In addition to the absence of an offshore tariff of the type enjoyed by developers in the North Sea, windfarm developers in Finland, Sweden and Estonia are faced with seemingly high installation and operations and maintenance (O&M) costs due to the nature of sub-Arctic conditions in northern parts of the Baltic. This being the case, project developers have tended to proceed cautiously, but STX Finland believes it has a potential solution in the design-to-cost (DTC) approach it has developed.

As Per Stenius, senior vice president corporate development at STX Finland explained, the Baltic differs significantly from the North Sea markets in terms of the environmental and financial constraints that apply. Apart from lower feed-in tariffs than apply elsewhere, the region also has weaker wind conditions than the North Sea. Environmental constraints include varying water depths, demanding ice conditions, and a range of different soil types.

However, there are also benefits. Average windspeeds are above 8m/s in many areas, turbulence is lower than the North Sea, depths can be as low as 5-10m, rarely exceeding 30m, and the water is much less salty and less corrosive. In addition, several sites are relatively close to shore, and network infrastructure is often reasonably close. The installation window is short, but the weather window during installation is very favourable. Thus, with some innovative thinking, capturing the potential of sub-arctic offshore wind should be feasible.

Finland’s government has expressed a commitment to offshore wind, and companies such as wpd – which has built many onshore wind power projects, and is developing large numbers of offshore wind projects in Europe – has expressed an interest in building projects. There is also interest from local power companies. Achieving Finland’s wind power target of 6 terawatt hours (approximately 2,500 megawatts of installed capacity) by 2020 will require a number of major offshore windfarms, but unless costs can be reduced, few projects are likely to be realised.

“Finland has excellent conditions for offshore wind. The problem is that the tariff means that developing offshore windfarms isn’t viable at North Sea cost levels,” Dr Stenius explained, noting that preliminary estimates indicate that cost reductions of 20-30 per cent will be required. “If you took a North Sea approach to developing offshore wind in the Baltic, projects simply wouldn’t get off the ground. The only way that it will come about is by adopting a more cost-effective solution of the type that we are proposing.”

In order to speed up market development, a consortium led by STX has initiated a DTC exercise together with major project developers considering developing sub-Arctic offshore windfarms. The joint effort is seeking a solution that provides sufficient returns for windfarm investors at current tariff levels by optimising the total cost of ownership and overall delivery process, including key hardware components, logistics, site preparation, installation, commissioning and operations and maintenance (O&M). The project addresses the special circumstances in the Northern Baltic Sea, including varying the above-mentioned challenges and others, such as drift and pack ice and the short installation window in the summer months.

In accordance with DTC principles, a cross-functional team involving windfarm developers, foundation design engineers, Arctic offshore engineers, wind turbine generator design engineers, logistics and installation experts, and O&M experts was engaged to address the cost challenge. “From the beginning of the project, the entire process cycle, throughput time, capital and cost, were analysed for various options, defining key boundary conditions for the overall solution and thus finding the optimal design window,” Dr Stenius explained. “A target cost for turnkey delivery was set prior to project start, at a level that meets the windfarm investment IRR requirements, and this was used to drive the process.”

The figure included costs for hardware, logistics, installation and cabling. The costs of wind turbines and cables were excluded, as they were deemed to be fairly fixed. However, the criteria for turbine selection were defined, so that the most cost-effective installation process could be realised. Similarly, cost-driving elements of cabling were included. “Our results show that optimising the overall supply chain and the total lifecycle of the offshore windfarm, costs can be reduced up to 25 per cent using the design-to-cost methodology,” Mr Stenius explained. “The effort helped to reveal key cost drivers and their interconnection, and to address them in a way that optimised the overall solution. This approach also helped to ensure improved execution in project implementation phase.”

Among STX’s partners in the project are Meriaura, a Finnish shipowner that specialises in transporting project cargo; Aker Arctic, which specialises in designing, developing and testing ice-going vessels and offshore structures intended for use in ice; and wind energy company Hafmex. One of the biggest challenges facing STX and its partners was the type of foundation to be used. Together they have pioneered an approach making use of highly modular units derived from a gravity foundation, which would reduce production throughput time (bearing in mind that the weather window for installation only runs from June until September) and reduce working capital required.

“Apart from the design of the foundation design, adopting lightweight structures throughout, for the foundation and towers, makes it possible to use lower-cost vessels and equipment. These same multipurpose vessels have a high level of flexibility and redundancy, further reducing costs,” said Mr Stenius. Other cost reduction ‘levers’ would include the adoption of just-in-time processes for minimal capital and quality costs, and the optimisation of O&M processes at the design stage, in order to secure lifecycle cost reductions.