This document discusses infrastructure investment in renewable energy, specifically the performance of offshore wind farms. It finds that offshore wind farms suffer from similar cost and time overruns as other large infrastructure projects. The analysis of 10 British offshore wind farms found all experienced budget overruns, with most projects finishing over time. Delays were often due to issues with weather, technology, equipment bottlenecks, and cabling processes. While offshore wind is an important part of climate strategies, the projects do not distinguish themselves from other "mega projects" and show signs of strategic misrepresentation of costs and timelines.

1. Quick and Dirty?
Infrastructure investment in renewable energy
The case of performance of offshore wind farms
Christian Koch
Aarhus University
Nordisk Forum 2011

2. Presentation CK
Mc. Engineering
Ph.D. Social Science
Professor (WSA) Technology based Business Development
1985-1990 Technological Institute
1994-1999 Research Centres (Management of Technology)
Technical University of Denmark (TUD)
1999-2007 Building Processes and Management, (TUD)
2007- Center for Innovation and Business Development,
Aarhus University (cleantech business development)

3. Challenges of Renewables
Ambitious Government plans – on the move
EU budget 2014-2020 announces a 20% focus on sustainability
renewable energy
EU 2020-20-20 (2009)
Denmark
Norway
Sweden
United Kingdom

4. Quick delivery needed
But at any cost?
Initiating question:
Do renewable power plant projects suffer from
the same mechanisms as other megaprojects
(re. Flyvbjerg) ?

5. Mega projects (Flyvbjerg)
Flyvbjerg et al (2003:16) notes that cost and time
underestimation is a global and longterm phenomena
and it is not deteriorating over time.
Cost and time underestimation cannot be explained by
technical error, but rather by psychological, optimism
bias and socio- political, strategic misrepresentation

6. Strategic Misrepresentation
Two components : underestimation of costs and
overestimation of benefit
Sociological phenomena; a series of private and
publice players have common interest in promoting a
mega project (Flyvbjerg and COWI 2004)
Indirect argumentation, counterfactual

7. Case Offshore wind farms
The outside view
Exploratory work
Desk research
Limitations (not full view of costs and benefits)

8. Offshore wind farms strategically
important to society
• Offshore wind farms are expected to grow as market at
approximately 45% from 2009 to 2015
• Government place wind as central climate strategy, yet it
takes looong time and the investment are substantial
• Is the investment done in the optimal way?
• Good reasons to investigate costs, time and operational
performance results of offshore wind turbine projects,
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9. What is a wind farm?
• Turbines
• Foundation
• Infield cable
• Substation
• Export cable
9

10. Main processes
1. Preparatory and regulatory process
2. Design, Manufacture and Implementation
1. Operation

11. Main processes Prepatory process
• Preplanning (Investigations of potential sites a.o.)
• Environmental, Archeological, Geophysical and more
investigations
• Five regulating laws to follow (ecology, planning,
naval traffic, fishing)
• Consents
• Finansing
• Tendering Bidding

12. Main processes Implementation
• Preplanning (Investigations of potential sites a.o.)
• Manufacture of components (turbine, substation,
cables a.o.)
• Transport
• Foundation
• Assembly of turbines (interface with foundation)
• Single Turbine Test
• Power plant test
• Commissioning Gerdes et al (2005)

13. Main processes Operation
• Production of power
• Surveillance
• Maintenance
• Repair

14. Phase 1 Experiences
10 UK offshore wind farms:
Round 1, 2 and 3
Preparation takes averagely 4 years
-apparently well planned and designed
-assuring tendering and proper bidding (Anholt)

15. Phase 2 Implementation
Focusing in on implementation processes

16. Scroby Sands Monopile deployment
16

17. A2sea
17

18. Who makes them?
Example contractors at Kentish Flat:
• EDF Energy, UK (Grid Connection)
• Vestas Offshore Associated contractors (Wind Farm)
• MT Hojgaard, DK (foundations)
• AEI Cables, UK (cables)
• MPI, UK (installation, foundations)
• Global Marine, UK (installation, offshore cables)
• Fitzpatrick, UK (installation, onshore cables)
• A2SEA, DK (installation, turbines)
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19. Focus on British offshore farms
• 20*20 segment
• Recent
• Comparable
• Monopiles
• Average Cost 333 mio. Euro in 2003-2010
prices (Flyvbjerg average 300 mio Euro 1995
prices, 2% yearly inflation)

20. Focus on British offshore farms
• Barrows
• Burbo Banks
• Gunfleet Sands
• Kentish Flats
• Lynn and Inner Dowsing
• North Hoyle
• Rhyll
• Robin
• Scroby Sands
• Thanet

21. Results Budget overrun
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22. Results Time overrun
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23. Delays (indicative)
• Most frequent explanation: bad weather,
especially during winter.
• Product technology:-turbines -testing, cables
• Implementation equipment bottleneck
(vessels)
• Cabling processes gives problems

24. Phase 3 Operation: Performance
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26. Discussion I: Not quick
• Considerable time and cost overruns.
• A small share of the wind farm has relatively, some
might say acceptable, low overruns.
• No project ends before time or under budget.
• Operation exhibit under performance so far
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27. Discussion 2: But Dirty
• In SUM indications of strategic
misrepresentation (so DIRTY in that sense)
• No clear learning curve, need to relax public
incentives?
• The long and the short time span (public,
regulatory reform still needed)
• Delays due to weather, product technology,
site, process, equipment bottlenecks

28. Conclusion
• Offshore wind farms do not distinguish themselves from other
mega projects ( Flyvbjerg et al 2003, 2004, 2011).
• The analysis and results give basis for further investigation of
assumptions of strategic misrepresentation (and may be
optimism bias)
• Mega projects should be understood as combined social and
technical, qualitative and quantitative, product and process
• Further work needed
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29. Implications
• (practical)Reference Class Forecasting pro et
cons
• (practical) Mass Customisation, product
configuration
• Life cycle costing
• (research) Public- Private interaction; political,
financial, performance, PPP
• (research) supply chain and manufacture
• (research) process management