Tuesday, 2 June 2015

Norway's Statkraft: Offshore Wind Giant + $ 11M/year for Green Energy Start-ups,By Darius Snieckus Recharge News, June 01 2015 + May 18, 2015

IN DEPTH: Statkraft – Europe's new offshore giant

Construction at Statkraft/Statoil’s Sheringham Shoal wind farm

Construction at Statkraft/Statoil’s Sheringham Shoal wind farm

Last year, the Norwegian energy utility sent enough electricity crackling through the nation’s transmission lines to meet nearly half the power demand of its five million inhabitants.
But since 2009, the company has quietly been expanding into offshore wind, primarily in the UK, as part of a far-reaching NKr60bn ($8bn) global clean-energy investment plan.
After wetting its head on the 317MW Sheringham Shoal wind farm with compatriot Statoil, Statkraft has shifted up a gear. This year, it is kicking off construction of the 402MW Dudgeon project, it has snapped up half of the UK’s giant 900MW Triton Knolldevelopment, and has won consent, as part of the Forewind consortium, for the lead-off phase of the sprawling 9GW Dogger Bank zone.
Announcing its annual results at the end of 2014, chief executive Christian Rynning-Toennesen was unequivocal: “Statkraft has a long-term ambition to grow as an international company within clean energy. In addition to implementing the investment decisions we have made, we are working on concrete projects in all countries where we operate.
“We are exploring opportunities within solar energy and biomass [but] the projects are primarily within hydropower and wind power.”
The company is under no illusions as to the challenge ahead. Decades of experience as a hydropower giant had taught it how to construct industrial mega-projects, and it had worked out how to build onshore wind farms, having built the country’s first large project, the 150MW Smøla 1, in 2002. But it knew next to nothing about offshore wind.
“There was a growing determination in Statkraft to move into offshore wind. But Norway had nothing — you couldn’t even sensibly talk about offshore wind in Norway; Sweden at that time likewise. So we looked into Denmark, Germany and the UK and we very quickly saw that the UK looked particularly interesting, especially in the long term,” Bjørn Drangsholt, Statkraft’s UK country manager, tells Recharge.
“When Statoil took the FID [final investment decision] on Sheringham Shoal, we looked at it and we thought: ‘This is a good project, we have good relations with Statoil, this should be where we enter the market’. In 2009, we only had a business plan and a budget, and two ROCs [Renewables Obligation Certificates from the UK government]. But Statoil had been working on it for a good while and once we partnered with them we were ‘inside’ on an offshore wind farm for the first time.”
Bjorn-Drangsholt-offshore-2.jpgBoth Statoil and Statkraft were on a steep learning curve building one of the biggest offshore wind farms in the world in a blustery, hostile stretch of the North Sea off Norfolk, eastern England.
Arrayed over a 35km2 diamond of water in the Greater Wash, Sheringham Shoalthrew up a variety of complications, which were all “to be expected”, says Drangsholt.
“Many of the lessons come from learning from doing,” he explains. Problems included the foundation installation vessel Svanen being unable to leave harbour because it couldn’t operate in the tricky swell of the Greater Wash (even though the water looked perfectly flat). And cable-laying was thwarted at times because the trenching equipment was not powerful enough to penetrate the hard rocky subsoils.
Yet by the end of 2011, the wind farm had started flowing to the grid and is now generating around 1.1TWh of electricity each year, enough to power more than 220,000 homes.
“Even if Statoil is a very experienced offshore oil & gas operator and knows how to work on projects in the sea, offshore wind is different,” says Drangholt. “So much has been brought in from offshore oil, which is great but it has also meant there has been overdesign, which often adds a lot of cost.
“The industrial culture is changing — we can see this between Sheringham Shoal and Dudgeon — but it takes time. You can’t one day be an oil man and the next a wind man.”
Sheringham Shoal laid the groundwork for Statkraft’s first “proper offshore wind strategy”, says Drangholt. “I have seen so many projects fall apart because of having strategies that were not adequately linked to the financial side of the business. Once we had Sheringham Shoal on line, we had a clearer understanding of what it would take to build even larger, more complex offshore wind projects.
“Very few [developers] have a true understanding of what offshore wind projects take, from a financial perspective.”
He continues: “Project financing has become a bigger and bigger part of the equation — we are talking about billions of kroner for these developments — and we see the sense sometimes in ‘recycling’ by divesting from projects as they come to production so that we can put the money into new developments.”
Sheringham Shoal is a prime example of rolled-forward finance. Late last year, the UK Green Investment Bank bought a 20% stake in Scira Offshore Energy, Statkraft and Statoil’s special-purpose operating company set up for the wind farm, freeing up £240m ($373m) to “enable further investments in other project developments such as Dudgeon and Triton Knoll while still maintaining our industrial role as operator of Sheringham Shoal”.
“The size of wind farm the world needs to build requires huge investment and we need to think creatively about how best to bring this money to the table — and so [we] split risk between developers and government [which owns Statkraft] and the supply chain,” says Drangholt.
“This way we can show our board we are doing things properly, using skill and not luck to make wind farms economic.”
Dudgeon, slated to be brought on line in 2017, has been hatched around 67 Siemens 6MW machines, with annual energy output calculated at 1.7TWh.
Developed with a levelised cost of energy (LCoE) of “well under” £150/MWh, the project, in 18-25 metres of water, is thought to be on the right track as the industry pushes to get to below £100/MWh before 2020.
Creyke Beck, the 2.4GW lead-off project at Dogger Bank, was consented earlier this year, and marks a giant leap in scale.
“Turbines went from 3.6MW to 6MW, which became 7MW, and now 8MW, which might be 8.3MW, with 10MW machines on the horizon. We need to be sure that the type of turbines we choose for future projects like Dogger Bank are the ones that that best value for money.
“Sheringham Shoal, Dudgeon and Triton Knoll have water depth more or less the same [as Dogger Bank], but the wind speed improves greatly [at Creyke Beck] — to 9.8 metres per second — so production improves and the power curves improve. You get more from less, which of course means an improvement in LCoE.”
He adds: “If you think back even 15 years, who would have thought that this industry would have developed as fast and have come as far as it has? And we are still a young industry. We are going to see Asia and the US and so on pushing ahead — and the UK right now is still at the forefront.”
Statkraft is fashioning itself to be a major player in the global energy industry for decades to come. In addition to its hydro and onshore and offshore wind activities, it is investing in solar, biomass, hybrid wind-hydro and even experimental osmotic power.
And with about a quarter of all European hydro storage capacity, it will also be a major “battery operator” for the continent, especially with two major interconnectors to Norway — from the UK and Germany — coming on line by 2021.
“We have the experience that comes with 120 years of hydropower and ten years of onshore wind. Now we have Scira; we are well into Dudgeon with co-developers Statoil and the UK Green Investment Bank; we have just embarked on Triton Knoll; and then there is Dogger Bank — consent for Creyke Beck A and B; Teesside A and B to come. We’re getting better and better.
“We have become the biggest renewables provider in Europe because historically we have had hydropower, hydropower and more hydropower. The hydropower is staying — it is baseload production, it is storage — but offshore wind is going to be a big part of our future.”
The process, Drangholt notes, of building a bridge between “old” renewable energy and “new” is progressing “stone by stone”.
“That way, we can make sure we know what we are doing and get to where we want to go.”

Statkraft to put $11m a year into green-energy start-ups

Statkraft's Asbjørn Grundt: 'providing funds to the most promising players'.
Statkraft's Asbjørn Grundt: 'providing funds to the most promising players'.

Based in Düsseldorf, Germany, the "exit-orientated" unit, Statkraft Ventures, will make lead-off investments "in the range up to €2.5m".
"Our mission is to be the preferred partner for ambitious entrepreneurs," says Matthias Dill, who moves from his role as boss of corporate venture capital at Statkraft to head the unit.
"Even though capital is an important part for a start-up's sustainable growth, we know that committed founders are the key to success.
"We strongly believe in the independence of entrepreneurs and support founders as active board members."
Asbjørn Grundt, Statkraft executive-vice president of market operations, adds: "We want to contribute to this ecosystem by providing funds to the most promising players."
Statkraft Ventures will operate in an "evergreen structure" with the ambition of investing as much as €100m over the next decade.

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