Quick and Dirty?Infrastructure investment in renewable energy          The case of performance of offshore wind farmsChris...
Presentation CKMc. EngineeringPh.D. Social ScienceProfessor (WSA) Technology based Business Development1985-1990       Tec...
Challenges of RenewablesAmbitious Government plans – on the moveEU budget 2014-2020 announces a 20% focus on sustainabilit...
Quick delivery neededBut at any cost?Initiating question:Do renewable power plant projects suffer fromthe same mechanisms ...
Mega projects (Flyvbjerg)Flyvbjerg et al (2003:16) notes that cost and timeunderestimation is a global and longterm phenom...
Strategic MisrepresentationTwo components : underestimation of costs andoverestimation of benefitSociological phenomena; a...
Case Offshore wind farmsThe outside viewExploratory workDesk researchLimitations (not full view of costs and benefits)
Offshore wind farms strategically           important to society• Offshore wind farms are expected to grow as market at  a...
What is a wind farm?•   Turbines•   Foundation•   Infield cable•   Substation•   Export cable9
Main processes1. Preparatory and regulatory process2. Design, Manufacture and Implementation1. Operation
Main processes Prepatory process• Preplanning (Investigations of potential sites a.o.)• Environmental, Archeological, Geop...
Main processes Implementation• Preplanning (Investigations of potential sites a.o.)• Manufacture of components (turbine, s...
Main processes Operation•   Production of power•   Surveillance•   Maintenance•   Repair
Phase 1 Experiences10 UK offshore wind farms:Round 1, 2 and 3Preparation takes averagely 4 years-apparently well planned a...
Phase 2 ImplementationFocusing in on implementation processes
Scroby Sands Monopile deployment16
A2sea17
Who makes them?Example contractors at Kentish Flat:•    EDF Energy, UK (Grid Connection)•    Vestas Offshore Associated co...
Focus on British offshore farms•   20*20 segment•   Recent•   Comparable•   Monopiles•   Average Cost 333 mio. Euro in 200...
Focus on British offshore farms•   Barrows•   Burbo Banks•   Gunfleet Sands•   Kentish Flats•   Lynn and Inner Dowsing•   ...
Results Budget overrun21
Results Time overrun22
Delays (indicative)• Most frequent explanation: bad weather,  especially during winter.• Product technology:-turbines -tes...
Phase 3 Operation: Performance24
Discussion I: Not quick• Considerable time and cost overruns.• A small share of the wind farm has relatively, some  might ...
Discussion 2: But Dirty• In SUM indications of strategic  misrepresentation (so DIRTY in that sense)• No clear learning cu...
Conclusion• Offshore wind farms do not distinguish themselves from other  mega projects ( Flyvbjerg et al 2003, 2004, 2011...
Implications• (practical)Reference Class Forecasting pro et  cons• (practical) Mass Customisation, product  configuration•...
Christian Koch
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Christian Koch

  1. 1. Quick and Dirty?Infrastructure investment in renewable energy The case of performance of offshore wind farmsChristian KochAarhus UniversityNordisk Forum 2011
  2. 2. Presentation CKMc. EngineeringPh.D. Social ScienceProfessor (WSA) Technology based Business Development1985-1990 Technological Institute1994-1999 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. 3. Challenges of RenewablesAmbitious Government plans – on the moveEU budget 2014-2020 announces a 20% focus on sustainabilityrenewable energyEU 2020-20-20 (2009)DenmarkNorwaySwedenUnited Kingdom
  4. 4. Quick delivery neededBut at any cost?Initiating question:Do renewable power plant projects suffer fromthe same mechanisms as other megaprojects(re. Flyvbjerg) ?
  5. 5. Mega projects (Flyvbjerg)Flyvbjerg et al (2003:16) notes that cost and timeunderestimation is a global and longterm phenomenaand it is not deteriorating over time.Cost and time underestimation cannot be explained bytechnical error, but rather by psychological, optimismbias and socio- political, strategic misrepresentation
  6. 6. Strategic MisrepresentationTwo components : underestimation of costs andoverestimation of benefitSociological phenomena; a series of private andpublice players have common interest in promoting amega project (Flyvbjerg and COWI 2004)Indirect argumentation, counterfactual
  7. 7. Case Offshore wind farmsThe outside viewExploratory workDesk researchLimitations (not full view of costs and benefits)
  8. 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,8
  9. 9. What is a wind farm?• Turbines• Foundation• Infield cable• Substation• Export cable9
  10. 10. Main processes1. Preparatory and regulatory process2. Design, Manufacture and Implementation1. Operation
  11. 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. 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. 13. Main processes Operation• Production of power• Surveillance• Maintenance• Repair
  14. 14. Phase 1 Experiences10 UK offshore wind farms:Round 1, 2 and 3Preparation takes averagely 4 years-apparently well planned and designed-assuring tendering and proper bidding (Anholt)
  15. 15. Phase 2 ImplementationFocusing in on implementation processes
  16. 16. Scroby Sands Monopile deployment16
  17. 17. A2sea17
  18. 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)18
  19. 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. 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. 21. Results Budget overrun21
  22. 22. Results Time overrun22
  23. 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. 24. Phase 3 Operation: Performance24
  25. 25. 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 far26
  26. 26. 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
  27. 27. 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 needed28
  28. 28. 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

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