Presentation given by Giel-Jan Triest and myself on the EVM Europe conference 2013

1. Early-stage Cost Estimation of Offshore Wind
Farm Projects using Monte Carlo Simulation
A presentation by Joost Arnoudt and Giel-Jan Triest
This research is done within the context of a thesis for obtaining the degree
of Master of Science, Applied Economics: Business Engineering - Operations
Management

2. About us
• Ghent University
• Master of Science in Business Enigeering
• Major: Operational Management
• Master thesis under supervision of prof. dr. M. Vanhoucke
and with support of L-P. Kerkhove
Joost Arnoudt
• Passionate about project management
• Clean energy believers
Giel-Jan Triest
Joost Arnoudt & Giel-Jan Triest

3. Overview
• Green energy and the role of offshore wind energy
• Objective
• Project description
• Preliminary results
• Further research
Joost Arnoudt & Giel-Jan Triest

4. Green energy is HOT
• Fossil fuel reserves are
decreasing + burning them
leads to global warming
Joost Arnoudt & Giel-Jan Triest

5. Green energy is HOT
• Fossil fuel reserves are decreasing + burning them leads to
global warming
• Nuclear energy: questionnable future (concerns about
radioactive waste, safety and
proliferation)
Joost Arnoudt & Giel-Jan Triest

6. Green energy is HOT
• Fossil fuel reserves are decreasing + burning them leads to
global warming
• Nuclear energy: questionnable
future (concerns about radioactive waste, safety and proliferation)
• Renewable energy: still in its
infancy BUT gradually
emerging
Joost Arnoudt & Giel-Jan Triest

7. Green energy is HOT
• Fossil fuel reserves are decreasing + burning them leads to
global warming
• Nuclear energy: questionnable
future (concerns about radioactive waste, safety and proliferation)
• Renewable energy: still in its
infancy BUT gradually emerging
Joost Arnoudt & Giel-Jan Triest
Flemisch Energy Agency: “Increase
in green energy of 26% between
2010 and 2011 in Belgium”
International Energy Agency:
“Building on several years of strong
deployment, worldwide growth of
renewable electricity should
accelerate over the medium term.”

8. Offshore wind energy
• Potential is enormous
European Environment Agency:
“Offshore wind energy is able to
meet Europe’s demand seven times
over.”
Joost Arnoudt & Giel-Jan Triest

9. Offshore wind energy
• Potential is enormous
• Crucial in reaching the European Climate Plan 20-20-20
Joost Arnoudt & Giel-Jan Triest

10. Offshore wind energy
• Potential is enormous
• Crucial in reaching the European
Climate Plan 20-20-20
• Offshore wind energy installations are ever increasing
Joost Arnoudt & Giel-Jan Triest

11. Offshore wind energy
• Potential is enormous
• Crucial in reaching the European Climate Plan 20-20-20
• Offshore wind energy installations are
ever increasing
• 90% of the 5,538 MW offshore wind
energy capacity, installed globally,
is located in Europe
Joost Arnoudt & Giel-Jan Triest

12. Future prospects
• Enthusiasm for the development of
offshore wind farms in other countries:
Japan, Korea, USA, Canada, Taiwan
and India (GWEC)
• “According to the more ambitious
projections, a total of 80 GW offshore
wind could be installed by 2020 worldwide, with three quarters of this in
Europe“ (GWEC)
• By the end of 2012, companies from
various countries announced plans for
the development of new offshore wind
turbines (see graph) (EWEA)
Joost Arnoudt & Giel-Jan Triest

13. Strenghts and weaknesses
+
• Higher wind speeds, less turbulence
and fewer environmental constraints
than on land; large scale development
near huge demand centers is possible
• Relatively new technology with significant opportunities for cost reduction,
technical innovations and ‘revolutionary’ developments which may change
the face of renewables in some parts
of the world.
Joost Arnoudt & Giel-Jan Triest
• Deeper waters, longer distances,
difficult soil characteristics, wave and
weather conditions drive up the costs
of an offshore wind farm.
• Current cost estimation techniques
often fall short
• Cost estimation of offshore wind
farms is relatively unpresent in
academic litterature

14. Strenghts and weaknesses
Conclusion: good earlystage cost estimation is
really important!
Joost Arnoudt & Giel-Jan Triest

15. Our objective
• Build a cost model for the construction
and installation of offshore wind farms
using the Monte Carlo simulation
technique
• Offshore wind farms are far from a
well-defined project.
• Theoretical model, but with a realistic perspective. Herefore we focus on
practices used for the offshore wind
farms already build at the Belgian and
Dutch North Sea coast.
Why Monte Carlo simulation?
• Good technique for early-stage cost
estimation
• Generates cost range instead of
single-point-estimate
• Possibility to incorporate uncertainties arising from weather conditions, wave heights and currents
• Scenario analysis
Joost Arnoudt & Giel-Jan Triest

16. Belgian & Dutch coastline
For specific parameters, we use the characteristics of the offshore wind farm projects at the Belgian and Dutch coastline for the construction of our ‘general’ offshore wind farm project.
Joost Arnoudt & Giel-Jan Triest

17. The offshore wind farm project
• We do not include financing methods of the project, design, transportation of
material to the site, material costs… Our focus is on installation and construction.
• As a result, the projects falls down to 4 main steps
Scour
protection
Joost Arnoudt & Giel-Jan Triest
Foundation
Turbine
installation
Cable
installation

18. Scour Protection
• Scour is a type of erosion
• Scour hole can reach a depth of 1.5
times the diameter of the monopile,
endangering the stability of the construction
• To prevent this, 2 types of rock layers
are dumped at the sea bed
• Rocks are usually dumped before the
construction of the foundation to
prevent damage to the foundation.
Joost Arnoudt & Giel-Jan Triest

19. Scour Protection - Transport/Installation
• Transportation methods
- Side Stone Dumping Vessel
- Fallpipe Vessel (see image)
• Fallpipe Vessel is more exact, more
resistant to current fluctuations and
usually a larger and faster vessel with
larger loading capacity
M
O
D
E
L
Joost Arnoudt & Giel-Jan Triest
• Amount of scour per turbine
calculated with a model used in
practice
• Use of fall pipe vessel
• Simplification: cost per ton rock
transported from Norway and
dropped at turbine

20. Foundation
Monopile
Joost Arnoudt & Giel-Jan Triest
Tripod
Jacket
Gravity

21. Foundation - Monopile
• Giant steel pipe (diameter: 4-6
meter)
• Simple design and production
• Easy transport
• Well-known installation technique in
construction industry
• On top of the monopile foundation,
a transition piece is attached with a
ladder, deck and pipes to protect the
electricity cables from waves.
Joost Arnoudt & Giel-Jan Triest

22. Foundation - Transport/Installation
• Transportation methods
- Jack-up vessel
- Tug boat
• Monopile is positioned with a crane
and hammered into the soil using a
hydraulic hammer
• Transition piece is installed on top of
the monopile
Joost Arnoudt & Giel-Jan Triest
M
O
D
E
L
•
•
•
•
Monopile foundation
Use of jack-up vessel
Simulate wave heights
Triangular distributed installation times with input from
managers

23. Turbine installation
• Main components: tower, blades and
rotor
• Transport and installation with jack-up
vessel
• Small turbines can be transported in
assembled state, however, in most of
the cases the turbine is transported in
pieces since turbines are getting larger
Joost Arnoudt & Giel-Jan Triest
M
O
D
E
L
• Use of jack-up vessel
• Triangular distributed installation times with input from
managers
• Simulate wave heights and
wind speeds
• Current force is of no importance

24. Cable installation
Inner-array cable
• Laying the cable with a (relatively small)
side stone dumping vessel
• Burying the cable with a trencher vessel
Export cable
• Laying the cable is done by a (bigger)
side stone dumping vessel
• Burying the cable with a trencher vessel
Joost Arnoudt & Giel-Jan Triest
M
O
D
E
L
• Calculate inner-array cable
length based on formula Kaiser & Snyder
• Installation rates based on
emperical findings of Kaiser
& Snyder
• Simulate wave heights and
current force

25. Preliminary results simulation
Simulate full model for
• 50 windturbines of 4 MW
• average distance to shore of 45km
• 100,000 runs
Results:
• mean:
• median:
• std. dev.:
• skewness:
• min:
• max:
Joost Arnoudt & Giel-Jan Triest
€ 83,975,532
€ 83,214,400
€ 3,297,755
1.136
€ 76,279,700
€ 100,121,000

26. Preliminary results simulation
Simulate same model for
• 50 windturbines of 4 MW
• average distance to shore of 45km
• 100,000 runs
BUT excluding wind and wave influence
Results:
• mean:
• median:
• std. dev.:
• skewness:
• min:
• max:
Joost Arnoudt & Giel-Jan Triest
€ 73,639,139
€ 72,799,200
€ 3,231,283
1.233
€ 66,913,100
€ 88,974,200

27. Preliminary results simulation
Simulate full model
Results:
• mean:
• median:
• std. dev.:
• skewness:
• min:
€ 83,975,532
€ 83,214,400
€ 3,297,755
1.136
€ 76,279,700
• max:
€ 100,121,000
Simulate same model
BUT excluding wind and wave influence
Results:
• mean:
• median:
• std. dev.:
• skewness:
• min:
• max:
Joost Arnoudt & Giel-Jan Triest
€ 73,639,139
€ 72,799,200
€ 3,231,283
1.233
€ 66,913,100
€ 88,974,200

28. Preliminary results simulation
Joost Arnoudt & Giel-Jan Triest

29. Further Research
By simulating the total installation cost of an offshore wind farm, valuable insights can
be obtained. However, the finish line is not yet reached:
Improve the model
• include influence of sea current
• use more management input to improve cost rates of activities in order to better
reflect reality
• include the installation of an offshore transformation station
• include vessel and machine availability
• gradually increase the complexity of the model: water depth, tower diameter,
turbine weight...
• enhance the weather sensitivity: time-dependent
Further interpret results
• investigate the role and influence of several parameters: number of turbines, size
turbines, distance to shore...
Joost Arnoudt & Giel-Jan Triest

30. Thank you for your attention
Any questions?
Joost Arnoudt & Giel-Jan Triest