Offshore Wind & Supply Chain

Opportunities

Workshop in Bilbao

28th February 2012

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Offshore Wind Market Overview

Renewables • EU target of 20% of energy from renewables by 2020 • UK target is 15% from renewables by 2020 (or 30 to 35% of electricity)

Offshore Wind Market • UK Targets:

• 39 GW between Scotland, Rounds 1, 2, 2.5 and 3 • ~2GW currently in operation

• European Targets:

• Germany (25GW ), Netherlands (6GW), France (6GW ), Spain (5GW) • Denmark, Norway, Belgium and others

• Total Market >80GW in Europe (could be peaks of installation of 10GW/year)

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Germany

1000 MW under development

Wikinger (Baltic Sea). 400 MW under development.

United Kingdom

West of Duddon (Round 2). 500 MW under development with Dong

East Anglia Zone Target 7,200 MW. JVA with Vattenfall.

Site investigation award for Argyll Array in Scottish waters. Up to 1.800 MW

France

Project sunder development up to 1000 MW

Spain

3000 MW applied in 2007.

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5

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3

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Iberdrola Projects Around Europe

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UK Round 3 Projects

Zone Winners

1.Moray firth EDP &

SeaEnergy

2.Firth of Forth SSE & Fluor

3.Dogger Bank Forewind

4.Hornsea Mainstream &

Siemens

5.Norfolk Iberdrola (SPR)

& Vattenfall

6.Hastings Eon

7.Isle of Wight Eneco

8. Bristol

Channel

RWE Npower

9. Irish Sea Centrica

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Iberdrola UK Projects Summary

West of Duddon Sands – Round 2 (<500MW). JV with DONG

Argyll Array – Scottish Territorial Waters Award (<1800MW)

East Anglia Zone 5 – Round 3 (7200MW). JV with Vattenfall

Combined installed capacity of 9500MW (SPR share equal to 5730 MW)

On today’s prices, capital investment of ~£30 Billion

Will be constructed 2013 – 2023

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Supply Chain Challenges & Opportunities

• The task ahead (33GW and £90Billion) seems extremely challenging

when taken all at once – especially if perception of lack of capital exists.

• But this can be achieved with several smaller steps.

• Capital will be available when construction & operation methods are

improved and the technology is proven.

• This will require investment by the supply chain – who must have

confidence to invest in R&D, systems, facilities etc.

• This will also require a track record of live projects to become ‘proven’.

• This is where developers/utilities and the supply chain must work

closer together than before.

• If so, then these initial steps can be the start of a very significant journey.

• In parallel, discussions with the funders of later projects must take place.

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Onshore vs Offshore Cost Balance

TURBINES 70%

CIVIL AND AUXILIARY WORKS 11%

ELECTRICAL INTER ARRAY 5%

SUBSTATION AND EXPORT CABLE 9%

PROJECT DEVELOPMENT AND MANAGEMENT 5%

ONSHORE

TURBINES 40%

INSTALLATION 14%

CIVIL AND AUXILIARY WORKS

25%

ELECTRICAL INTER ARRAY 7%

SUBSTATION AND EXPORT CABLE

10%

PROJECT DEVELOPMENT

AND

MANAGEMENT 4%

OFFSHORE

Onshore is dominated by turbines Offshore is much more balanced

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Foundation Types

Monopile

• Medium water depths

• Medium size turbines

• Sand – clay seabed

• Environmental sensitivities

Gravity base structure

• All water depths

• Larger turbines

• Higher load-bearing capacity

• Seabed preparation required

Jacket structures

• Deeper water depths

• Larger turbines

• Suitable for different seabed

conditions

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Keystone Foundation

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Suction Bucket Foundation

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Installation Techniques

• Major cost component

• Substantial weather risk

• New techniques under development

• Vessel availability key consideration

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Offshore Wind Turbines • Big political push for turbine manufacture in UK

• Developers will contract directly with turbine manufacturers

• Significant component requirements near OEM location

• Limited proven technology – 3MW, 3.6MW, 5MW

• Next generation of turbines 5MW to 7MW

– Improves logistics

– Reduces foundation and connection requirements

• Technology must have proven reliability

– Clear technology roadmaps needed

– Test & Demo critical role to play

– More Test sites needed

• Possible range of turbine types per project

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Operations & Maintenance

Local Harbour Based Facility:

• Control Room

• Stores

• Logistics Management

• Helicopters

• Weather Monitoring

Far Shore Project:

• Personnel based offshore

• Mother-ship / accommodation platform

• Workboats for transfer to WTG’s

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Electrical Equipment CABLING

• Large cable demand – array and export

• Capacity limited, new facilities/lines will take time to commission and prove

• Work required to deal with the installation of array cables

SUBSTATIONS

• Bespoke nature slows procurement and production process

• Large fabrication capacity required (as with jackets)

• DC and AC required – some connections greater than 100km

• DC conversion technology potentially required

SYSTEMS

• HVDC technology currently being developed

• Improved grid designs are crucial (reduce losses, improve reliability and redundancy, reduce capex etc)

OFTO

• Long term owner of offshore transmission assets will be the licensed Offshore Transmission Operator (OFTO)

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Consultancy Services

Large volumes of expert advisory services required:

• Environmental Experts: Sea bed, sea life, birds, mammals, coastal protection, onshore impacts etc

• Offshore surveying: Geophysical, geotechnical etc

• Engineering: Electrical, structural, civil, mechanical etc

• Wind yield analysis

• Port and logistics experts

• Vessel operators, marine warranty surveyors etc

• Legal advisers

• Insurance Advisers

• Health & Safety professionals

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Offshore Surveys

• Offshore met masts

• Geophysical / geotechnical surveys

• Environmental surveys

• Meteocean surveys

• Navigation & fishing studies

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Marine Renewables - Overview

• Significant global resource potential:

• 250 GW wave, 60 GW tidal

• Areas of best resource have been identified:

• UK, France, Spain, Ireland, Portugal

• USA, Canada, Mexico, South America

• Australia, New Zealand

• EU & Member States are developing supportive policies

• This is especially the case in the UK

• A range of full-scale prototypes are being deployed

• Large-scale array projects are being prepared

• Very strong political & policy support in Scotland

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SPR Activity in Wave and Tidal Energy • SPR has a phased plan to develop a market-leading position

• First step is prototype trials, now underway:

• Second step is array deployment – Islay 10MW Tidal Project

• Islay consent is secured, deployment awaits test outcome

• Large scale commercial projects also under development:

• Duncansby (tidal, 95MW) & Marwick Head (wave, 50MW)

Hammerfest 1MW Tidal device,

Installed EMEC Dec 2011

Pelamis 750kW Wave Device

Installation at EMEC Imminent

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Islay Tidal Project – A World First!

• Developer: ScottishPower Renewables

• Technology: Hammerfest Strøm

• Local Partner: Islay Energy Trust

• Size: Ten 1MW tidal devices

• Location: Sound of Islay, Argyll, UK

• Installation: 2014 onwards

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Orcadian Wave Project

• Pelamis P-2 Device

• World’s most advanced wave project

• Vital role to prove performance

• And facilitate commercial deployment

• Manufacturing work completed

• Tow to Orkney completed

• Installation shortly

• Collaboration with EON

Accelerating commercialisation of wave technology

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Conclusions

• The offshore wind market is a huge opportunity

• The Supply Chain has to be involved at an early stage:

• Build capacity

• Prove technology

• Reduce risk

• Reduce cost

• Offshore Wind technology is still developing

• This means opportunities for new market participants

• UK content is still a political requirement

• Standardisation and Industrialisation are also essential

• Leading to a sustainable, profitable and safe offshore wind sector

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Questions? Contacts:

Alan Mortimer

Head of Innovation, ScottishPower Renewables

email: alan.mortimer@scottishpower.com

tel: +44-141-568-4421

Ignacio Gomez De Oleo Alcaniz

Supply Chain Director

Iberdrola Renovables Offshore Wind

email: igdeolea@iberdrola.es

Alvaro Martinez Palacio

Operations Director

Iberdrola Renovables Offshore Wind

emails: aap@iberdrola.es