1. Carbon Trust’s Offshore Wind Accelerator Driving down the cost of offshore wind Phil de Villiers Offshore Wind Accelerator Manager

2. 2 Our mission is to accelerate the move to a low carbon economy We cut carbon now by Providing specialist advice and finance to help organisations cut carbon Setting standards for carbon reduction We cut future carbon emissions by Opening markets for low carbon technologies Leading industry collaborations to commercialise technologies Investing in early stage low carbon companies

3. 3 Focus of assessment –What is required to deliver offshore wind in the UK? –What does UK Government and industry need to do? In 2008 Carbon Trust assessed barriers to offshore wind Offshore wind power: Big challenge, big opportunity Note: Report is available on our website: www.carbontrust.co.uk

4. … UK faces an energy gap and tough renewable energy target This requires mass deployment of offshore wind Installed capacity, projected demand (GW), 2008-2020 % of UK energy from renewables, 2005-2020 Source: Committee on Climate Change, 2008 (based on DECC Energy Model) 201520102008 Coal Gas Nuclear Renewables Projected peak demandProjected peak demandProjected peak demandProjected peak demand 2020 Energy gap 2020 target 20052010 8x increase required

5. 5 Current expectationOptimal site availabilityCost reductionsAchievable goal Weak commercial returns, high levels of public subsidy Stronger commercial returns, lower levels of public subsidy Source: Carbon Trust “Offshore wind power: big challenge, big opportunity”, 2008 Increased RD&D critical for delivering cost reduction £45bn £14bn £16bn£75bn Requires major RD&D programme, of which OWA is one component

6. 6 Gunfleet Sands Robin Rigg Lynn Burbo Barrow Kentish Flats Scroby Sands North Hoyle Cost per MW installed (€m/MW) Year Rhyl Flats Costs must be reduced Otherwise projects cancelled, UK renewable targets missed Source: Emerging Energy Research, 2009 Drivers Rising commodity prices Bottlenecks in supply chain Complexity of sites, distance, depth FX rate volatility

7. 7 Offshore Wind Accelerator Offshore Wind Accelerator Objective: Reduce cost of energy by 10% through RD&D 8 developers + Carbon Trust Focusing on technologies for –Round 2 extensions –Round 3 –Scottish Territorial Waters Total budget ~£40m –£10m for collaborative R&D –Up to £30m for demonstrations –Carbon Trust funds 1/3 Commitment to 2014 –Started October 2008

8. 8 OWA objectives Requires very targeted RD&D Focus on commercial outcomes –Reduce cost of energy by 10% –Deliver innovations in time for Round 3 (~2015) Learn from the capabilities and experiences of each member –Offshore wind, oil and gas, onshore wind Encourage the best designers to deliver innovations –Engage them on very specific challenges –Let them keep their IP –Look internationally, not just to UK –Engage with other industries for technology transfer Operate responsively to member needs; manage costs effectively

9. 9 Research- focused May not meet customer needs Customer- focused Innovators focus on main challenges OWA is an example of market- pull innovation Two approaches to innovation UK offshore wind R&D customer-driven Offshore Wind Accelerator InnovatorsMarket Technology push Market pull Source: Carbon Trust 2011

10. 10 RWE SSE Centrica SPR Vattenfall DONG Statkraft Statoil Mainstream Siemens Fluor E.ON SeaEnergy EDP Eneco Warwick Fred Olsen Masdar EDF AREG Round 1Round 2STW & DemoRound 3Total marketDeveloper 60% of UK market is in OWA: big pull for innovators OWA developers have 30GW of licensed capacity in UK waters OWA Stage II partners 4% 2,0004% 2,3605% 2,408 5% 2,8846% 4,3969% 5,35011% 5,80912% 6,01512% 6,55514% 0% 1% 5% 2% 1,2383% 1,8094% 1,985 2% 4,18513% 3,98312% 3,75012% 3% 1% 1,7335% 2,0006% 2,0006% 2,2507% 2,2507% 0% 3,60011% 3,60011% 6% 0% 1% 8% 1,50026% 16% 5% 0% 26%1,518 1% 7% 2% 7% 3% 0% 2% 2,40626% 5% 3% 1,43016% 5% 2,20224% 20% 7% 0% 20% 16% 1% 12% Source: RenewableUK (Jan 2010), The Crown Estate (May 2010)

11. 11 Yield Cost of finance Focus is on areas developers most able to influence BoP Turbine O&M I&C

12. Aiming to reduce impact of distance and depth on cost Note: Cost analysis for <700 W/m2 wind power, where 100% = £97/MWh (2008 assumptions) Source: Carbon Trust “Big Challenge, Big Opportunity” 2008 Wind speedDistanceDepth Depth (m) 0-2020-4040-60 Distance to shore (nm) 60+12-3030-600-12800-900 Wind power (W/m2) 700-800 <700900+ CoE as % typical near-shore site

13. 13 Steering Committee Carbon Trust Management Team Innovators, designers OWA partners Carbon Trust 3 rd party contractors 125+ people 500+ companies Technical Working Group Technical Working Group Technical Working Group Wake EffectsAccessFoundations Technical Working Group Electrical Research performed within Technical Working Groups Innovation is provided by third-parties

14. 14 Many companies engaged by OWA to deliver innovation Wake effectsDevelopers DesignersFabricatorsInstallers Electrical systemsO&M Foundations

15. 15 20102011201220132014 Foundations Wake Effects Electrical ATL New area 1 New area 2 Common R&D Demo proj. 1 Selected Demo proj. 2 Selected Demo proj. 3 Selected Demo proj. 4 Selected Demo proj. 5 ETC Discretionary projects Common Partner “A” participation Other Partners’ Projects Two types of activity: Common R&D and Discretionary Projects Partners opt-in to participate in Discretionary Projects

16. 16 Some important stakeholders for OWA Funders WTG OEMs Finance community Innovators, designers R&D institutes F WE A OWA

17. 17 OWA focuses on strengthening economics of offshore wind Offshore wind returns YieldOPEXCAPEX Wake effects AccessFoundations Electrical systems Financing costs Four technology areas, selected on basis of detailed analysis of over 70 technical barriers

18. 18 Most of UK licenced capacity is in 20-60m depths Source: Crown Estate 2009 Round 1, 2 and 3 potential installed capacity (MW) Depth (m) 60-70 50-60 40-50 30-406,220 20-306,260 10-201,340 0-10580 835 5,880 6,050 Round 3 Round 2 Round 1 Foundations

19. 19 Turbine installation rates will need to increase dramatically Number of turbines installed per year 2003 - 2020 1 202020192018201720162015201420132012201120102009200820072006200520042003 1. Number of turbines calculated from actual and forecast installed capacity figures, assuming 3MW turbines 2003 – 2013, and 5MW turbines from 2014 Source: Carbon Trust “Offshore wind power: big challenge, big opportunity”, 2008; Carbon Trust analysis 2010 One new turbine installed per day 2.5 new turbines installed per day One new turbine installed every 11 days Over 6,000 turbines to be installed over 10 years Modelled Actuals Foundations

20. 20 Fabrication Foundations research area focuses on 30-60m ShortlistFinalists Keystone Gifford / BMT / Freyssinet SPT Offshore MBD Airbus A320 Source: Carbon Trust Offshore Wind Accelerator 2010, IHC IHC Foundations Current focus Installation Demonstration

21. 21 Electrical systems opportunity: higher voltage arrays Electrical Systems Current priorities Engaging cable suppliers to deliver higher voltage cables Optimising design of switchgear, transformers Benefit Improved reliability Lower losses Source: Carbon Trust Offshore Wind Accelerator 2010

22. 22 Next steps Develop more accurate wake effects models Develop tools to optimise layouts Measurement campaign to reduce data collection costs More accurate models are being developed Increases wind farm yields and reduces financing costs Coloured lines represent different models or model variants Wake Effects Source: Carbon Trust Offshore Wind Accelerator 2010

23. 23 New technologies required to implement optimal strategies Access competition to increase availability and safety Over 450 designs entered Challenge: improve access in tough metocean conditions Vessels Transfer systems Launch & recovery systems Source: Carbon Trust Offshore Wind Accelerator 2010 Access Systems

24. 24 Some excellent R&D is being performed in Europe Examples Denmark – Risø Germany – RAVE, Fraunhofer Netherlands – ECN, FLOW Norway – NOWITECH Sweden – Vindforsk III UK – ETI, NAREC

25. 25 Greater collaboration is needed Reduce duplication, increase efficiency Ecosystem Wind resource assessment Turbine development Grid integration Foundations Wake effects Access / O&M Electrical systems Floating wind turbine No. projects Source: Carbon Trust analysis 2010 OWA focus area

26. 26 We are focusing our RD&D efforts on the needs of end users Cost reduction in site conditions applicable to EU market RD&D is essential for driving down cost of offshore wind Strengthens economic returns Reduces financing costs Reduces costs to consumers Accelerates deployment Greater collaboration would benefit everyone Avoids duplication and reinvention Conclusions

27. 27 Phil de Villiers Offshore Wind Accelerator Manager Phil.deVilliers@CarbonTrust.co.uk Phil.deVilliers@CarbonTrust.co.uk