Optimising Projects Optimising Assets, Project … · Optimising Projects Optimising Assets, Project Planning & Contracting To Reduce Costs Overall Matthew Green – Vattenfall Wind

Deeper Water Offshore - 7th March 2012

Confidentiality class: None (C1)

Optimising Projects

Optimising Assets, Project Planning & Contracting To

Reduce Costs Overall

Matthew Green – Vattenfall Wind Power UK

OFFSHORE WIND - WHERE ARE WE?

OFFSHORE WIND - WHERE ARE WE?

Should we think we are a new industry?

• 10 years+ of experience Offshore

• Approaching 4GW installed offshore across Europe (1)

• <1250 Turbines Offshore (2)

• Just passed 6GW of total wind capacity in UK (2)

NO! But we must not stop learning because:

• £/MW installed still rising >£4m and needs to reduce.

• Too many project construction delays

• Too many quality failures in the early life of assets.

OPTIMISATION!

(1) EWEA, (2) RenewablesUK

OPTIMISATION

What do we mean by Optimisation?

Reducing Overall Costs

Delivering to Project Schedules

Delivery Quality Assets

INDUSTRIALISATION

STANDARDISATION

EPC CONTRACTING - PARTNERSHIPS

The challenge for the industry

Mio€ / MW

Year

Know how transfer

Control and master the business Control and master the price

** based on published figures

Kentish Flats

Lillgrund

Alpha Ventus**

Global Tech**

Butendiek**

Increasing prices due to higher

complexity of windparks (water

depth & distance from shore)

LEC reduction by

CAPEX and OPEX Optimisation

Challenge

INDUSTRIALISATION

• Project broken down into well understood

repetitive tasks.

• R&D/Trials/Testing/Pre-commissioning are to

be completed prior to shipping – we must get

beyond prototypes!

• Training/Familiarisation do it all offline &

onshore - Offshore is not the place for

learning curves!

• Suppliers must prove their products/ services

in advance – the challenges are greater but

the opportunities are increasing..

INDUSTRIALISATION – Portfolio Planning

• Developers set up for Multiple project delivery.

• Shared Resources

• Better sharing of experience.

• Continuity

• Cross Project Supply Chain Management.

• Standardised Products - Single Product / Multiple Suppliers

• Economy of Scale

• Cross Project Logistics Management.

• Establish dedicated Logistics Bases

• Longer term Vessel Charters

OPTIMISATION – Installation Vessels

Know Your Vessels.

• Weather sensitivity for all operations

• Crew Competence & Experience

• Deck Capacity/Flexibility for all operations

• New Builds

• Consider all possible optimisations before

mobilisation.

• Cable vessels?

INDUSTRIALISATION - Ports

• What are the Key issues

- Distance to Site/Suppliers

- Facilities/Resources

- Flexibility of Storage

• Access is critical – consider types of

vessel, tide limitations and the effects

of adverse weather

Ports – Choose Carefully!

INDUSTRIALISATION – Weather

You can’t control weather!

• Understand the weather and its affects at every location and stage of the

project. Circa 5-10% Project CAPEX is attributable to weather delays!

• Further Offshore = increased weather and year round working.

• You can only base schedules on statistical weather but think of the

production line even it worst scenario:

- Minimise weather sensitivity / Maximise operability

- Investigate and develop less weather sensitive operations/vessels.

INDUSTRIALISATION - Supply

• As distance offshore and project sizes increase –

reliance on supplies increases dramatically.

• Any breakdown in the supply lines (Manufacture,

shipment, transhipment, pre-assembly, site supply,

offshore transfer, quality issues, serial defects,

interfacing, insufficient handling equipment,

certification of handling equipment…) any one of these

WILL cause offshore standby time, project delays = £€

• Standardisation can resolve some issues…

STANDARDISATION

Time to Establish Basic Standards

• Categorisation and minimum standards for the various aspects of offshore

wind farm construction – comparing apples…

- Installation Methods, Major Components, Subcomponents, SMSs/ERPs/HSE Standards

• Suppliers, developers, installation contractors, consenting bodies &

certification agencies with common references.

• Build on past experience rather than reinvent.

PROJECT 3

PROJECT 2

STANDARDISATION

PROTOTYPE

PROJECT 1

Lessons Learned /

Employer Rqmts

+ Product

Improvements

Revised Employer

Requirements

+Product

Improvements

Reduce:

RISK

COST

DELAYS

Testing /

Certification / Type

Approval

OPTIMISATION – EPC Contracting

EPC Contracting simplifies and optimises projects execution.

But there are traps:

• Contractor with true expertise for the full EPC scope will be more limited.

• Less commercial interfaces does not mean less technical interfaces!

• How is it possible to ensure performance is maintained to completion?

OPTIMISATION – EPC Contracting

Making EPC Work:

Contractor/Supplier Expertise:

• Use only the supply chain who meet all the requirements.

• Tailor Contract Strategy to Suit the supply chain.

• Work With Contractors to build a better supply chain.

OPTIMISATION – EPC Contracting

Making EPC Work:

Interfaces

• The developer will always have the

most to lose or gain – so never make

assumptions about interfaces.

• But a successful project benefits all

so…

Look for Contractor/Suppliers who are

looking at ways of expanding not limiting

their involvement in interfaces.

OPTIMISATION – Partnerships

Mutually Beneficial Agreements

Adversaries

Partnership

Unproven Targets + Penalties

Realistic Targets + Incentivisation

Performance Optimisation

Long Term Objectives

Closed Approach

Open Approach / Shared Knowledge

One Off Thinking

Sustainability, Security

OPTIMISATION – Partnerships

Logical Conclusion…

Partnerships:

• Shared Development – Budget

Shared/Risk Shared?

• Full EPC – Developer/EPC

Relationship.

• Package EPC – Developer/Principle

Contract/EPC Packages.

SUMMARY

An Outlook of Challenges and Opportunities:

Ours is a maturing Industry ready for the next level.

The future requires massive expansion and greater challenges

offshore – But success in the future requires lower cost and lower

risk.

Capital & Operational Cost and LEC reduction is only possible by

optimisation from Industrialisation, Standardisation and Effective

Partnerships.

Experienced Supply Chain and Developers pulling in a common

direction.