over again. And I don't think

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Speaker 1: he laughed at any of my jokes orquips the second

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Speaker 1: time around. But a lot has changed since then, and

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Speaker 1: we are now over a hundred episodes into Switched On,

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Speaker 1: and floating wind technology is now on track to commission

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Speaker 1: giga watts of capacity this decade. Flying wind, on the

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Speaker 1: other hand, has yet to take off. No pun intended,

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Speaker 1: but we thought it might be the right time to

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Speaker 1: talk about floating wind again, and that's because things like

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Speaker 1: the scot Wind seabed auction. It surprised the world when

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Speaker 1: it rewarded up to fifteen gigawatts of floating offshore wind

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Speaker 1: sites earlier this year. That's more than the existing operating

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Speaker 1: offshore wind capacity in the UK. And that's not all.

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Speaker 1: France is set to announce the winner of the world's

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Speaker 1: biggest subsidy tender yet this year, and California is looking

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Speaker 1: too soon conduct its first floating seabed lease auction in

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Speaker 1: the US. But questions remain, won't these projects cost a fortune?

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Speaker 1: How big will the sector get and who will be

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Speaker 1: the leaders? And what's enabling this growth? So to explore

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Speaker 1: this topic, the b andF WIN team published a research

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Speaker 1: note titled Tomorrow's Cost of Floating Wind and looked at

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Speaker 1: a new model that helps users create the cost of

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Speaker 1: building a floating wind project by turning over fifty different parameters.

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Speaker 1: They also published their one h offshore wind Market Outlook.

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Speaker 1: So from that team, I will be speaking with Louisa

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Speaker 1: M Marin, who writes about offshore wind at b n

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Speaker 1: EF and Oliver Metcalf, the head of Wind at b NF.

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Speaker 1: All of these reports can be found at b enof

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Speaker 1: Go on the Bloomberg terminal at BNF dot com or

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Speaker 1: on BNFS mobile app. And as a quick reminder, we

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Speaker 1: do not provide investment of strategy advice, and there is

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Speaker 1: a complete disclaimer that is found at the very end

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Speaker 1: of the show. But now let's speak with Ali and

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Speaker 1: Louisa about floating offshore wind. Ali, thank you for joining us,

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Speaker 1: Thanks very much for having us on. And Louisa, this

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Speaker 1: is your first podcast with us, right, so we're here

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Speaker 1: today to talk about floating wind. Now, those of you

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Speaker 1: who have been listening to the podcast for a while

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Speaker 1: or who are happy to flip back through the back

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Speaker 1: catalog will realize that we did something on floating and

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Speaker 1: flying wind in the early early days, which I referenced

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Speaker 1: actually in the opener that you just heard. But I

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Speaker 1: want to from you Ali and Louisa. Why is it

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Speaker 1: the right time now for us to revisit this topic

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Speaker 1: and why should everybody be interested in an update on

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Speaker 1: the floating wind space. Well, when we first started looking

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Speaker 1: at floating wind and published our first research on it,

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Speaker 1: we kind of put the technology in the same bucket

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Speaker 1: as pine the sky technologies, as you say, like airborne

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Speaker 1: wind kites in the sky, whereas some of those other

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Speaker 1: technologies have gone nowhere, floating wind has come on leaps

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Speaker 1: and bounds. That's from a technology perspective, and the technologies

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Speaker 1: are getting better and better, much faster than a lot

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Speaker 1: of people predicted. But also governments are starting to get

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Speaker 1: ambitious on this technology as well. So we're seeing governments

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Speaker 1: around the world really start to show commitment to bring

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Speaker 1: down the costs and to really make commercial scale projects

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Speaker 1: of reality. So we're going to come to which governments

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Speaker 1: in which locations. But before we even go there, can

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Speaker 1: you create a picture for all of us who are

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Speaker 1: listening today on what does a floating wind project actually

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Speaker 1: look like. So a floating wind project is made up

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Speaker 1: of winter and is obviously these similar ones to what

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Speaker 1: you see on onshore and traditional offshore wind projects. These

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Speaker 1: turbines are sitting on top of a floating structure that

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Speaker 1: is kept stable using system of mooring lines which are

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Speaker 1: anchored to the seabed and help limit the floater emotions.

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Speaker 1: As any offshore wind project, the turbines are connected to

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Speaker 1: each other through cables, but using floating substructures which are

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Speaker 1: moved by waves and currents, requires a special type of

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Speaker 1: cables dynamic cables, which are specially designed to stand this

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Speaker 1: constant moving during the project's lifetime. The cables are their

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Speaker 1: linked together in a substation which receives all the power

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Speaker 1: produced by the wind bines and connects to the onshore

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Speaker 1: grid via an export cable so that the electricity can

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Speaker 1: reach all of us. So I've seen a ton of

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Speaker 1: offshore wind, but that's the fixed offshore wind space. Actually,

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Speaker 1: just the off the coast of England, we have the

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Speaker 1: London Array and it is massive and you can see

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Speaker 1: it as you fly onto the continent. And that seems

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Speaker 1: to be working very well. So why this innovation and

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Speaker 1: and really what's the incentive for floating wind to come

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Speaker 1: to scale? Why all the household well, the ushore wind

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Speaker 1: industry as a whole is progressed incredibly fast over the

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Speaker 1: last couple of decades. So costs have dropped around six

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Speaker 1: fourteen for those traditional bottom fixed projects you talk about.

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Speaker 1: But offshore wind also allows us now to install renewable

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Speaker 1: energy projects with the same generating capacity as some of

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Speaker 1: the biggest conventional power plants. But these are so far

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Speaker 1: out at sea they're almost invisible from shore. And all

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Speaker 1: that comes while delivering a new green industry that brings

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Speaker 1: jobs and all the economic benefits with that. But the

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Speaker 1: problem is you can only install those traditional projects in

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Speaker 1: waters of around deep, whereas you can install floating projects

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Speaker 1: in waters up to a thousand meters deep or even more.

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Speaker 1: So that means you can search more areas to find

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Speaker 1: the windiest spots with the most consistent wind speeds, so

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Speaker 1: the turbines generate more electricity. But it also means in

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Speaker 1: places that have really steep continental shells, so places like

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Speaker 1: California or the Mediterranean Sea where the sea gets deep

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Speaker 1: really quick, you can take advantage of some of those

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Speaker 1: benefits of bottom fixed offshore wind that I mentioned before,

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Speaker 1: but pretty much in any country that has a coastline.

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Speaker 1: So what if I want to see one, Are there

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Speaker 1: any of these projects that have already been built or

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Speaker 1: is it still actually a bit pie in the sky. Well, yeah,

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Speaker 1: the project exists, but the sector is still very much

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Speaker 1: of the demonstration scale. So the first project of more

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Speaker 1: than one turbine came online in off the coast of Scotland.

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Speaker 1: It was built by a Norwegian oil company called Equanol.

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Speaker 1: That was five turbines, but the sectors still needs to

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Speaker 1: see a lot of consolidation before we start to see scale.

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Speaker 1: So last time we did the analysis, there were over

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Speaker 1: forty different floating platform design so the designs for these

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Speaker 1: platforms that turbine sit on top of. Now we'd expect

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Speaker 1: to see a bit of consolidation and the industry to

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Speaker 1: settle on on maybe just a few designs, and we

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Speaker 1: haven't really nearly got there yet. The biggest operating project

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Speaker 1: is the fifty megawat Kin Cardine, Scotland project, which has

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Speaker 1: six turbines. It was commissioned last year. Now, just for comparison,

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Speaker 1: the biggest cbed fixed offshore wind projects in the world

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Speaker 1: is off the east coast of England. Now that's one thousand,

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Speaker 1: two hundred megawats a hundred and seventy four turbines. So

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Speaker 1: we've got a long way to go until we hit

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Speaker 1: the kind of scale that we're seeing with traditional offshore

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Speaker 1: wind projects. Six turbines does it sound anywhere close to

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Speaker 1: commercial scale? So we don't have those in the water today.

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Speaker 1: And we have, however, built a tool that will estimate

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Speaker 1: the cost of different commercial scale projects. So how does

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Speaker 1: this tool essentially work alongside the floating wind space and

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Speaker 1: is it able to help us better understand what the

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Speaker 1: costs will be for this in the future. So yeah,

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Speaker 1: last week we released the tool that estimates the total

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Speaker 1: cost of floating offshow wind projects from fabrication to transport

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Speaker 1: and installation. So to build this tool with follow up

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Speaker 1: bottom up approach where we forecast the price for each

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Speaker 1: subsystem of a flotting inform in terms of material cost

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Speaker 1: of intimerdial components, which then added up to a total

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Speaker 1: capex value. So answering how did we think about these costs.

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Speaker 1: Initially we asked the question of whether these solutions being

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Speaker 1: used in each sub system have already been deployed in

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Speaker 1: bottom fixed projects or even in other industries as oil

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Speaker 1: and gas, and looked at how mature are these industries

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Speaker 1: and how sensitive prices have been to the scale of deployment.

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Speaker 1: I think a good example of this process is how

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Speaker 1: we calculated win turbine costs. Most floating platform designs are

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Speaker 1: turbine agnostic, meaning that they can use the same turbine

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Speaker 1: models that are currently being developed and even deployed in

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Speaker 1: fixed bottom project. This way, we looked at a more

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Speaker 1: mature industry that fixed bottom industry, and we saw how

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Speaker 1: turbine prices have been decreasing with the scale of deployment,

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Speaker 1: and how this trend is looking into the future. A

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Speaker 1: little bit different known approaches followed for floating substructures. As

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Speaker 1: all they mentioned, there are numerous technology designs in the

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Speaker 1: market at different development stage, and so we had to

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Speaker 1: narrow down or research those that have already completed the

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Speaker 1: testing and transition to a full scale demonstration project now

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Speaker 1: for a very short break stay with us. So we've

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Speaker 1: looked at the minutia around all of these different parts

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Speaker 1: and how expensive this can be. We've kind of already

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Speaker 1: established that. Unfortunately, your model is able to really get

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Speaker 1: at the heart of it. How are we thinking about inflation,

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Speaker 1: because that is definitely something that I think is affecting

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Speaker 1: every industry. There's so many different things actually that are

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Speaker 1: leading into this inflationary environment, and is that something that

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Speaker 1: the model is able to handle. So that's a really

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Speaker 1: interesting question and something that's right at the top of

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Speaker 1: the minds of renewable energy developers. More generally, commodity prices,

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Speaker 1: other input prices like labor costs, like logistics costs have

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Speaker 1: shot up recently as countries have bounced back from pandemic

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Speaker 1: injuced lockdowns, and so that makes the cost of building

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Speaker 1: some of these projects much more expensive. Now, when we

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Speaker 1: look specifically at floating wind, then some of those projects

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Speaker 1: are really steel intense. A lot of floating platforms are

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Speaker 1: built completely by steel, and so the cost of these

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Speaker 1: projects can be pretty sensitive to fluctuations in the steel price.

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Speaker 1: So what we did is within our model, we allow

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Speaker 1: users to pull several different tickers from the Bloomberg terminal

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Speaker 1: to choose which steel price from around the world they

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Speaker 1: want to use to estimate project costs. Users can also

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Speaker 1: input their own cost and so if they're thinking that

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Speaker 1: a steel prices are different, or if they have different

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Speaker 1: access to cheaper steel, then many can generate their own

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Speaker 1: bespoke capex breakdown. I mean, that's how the whole system works,

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Speaker 1: so it all inter relates, and that's really fascinating. So

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Speaker 1: I guess that then just brings me to a question

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Speaker 1: as we're talking about floating wind specifically within this you know,

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Speaker 1: will it ever be cost competitive or at least as

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Speaker 1: competitive as the bottom fixed offshore wind, which we already

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Speaker 1: know is more expensive than onshore wind. Well cost is

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Speaker 1: certainly significantly higher today so the early demonstration projects that

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Speaker 1: I've been talking about, they come in around two to

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Speaker 1: three times more expensive than the seabed fixed offshore wind

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Speaker 1: projects that are getting installed today. So reaching commercial scale

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Speaker 1: is going to be crucial to cutting costs. The sector

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Speaker 1: needs to go from building one of these platforms at

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Speaker 1: a time in a bespoke way to building twenty or

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Speaker 1: even a hundred of these on a on a serial

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Speaker 1: production line. So according to our latest calculations, we never

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Speaker 1: really expect floating wind projects to reach that cost parity

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Speaker 1: with bottom fixed projects, not at least before the horizon

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Speaker 1: of our forecast out of But that isn't to say

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Speaker 1: that the two technologies really need to compete. Different use

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Speaker 1: cases right exactly. Cost very significantly depending on the project site.

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Speaker 1: So in some cases there may be a floating project

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Speaker 1: closer to shore that's cheaper than a bottom fixed one

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Speaker 1: so far from shore that requires one of those really

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Speaker 1: long and expensive export cables to bring the electricity to

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Speaker 1: the consumer. Also, there are loads of countries with limited

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Speaker 1: space or maybe no space at all where they can

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Speaker 1: build one of these big, industrial scale seabed fixed off

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Speaker 1: wind projects. So if they want to use offshore wind

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Speaker 1: to support the net zero goals, they're going to have

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Speaker 1: to use floating wind turbines, even if they are more expensive. Yeah,

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Speaker 1: because so much of the discussion around trying to electrify

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Speaker 1: everything relies on us having a lot more installed renewable

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Speaker 1: energy around the world. So I suppose this is one

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Speaker 1: of those where there are some technical aspects that are

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Speaker 1: standing in our way from a cost standpoint, But we

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Speaker 1: do expect that they will get cheaper and not everything

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Speaker 1: is going to be the lowest cost option because that

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Speaker 1: will have been exhausted at a certain point. So thinking

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Speaker 1: about these costs a little more, and Louisa, I know

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Speaker 1: you've looked into this, what is the most expensive part

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Speaker 1: of the projects? So as all they just mentioned, the

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Speaker 1: costs for floating winto projects can vary significantly. This depend

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Speaker 1: on how far we are from shore, what is the

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Speaker 1: water depth in the project location, or even where platforms

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Speaker 1: are manufactured, or the topic around commodities and logistic prices.

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Speaker 1: There's being said. I think it is sometimes difficult to

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Speaker 1: define a benchmark project. But looking at project located fifty

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Speaker 1: offshore in a water depth of two hundred meters, for example,

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Speaker 1: we predict that turbinds are the most expensive cost element.

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Speaker 1: This account for around thirty percent of the total cost,

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Speaker 1: and the second and third most expensive elements are export

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Speaker 1: system and platforms, which vary between twenty and These turbines

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Speaker 1: are dramatically different from the ones that we're seeing in

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Speaker 1: other on and after our projects. I'm just trying to

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Speaker 1: think about, like, are the cost essentially verily consistent, it's

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Speaker 1: just all of the additional installation that's the problem, or

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Speaker 1: they just fundamentally different pieces of kits pretty much the

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Speaker 1: same kind of machines. Offshore wind turbines are hugely bigger

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Speaker 1: than those you see on shore. Some of the latest

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Speaker 1: models are almost as tall as the Eiffel towers. So

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Speaker 1: when you're thinking of one of these commercial scale projects,

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Speaker 1: think of a hundred Eiffel towers with spinning fans on

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Speaker 1: the top, each sitting on a floating platform. They're the

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Speaker 1: same kind of technology that sits on top of a

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Speaker 1: typical bottom fixed offshore wind foundation. Although that that you

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Speaker 1: do need to tune some of the some of the

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Speaker 1: kit in the top of the turbine, some of the

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Speaker 1: controller and so the turbine can handle and optimize its

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Speaker 1: output on top of a moving structure instead of one

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Speaker 1: that's fixed at the seabed. And just as a point

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Speaker 1: of comparison, how tall is an onshore wind turbine, but

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Speaker 1: they reach to around two high. For the taller ones,

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Speaker 1: often they have to rise much higher above the above

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Speaker 1: the trees, so you get much taller, slender onshore wind turbines.

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Speaker 1: The offshore ones tend to be squat and still tall,

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Speaker 1: but they have much longer blades and sit much lower

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Speaker 1: above the sea. So given the casts and the head

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Speaker 1: winds here, there's a lot of I guess, R and

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Speaker 1: D that needs to go into it. Who's looking at

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Speaker 1: this market and who do we think is kind of

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Speaker 1: men in some respects leading the way. The market is

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Speaker 1: currently dominated by renewable energy developers such as A Withdrawal

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Speaker 1: of and and full We are looking into extend their

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Speaker 1: offshore project in pipeline. But as we mentioned before, oil

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Speaker 1: and gas players are starting to become more and more

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Speaker 1: interested in the floating offshore wind and so companies as Equino,

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Speaker 1: Totel and BP we're broadening. They're trying to broaden their

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Speaker 1: portfolio and include more renewable energy projects are also becoming

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Speaker 1: more interested in and investing in this type of projects,

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Speaker 1: and some of these companies are getting really really ambitious

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Speaker 1: of renewable energy in general. Now, floating off shore wind

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Speaker 1: or offshore wind in general is a technology that allows

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Speaker 1: them to contribute gigawatts towards their renewable energy targets with

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Speaker 1: one single project. They're also big infrastructure projects similar to

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Speaker 1: the kind of things that they're working on on their

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Speaker 1: distant offshore oil and gas platform And so that's where

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Speaker 1: we've seen many of the kind of oil and gas

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Speaker 1: majors start to look seriously offshore wind over the last

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Speaker 1: few years. How well do they perform in storms? So

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Speaker 1: that's a really good question, and I think at the moment,

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Speaker 1: a lot of the projects that we've seen have been

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Speaker 1: installed in the North See now that's a pretty tough environment.

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Speaker 1: Although not in the kind of environment that you see

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Speaker 1: hurricanes like we see in the US in the America's

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Speaker 1: or typhoons in the in the Asia Pacific. The turbine

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Speaker 1: makers are already releasing turbines that are so called typhoon resistant,

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Speaker 1: and while it may take some modifications to the floating platforms,

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Speaker 1: the turbine technology is there, and so we've already seen

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Speaker 1: some demonstrator scale floating wind projects in Japan. Those are

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Speaker 1: the kind of markets we might have to see typhoon

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Speaker 1: resistant turbines in the future, and slight changes to the

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Speaker 1: floating wind platform that those turbines sit on top of. Yeah,

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Speaker 1: because climate adaptation is coming up more and more frequently.

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Speaker 1: I think out there in the world, and you know,

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Speaker 1: when we go to conferences, we hear it come up.

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Speaker 1: And I definitely think as we're looking at these things

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Speaker 1: that are going to be in the ocean that may

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Speaker 1: be subject to as you reference, you know, hurricanes or typhoons,

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Speaker 1: I imagine those developing this technology will be looking at

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Speaker 1: that in some details so that they don't have to

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Speaker 1: go back and essentially fix it later. You mentioned the

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Speaker 1: North Sea, and you mentioned Japan, and you mentioned the

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Speaker 1: coast of California. Where do you think will be the

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Speaker 1: leading countries where these will be utilized. Well, we've seen

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Speaker 1: the early demonstration projects in countries that are willing to

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Speaker 1: pay that premium in order to bring the cost of

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Speaker 1: the technology down. Now many of the leading countries are

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Speaker 1: already thinking about that scaling up that I said is

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Speaker 1: really crucial to bringing costs down. So, for example, the

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Speaker 1: UK held the first lease auction offering seabed sites that

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Speaker 1: is capable of hosting gigawatt scale floating wind projects. So

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Speaker 1: in that auction at the beginning of the year, sites

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Speaker 1: that could host fifteen gigawats of floating wind one contract.

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Speaker 1: Now the UK is planning two more of those lease

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Speaker 1: auctions over the next couple of years, and so that's

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Speaker 1: the market was really starting to think about scale at

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Speaker 1: the moment, and we're expecting there will be more than

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Speaker 1: seven gigawats are floating wind in the UK by other

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Speaker 1: markets and markets that don't have sufficient space to install

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Speaker 1: bottom fixed projects but are really looking at how to decarbonize.

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Speaker 1: So the West coast of the US is another one

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Speaker 1: markets like Oregon, California. The continental shelf drops off really

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Speaker 1: quickly as you move off the coast, and so we're

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Speaker 1: expecting the US to be the second largest floating wind

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Speaker 1: market globally, driven by those states that have really ambitious

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Speaker 1: for renewal energy targets are struggling to build on shore

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Speaker 1: renewables because of local pushback and and other reasons, and

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Speaker 1: so now a're seeing offshore wind and floating offshore wind

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Speaker 1: as a crucial technology to help them get there. There

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Speaker 1: are markets further afield. So in South Korea, offshore wind

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Speaker 1: farms already received higher subsidies if they're built in deeper waters,

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Speaker 1: if they're further from shore, and so that favors floating

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Speaker 1: wind projects. So South Korea's limited space again to god

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Speaker 1: bottom fixed projects, and so are expecting the market to

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Speaker 1: have an explosion of floating wind over the next fifteen

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Speaker 1: years or so and install three gigawats of capacity now

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Speaker 1: for a very short break stay with us. So in

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Speaker 1: addition to the costs, which we really have discussed and

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Speaker 1: we know we can look out into the future and

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Speaker 1: try and figure out how these cost of clients might work.

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Speaker 1: What are some of the other bottlenecks that are limiting

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Speaker 1: the expansion of floating wind that we mentioned, You know inflation,

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Speaker 1: which again is tied to costs, but how about things

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Speaker 1: associated with supply chains and delivery and even how the

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Speaker 1: options are structured. I think the major question than that

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Speaker 1: the floating wind industry has to answer right now is

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Speaker 1: how to ramp up the supply chain in order to

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Speaker 1: commit to such massive scale up and installations. So for

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Speaker 1: most of the elements of the wind farms, like the

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Speaker 1: turbines platforms in the Morning system. The question is no

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Speaker 1: longer if those are technically feasible, but how can we

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Speaker 1: reproduce them at a base that is fast enough to

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Speaker 1: meet the developers downlines? Right So, for instance, when we

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Speaker 1: look at more systems, the solutions used in the floating

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Speaker 1: wind for objects have been deployed before in ryland gas,

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Speaker 1: but the skill that we're looking right now is completely different.

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Speaker 1: We're talking about commercial skill. Projects with dozens of units

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Speaker 1: lead into hundreds of marine lines to be supplied all

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Speaker 1: at once. I think another thing we need to look

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Speaker 1: at is who is going to build these projects, but

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Speaker 1: also where, so we need a drastic scale up of

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Speaker 1: fabrication facilities. But equally important is the question of people.

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Speaker 1: So each floating steel platform has as a load of

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Speaker 1: joints that need welding. The industry needs to attract enough

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Speaker 1: talent to make sure we've got enough welders to make

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Speaker 1: those platforms, to make sure we've got enough engineers to

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Speaker 1: design projects, or construction crews to man installation vessels. There's

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Speaker 1: also a significant lack of suitable ports to support these

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Speaker 1: projects today, So a big floating wind farm will require

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Speaker 1: a port with deep waters with plenty of space for

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Speaker 1: wet storage in the water and also dry storage somewhere

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Speaker 1: in the port. So upgrading existing ports or building new

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Speaker 1: ones is going to require a vast amount of government

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Speaker 1: and private investment. And how about manufacturing the turbines, do

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Speaker 1: you anticipate it will be the existing manufacturers and their

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Speaker 1: existing locations or is there in this space And I

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Speaker 1: suppose this extends beyond floating wind, but to all wind.

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Speaker 1: Is there a drive for localization as there is in

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Speaker 1: other industries. Well, that's a really good question because a

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Speaker 1: lot of the turbine makers are struggling quite a lot.

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Speaker 1: Now we mentioned before, but their input costs arising, so

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Speaker 1: labor costs of their factories, logistics costs to deliver components

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Speaker 1: to where they need to be, and then the materials

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Speaker 1: themselves that make the turbines, all of those things have

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Speaker 1: gone up in price, and the turbine makers are struggling

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Speaker 1: to pass on all of those costs onto their customers,

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Speaker 1: especially for contracts that they signed a year ago maybe

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Speaker 1: and haven't delivered that turbine yet, And so they're delivering

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Speaker 1: on a contract that they signed for a much lower

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Speaker 1: cost in the past. So some of the major supply

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Speaker 1: chain companies are struggling at the moment, and we're seeing

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Speaker 1: in some cases they're downsizing, pausing production at factories or

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Speaker 1: laying off staff at the same time as we need

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Speaker 1: this drastic scale up in order to help them meet

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Speaker 1: the demand of the industry. And so where to place

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Speaker 1: the factories becomes a very important thing because governments are

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Speaker 1: really keen to take advantage of the economic benefits of

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Speaker 1: shore wind bring as well green jobs, green growth. But

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Speaker 1: if the terb by makers are losing money, then it's

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Speaker 1: expensive to set up a factory, and so there's this

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Speaker 1: midsmatch at the moment between government ambition and this political

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Speaker 1: cell of offshore wind is good for the economy as

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Speaker 1: well as kind of good for decrbonization and the health

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Speaker 1: of some of these supply chain companies that they're expecting

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Speaker 1: to set up these factories. And we've seen before that

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Speaker 1: also the fact that sometimes government impose local content requirements

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Speaker 1: has not always been so helpful for the off showing industry.

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Speaker 1: Has This might lead to our cost of the components,

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Speaker 1: and so the competitiveness in the market decreases and we

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Speaker 1: see actually rounds of auctions with higher prices and in

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Speaker 1: markets where none of the local content requirements are in post.

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Speaker 1: So local content requirements are requirements set by a government.

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Speaker 1: Usually that certain proportion of the project's bend has to

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Speaker 1: be in the market where the project is being installed.

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Speaker 1: So a good example of this is in Taiwan, where

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Speaker 1: the Taiwanese government insists that a certain proportion of projects

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Speaker 1: that win subsidies have to manufacture certain components within Taiwan

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Speaker 1: in order to secure those subsidies. Are these going to

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Speaker 1: be competing against other technologies in these actions, or countries

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Speaker 1: going to start setting up specific floating wind actions. Well,

437
00:23:35,320 --> 00:23:37,240
Speaker 1: at the moment, they have to, because floating wind is

438
00:23:37,320 --> 00:23:40,600
Speaker 1: so much more expensive than most other renewable energy technologies

439
00:23:40,680 --> 00:23:43,080
Speaker 1: that they wouldn't win any subsidies if there are competing

440
00:23:43,200 --> 00:23:45,679
Speaker 1: purely on cost. But some of the countries that are

441
00:23:45,720 --> 00:23:49,359
Speaker 1: moving earliest on this are also hoping to establish themselves

442
00:23:49,560 --> 00:23:53,359
Speaker 1: as future supply chain hubs for the global floating wind sector.

443
00:23:54,040 --> 00:23:57,159
Speaker 1: So again they're willing to pay increased costs today in

444
00:23:57,320 --> 00:23:59,879
Speaker 1: order to establish themselves as the experts in this space

445
00:24:00,240 --> 00:24:03,880
Speaker 1: and as the export hubs for future floating wind components.

446
00:24:03,960 --> 00:24:06,960
Speaker 1: As more countries start to look towards the technology, and

447
00:24:07,080 --> 00:24:09,800
Speaker 1: so there's this race to become the technology leader as

448
00:24:09,840 --> 00:24:13,200
Speaker 1: well between countries and to take advantage of some of

449
00:24:13,280 --> 00:24:16,960
Speaker 1: these benefits of green growth. And also in some of

450
00:24:17,040 --> 00:24:21,119
Speaker 1: these countries, I guess government and even developers are hoping

451
00:24:21,240 --> 00:24:26,639
Speaker 1: to revitalize the ideally declining oil and gas sector because

452
00:24:26,720 --> 00:24:29,440
Speaker 1: floating wind can pick up a lot of technology and

453
00:24:29,560 --> 00:24:33,520
Speaker 1: operational experience from oil and gas and crew too this

454
00:24:33,680 --> 00:24:38,560
Speaker 1: opportunity to to increase jobs or pick up from existing expertise.

455
00:24:39,600 --> 00:24:42,320
Speaker 1: So not only will some oil and gas companies be

456
00:24:42,359 --> 00:24:46,720
Speaker 1: able to reuse some of their existing ships and drills

457
00:24:46,800 --> 00:24:49,399
Speaker 1: and other equipment that they have, you think they'll be

458
00:24:49,440 --> 00:24:52,080
Speaker 1: able to reuse some of the actual employees that were

459
00:24:52,119 --> 00:24:56,280
Speaker 1: involved in offshore oil and gas exploration. Absolutely. I was

460
00:24:56,320 --> 00:24:59,200
Speaker 1: at an offshore wind conference the other day up in Manchester.

461
00:25:00,240 --> 00:25:04,240
Speaker 1: The exhibition hall was filled with companies that used to

462
00:25:04,520 --> 00:25:07,440
Speaker 1: supply only the oil and gas industry and now are

463
00:25:07,440 --> 00:25:11,960
Speaker 1: aggressively targeting floating wind because some of the expertise dovetails

464
00:25:12,000 --> 00:25:15,240
Speaker 1: really nicely between the two sectors. Like I say, the

465
00:25:15,640 --> 00:25:18,800
Speaker 1: oil and gas industry have been installing floating platforms in

466
00:25:18,920 --> 00:25:21,800
Speaker 1: deep waters for decades and so there's a lot of

467
00:25:21,880 --> 00:25:24,879
Speaker 1: learnings that can take place between the two sectors, and

468
00:25:25,520 --> 00:25:27,560
Speaker 1: it's it's a way that a lot of these smaller

469
00:25:27,600 --> 00:25:29,879
Speaker 1: supply chain companies that have been serving the oil and

470
00:25:29,960 --> 00:25:32,800
Speaker 1: gas sector for a long time can start to transition

471
00:25:33,119 --> 00:25:35,360
Speaker 1: their businesses in a new and greener world as well.

472
00:25:35,880 --> 00:25:37,760
Speaker 1: So can we talk a little bit about the future

473
00:25:37,840 --> 00:25:41,000
Speaker 1: and where you see this going from a timeline standpoint,

474
00:25:41,080 --> 00:25:43,200
Speaker 1: because so much of the narrative at the moment is

475
00:25:43,200 --> 00:25:46,600
Speaker 1: benchmarked around these you know, the race and then the

476
00:25:46,680 --> 00:25:51,160
Speaker 1: race and then depending upon the country from net zero.

477
00:25:51,600 --> 00:25:55,920
Speaker 1: But this next eight years, this now to is discussed

478
00:25:56,040 --> 00:25:59,879
Speaker 1: so frequently. What role is floating wind potentially going to

479
00:26:00,040 --> 00:26:03,080
Speaker 1: have to play? And do we see technology in what

480
00:26:03,280 --> 00:26:06,760
Speaker 1: is essentially, you know, large infrastructure projects which take a

481
00:26:06,800 --> 00:26:08,600
Speaker 1: lot of time. Do we think it's going to ramp

482
00:26:08,720 --> 00:26:11,440
Speaker 1: up pretty rapidly this decade or is it a next

483
00:26:11,520 --> 00:26:14,359
Speaker 1: decade thing? So this decade is all about scale up,

484
00:26:14,440 --> 00:26:18,240
Speaker 1: but we're not really expecting the large commercial scale projects

485
00:26:18,320 --> 00:26:21,439
Speaker 1: to come online until eight So we still expect bottom

486
00:26:21,480 --> 00:26:24,600
Speaker 1: fixed foundations to continue to be the dominant supporting structure

487
00:26:24,600 --> 00:26:26,800
Speaker 1: all the way out to twenty thirty five. So we're

488
00:26:26,840 --> 00:26:29,639
Speaker 1: still expecting bottom fixed foundations to make up around nine

489
00:26:30,440 --> 00:26:33,879
Speaker 1: of the global fleet by thirty five, but in our forecast,

490
00:26:33,960 --> 00:26:37,160
Speaker 1: floating wind does begin to take market share from twenty seven,

491
00:26:37,680 --> 00:26:42,119
Speaker 1: so we're expecting six gigawatts operating by twenty thirty, but

492
00:26:42,200 --> 00:26:44,479
Speaker 1: that's going to shoot up to twenty five gigawatts by

493
00:26:44,520 --> 00:26:48,040
Speaker 1: twenty thirty five. So floating wind might not be looking

494
00:26:48,119 --> 00:26:50,720
Speaker 1: too much at this decade, but we're really expecting a

495
00:26:50,880 --> 00:26:54,560
Speaker 1: quick pickup in the first half of the trade to happen.

496
00:26:54,720 --> 00:26:56,639
Speaker 1: I think we need to keep in mind exactly what

497
00:26:56,800 --> 00:27:01,480
Speaker 1: we're saying then that installation infrastructure investment has to be

498
00:27:01,600 --> 00:27:06,439
Speaker 1: made on port vessels, manufacturing facilities, and there's still as

499
00:27:06,520 --> 00:27:09,959
Speaker 1: we discussed previously, there's still some technical challenges that need

500
00:27:10,000 --> 00:27:14,960
Speaker 1: to be overcome as an dynamic cables that connect the unit,

501
00:27:15,200 --> 00:27:19,000
Speaker 1: and also as all they mentioned before, on substations to

502
00:27:19,200 --> 00:27:22,560
Speaker 1: link to export the power produced. One of the things

503
00:27:22,640 --> 00:27:25,399
Speaker 1: that we reference oftentimes when people talk about bird deaths

504
00:27:25,440 --> 00:27:28,680
Speaker 1: associated with wind turbines is the fact that cats actually

505
00:27:28,760 --> 00:27:31,480
Speaker 1: kill more birds than wind turbines do an annual basis. Now,

506
00:27:31,680 --> 00:27:33,520
Speaker 1: believe it or not, I actually have two cats, so

507
00:27:33,760 --> 00:27:36,480
Speaker 1: apparently I am not enough of a bird lover, but

508
00:27:36,640 --> 00:27:40,840
Speaker 1: for those who are given that these offshore wind, floating

509
00:27:40,880 --> 00:27:44,119
Speaker 1: wind turbines will be so far offshore is one of

510
00:27:44,200 --> 00:27:47,440
Speaker 1: the potential benefits that they will be beyond where birds

511
00:27:47,480 --> 00:27:50,360
Speaker 1: are flying or are we looking at the same kind

512
00:27:50,440 --> 00:27:52,840
Speaker 1: of offshore wind bird deaths or has that not been

513
00:27:52,880 --> 00:27:55,040
Speaker 1: looked into? So I think one of the benefits of

514
00:27:55,119 --> 00:27:57,440
Speaker 1: looking at floating wind is that not only can you

515
00:27:57,520 --> 00:27:59,680
Speaker 1: look for the windy sites, but you can also start

516
00:27:59,760 --> 00:28:02,760
Speaker 1: to look at more sites from an environmental perspective as well.

517
00:28:03,400 --> 00:28:06,560
Speaker 1: So it's part of the permitting process for any wind project,

518
00:28:06,600 --> 00:28:10,159
Speaker 1: whether it's onshore, offshore, bottom fixed or floating, you have

519
00:28:10,240 --> 00:28:12,800
Speaker 1: to carry environmental studies to look at what the impact

520
00:28:12,840 --> 00:28:15,679
Speaker 1: will be on marine mammals, on birds as well. When

521
00:28:15,720 --> 00:28:18,000
Speaker 1: you're looking at floating wind, you can look at vastly

522
00:28:18,080 --> 00:28:20,040
Speaker 1: more sites because you can look at more and more

523
00:28:20,200 --> 00:28:23,679
Speaker 1: water depths and deeper water depths, and so that allows

524
00:28:23,720 --> 00:28:25,680
Speaker 1: you to pick and choose where you build a project,

525
00:28:25,840 --> 00:28:29,160
Speaker 1: so hopefully you'll have the minimal environmental impact as well.

526
00:28:29,320 --> 00:28:31,840
Speaker 1: So yeah, we can start saving more of those birds.

527
00:28:32,119 --> 00:28:34,639
Speaker 1: As with any model, which really was the basis of

528
00:28:34,680 --> 00:28:39,120
Speaker 1: our conversation today. There are so many different inputs and

529
00:28:39,520 --> 00:28:41,760
Speaker 1: we're sitting here staring at a model, staring at a

530
00:28:41,800 --> 00:28:45,440
Speaker 1: computer about this very real and complicated thing which has

531
00:28:45,560 --> 00:28:50,120
Speaker 1: variables that maybe we don't yet fully understand, especially with

532
00:28:50,240 --> 00:28:53,960
Speaker 1: something so new. How do you, guys go about collecting

533
00:28:54,360 --> 00:28:58,200
Speaker 1: information on something so new? Who do you engage with

534
00:28:58,360 --> 00:29:00,680
Speaker 1: to try and make yourself? I guess it's murder? And

535
00:29:00,760 --> 00:29:03,520
Speaker 1: how do you find all of these variables to build

536
00:29:03,600 --> 00:29:07,360
Speaker 1: this too? We followed a bottom up approach, so we

537
00:29:07,480 --> 00:29:11,200
Speaker 1: forecast the price for each system of a floating wind firm.

538
00:29:11,280 --> 00:29:14,520
Speaker 1: We looked at material costs of individual components, We looked

539
00:29:14,560 --> 00:29:18,680
Speaker 1: at manufacturing prices, and we added all that up to

540
00:29:19,040 --> 00:29:22,040
Speaker 1: create our capex cost, the capex of a floating wind

541
00:29:22,080 --> 00:29:25,960
Speaker 1: from and when we ask ourselves, how would we look

542
00:29:26,120 --> 00:29:29,280
Speaker 1: at the individual costs? So we looked into other dissolutions

543
00:29:29,640 --> 00:29:33,480
Speaker 1: were already being used in bottom fixed projects or even

544
00:29:33,520 --> 00:29:36,680
Speaker 1: in other industries as well. Guess at how mature are

545
00:29:36,800 --> 00:29:40,680
Speaker 1: these industries and how sensitive prices have been to the

546
00:29:40,760 --> 00:29:43,960
Speaker 1: scale of of the ployment. So I think a good

547
00:29:44,000 --> 00:29:46,440
Speaker 1: example of this is how we thought was It was

548
00:29:46,520 --> 00:29:49,600
Speaker 1: out thought process behind the calculation of wind turbine costs.

549
00:29:49,920 --> 00:29:54,440
Speaker 1: So most of floating wind platform designs are turbine agnostic,

550
00:29:54,760 --> 00:29:57,880
Speaker 1: meaning that they can use the same turbine models that

551
00:29:58,080 --> 00:30:01,760
Speaker 1: are currently used in fixed mode projects. And so this

552
00:30:01,960 --> 00:30:04,600
Speaker 1: way we were able to look at a more mature

553
00:30:04,720 --> 00:30:07,920
Speaker 1: industry and see how to bind prices have been decreasing

554
00:30:08,040 --> 00:30:10,680
Speaker 1: or not with the scale of deployment, and how this

555
00:30:10,840 --> 00:30:13,600
Speaker 1: trend is looking into the future. There's other components of

556
00:30:13,640 --> 00:30:15,560
Speaker 1: the wind farm in which we don't have such a

557
00:30:15,600 --> 00:30:19,320
Speaker 1: good visibility on the cost trants, and so we we

558
00:30:19,480 --> 00:30:23,080
Speaker 1: used our network of clients who are currently working on

559
00:30:23,200 --> 00:30:26,480
Speaker 1: this type of projects and we changed and thoughts with

560
00:30:26,560 --> 00:30:29,080
Speaker 1: them and how do they look the prices look like

561
00:30:29,320 --> 00:30:32,360
Speaker 1: for some for the components nowadays, if they see that

562
00:30:32,480 --> 00:30:34,520
Speaker 1: they will come for them, they will come with the

563
00:30:34,600 --> 00:30:38,680
Speaker 1: premium in the future, considering their deployment in flooding projects

564
00:30:38,760 --> 00:30:41,040
Speaker 1: rather than fixed bottom ones. That was a bit of

565
00:30:41,320 --> 00:30:44,000
Speaker 1: of our process. I think those two things are super key,

566
00:30:44,160 --> 00:30:47,080
Speaker 1: like leveraging our network and like the people side of

567
00:30:47,160 --> 00:30:50,600
Speaker 1: the question. And then also we just got down and

568
00:30:50,680 --> 00:30:54,120
Speaker 1: dirty with a model and looked at each subsystem and

569
00:30:54,400 --> 00:30:56,320
Speaker 1: used any data that we could that was out on

570
00:30:56,400 --> 00:30:58,440
Speaker 1: the market, whether it was on a floating project and

571
00:30:58,520 --> 00:31:01,200
Speaker 1: oil and gas project or or on a bottom fixed

572
00:31:01,240 --> 00:31:05,120
Speaker 1: turbine for things that are transferable. So since we're revisiting

573
00:31:05,120 --> 00:31:09,080
Speaker 1: a topic, tell me we also in our previous episode

574
00:31:09,160 --> 00:31:12,080
Speaker 1: on floating wind, it was about flying wind as well.

575
00:31:13,000 --> 00:31:16,000
Speaker 1: Is that still pie in the sky? No pun intended.

576
00:31:16,520 --> 00:31:19,479
Speaker 1: I think that's probably better left to kids with their kites.

577
00:31:19,800 --> 00:31:22,800
Speaker 1: It's a long time before we'll see big ebble wind projects.

578
00:31:22,840 --> 00:31:25,600
Speaker 1: In my opinion. Yeah, I'm pretty new to the industry,

579
00:31:25,800 --> 00:31:29,240
Speaker 1: but since I started working on our show and two

580
00:31:29,320 --> 00:31:32,560
Speaker 1: years ago, I've never heard about that topic. So I

581
00:31:32,640 --> 00:31:37,240
Speaker 1: think that tells a bit where it's going. Okay, alright,

582
00:31:37,480 --> 00:31:40,680
Speaker 1: so coming to the deep ocean near you, but not

583
00:31:40,880 --> 00:31:43,400
Speaker 1: to the sky, got it. Thank you very much, Ali

584
00:31:43,480 --> 00:31:46,120
Speaker 1: and Louisa for joining today, and we look forward to

585
00:31:46,160 --> 00:31:49,120
Speaker 1: seeing how these projects come along over the course of

586
00:31:49,200 --> 00:31:51,800
Speaker 1: the next several years and whether or not they will

587
00:31:51,880 --> 00:31:54,959
Speaker 1: be coming to scale at the beginning of the next decade.

588
00:32:00,840 --> 00:32:04,560
Speaker 1: This episode was produced by Sanjeet Sangara at Bien e F.

589
00:32:05,000 --> 00:32:08,000
Speaker 1: Today's episode of Switched On was edited by Rex Warner

590
00:32:08,080 --> 00:32:10,040
Speaker 1: of gray Stoke Media. Bloomberg An e F as a

591
00:32:10,120 --> 00:32:13,280
Speaker 1: service provided by Bloomberg Finance LP and its affiliates. This

592
00:32:13,400 --> 00:32:15,880
Speaker 1: recording does not constitute, nor should it be construed as

593
00:32:15,920 --> 00:32:19,800
Speaker 1: investment advice, investment recommendations, or recommendation as to an investment

594
00:32:19,880 --> 00:32:21,920
Speaker 1: or other strategy. Bloomberg an e F should not be

595
00:32:22,000 --> 00:32:25,320
Speaker 1: considered as information sufficient upon which to base an investment decision.

596
00:32:25,480 --> 00:32:28,280
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597
00:32:28,320 --> 00:32:31,440
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598
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