Offshore wind after 2020

AGCS Expert Days 2017, Munich| November 3, 2017

Bent Christensen, Senior Vice President

Introduction – Our contribution to clean energy so far

>2,370 offshore wind turbines

installed in Denmark, UK, Germany,

Norway, Sweden and Netherlands

Accumulated since 1991

>8.3 GW installed out of

12.6 GW total installations across Europe

123 600 000 000 kWh of clean energy

59 300 000 tons of CO2 emissions avoidance

247 200 000 000 liters of water saved

We need to act – Securing the below 2˚C requires 60% higher generation in wind

Gt of CO2 emissions

Source: © OECD/IEA 2016

World Energy Outlook 2016 TWh of wind generation, 2040

0

10

20

30

40

50

1990 2000 2010 2060 2070 2080 2020 2030 2040 2050

717

<2°C

+430%

+60% 6,100

COP21

3,800

2014

Source: Siemens internal calculations

1) Load factors: OF 47,7% (reference used for offshore wind for the affordability check is 47.7% on CfD R2, UK); ON 27% and PV Solar 18% (IRENA’s Power to Change report 2016).

2) Unleashing Europe’s offshore wind potential: A new resource assessment, Wind Europe & BVG Associates June 2017

Why Offshore Wind – Realizing a better future for society

The Sustainable Power of Offshore Wind Offshore wind Power is set to become increasingly important in the years ahead. It's economic,

environmental, and political benefits will make it more attractive than other, more conventional options

Reliable

4,000 full load hours which is ~ 80%

and ~ 170% higher capacity factor than

onshore wind and PV respectively1

Cheap Offshore wind power can reduce

energy costs to below

€65/MWh by 20302

Employment Offshore wind creates local jobs

across Europe Health and Environment Every offshore wind turbine saves

>12,000 tons CO2 per year. This equals

amount of CO2 absorbed by a forest

of 9 km2

Energy independence

e.g. UK imports 70% of its coal

and 47% of its gas

Offshore Wind – Installations and investments in 2016

Construction Summary

1,558 MW Installed capacity

338 Grid-connected turbines

361 Turbines erected

568 Foundations installed

Source: WindEurope Stats; Bloomberg New Energy Finance

Total Investments Construction

Transmission assets

€1,500 m

Construction

Offshore wind

projects

€18,202 m

Refinancing

Wind projects and

transmission assets

€2,971 m

€22.6 bn invested in

the offshore

wind sector

Offshore Wind – Global Market Forecast, 2016 – 2030

0.3 9.1

6.8

2.0 0.3

8.8

6.1

2.4 0.3

8.5

5.3

3.2

0.0 7.9

4.6

3.3

0.0

8.2

3.9

4.3

0.0 7.0

3.0

4.1

0.0 4.5

2.4

2.1 0.0

4.2

1.7

2.5 0.0 2.7

1.3 1.4

0.0

2.5

13.1

11.0

1.5 0.6 10.8

8.9

1.3 0.6

10.4

8.7

1.2 0.5

10.4

8.4

1.6 0.5

11.3

8.0

2.8

0.5 10.4

7.6

IHS Autonomy 2016

0.3

3.0

0.3

3.2

2026

0.4

3.2

2027

0.2

9.4 9.1

3.2

5.3

0.2 0.4

2025

6.8

3.5

2.8

0.2 0.3

2024

4.6

3.0

8.2

4.2

0.0

2022

0.3

0.3

2023

3.5

8.0

9.4

0.3

5.5

3.3

5.7 0.4

6.9

2028

0.4

3.3

0.3

2029

2.6 3.0

3.3

2030

7.0 6.6

0.4

2.6

6.4

0.1 0.2

2018

5.5

1.8

3.7

0.0 0.0

2017

4.5

0.9

3.6

0.0 0.0

2016

1.8

0.6 1.1 0.0

0.0 3.4

0.2

2021

0.3

10.2

8.3

0.3

2019

0.3

4.4

5.4

0.2

2020

0.3

4.8

3.1

BNEF 2016

Asia Pacific Rest of World Europe North America

An almost untapped resource – Today we only use 1% of the North Sea’s offshore wind potential

1) DE, UK, NL, BE, SE, NO, DK

The North Sea is Europe’s “Wind Well”

North sea region1)

North sea region

GDP ~50% of EU

Population

~195 m

Offshore wind

potential (2030)

Pan-European grid

Local employment

and investment

CO2 reduction

Energy independence

Forecast

(2030)

= only 18%!

1% Today

An industry on a steep learning curve

From the early days – Innovation has been a key driver

SWT-8.0-154

11 meter

35 meter

154 meter

30 kW 450 kW 8 MW

From 30 kW to 8 MW

turbine size in 35 years

1991 2016 1980

79.8 meter

A380

From wind turbines to power plant – Sizes of wind farm has increased significantly over the years!

World’s 1st

offshore wind

power plant

1991

Vindeby

5 MW

World’s 1st

offshore wind

power plant w/MW

turbines

2000

Middel-

grunden

40 MW

World’s largest

offshore wind

power plant in

operation

2003

Nysted

166 MW

World’s largest

offshore wind

power plant in

operation

2013

London

Array

630 MW

World’s largest

offshore wind

power plant in

operation

2012

Greater

Gabbard

504 MW

Big power plant

based on the D6

platform in

operation

2016

Gode

Wind

582 MW

World‘s largest

offshore wind

power plant

2019

Hornsea 1

1,200 MW

We are overcoming the cost challenge!

(LCoE) Levelized Cost

of Energy Lifecycle Energy Output

CAPEX

Wind turbine

OPEX CAPEX

Balance of plant

Historic LCOE

Borssele I & II X

Horns Rev III X

X Danish ‘near-shore’ X Kriegers Flak

0

50

100

150

200

250

2012 2014 2016 2026 2028 2030 2018 2020 2022 2024

5%

10%

20%

X Industry 2020 target $110/MWh

X

ROCs

CfD R1 East Anglia 1 X

X CfD R1 Neart na Goithe

X X

Early CfDs

$/MWh

Borssele

III & IV X

Source: Bloomberg New Energy Finance

2030 Commissioning year

X CfD R2 Triton Knoll X

CfD R2 Hornsea 2, Moray Firth Gode Wind 3 X

He Dreiht X

OPW West, BRW II

X

Technology has and

will continue contributing

to lower the LCoE

Cost reduction through Product Innovation

SWT-6.0-154 SWT-7.0-154 SWT-8.0-154

Re-use technology and supply chain

Minimal impact

Increased output

Supply chain

Balance of plant

AEP

Offshore Transformer Module

HVAC: Offshore Transformer Module OTM®

Can be installed on a wind turbine foundation

or on a separate foundation 30% lower

topside volume

33% lower

topside weight

20% shorter

construction time

40% lower

costs

HVAC up to

Jacket foundation

40% lower costs

Feasible target Up to

Ageing test for 15 different

paint systems

Key players in the industry

to develop automatic

manufacturing process

Fatigue testing of full scale

robot welded nodes

Improvement in installations, logistics and service concepts also contributes

Holistic

approach

Optimizing our Installations

Optimizing our Logistics

Optimizing our Services concepts

Demonstration of new technologies – to reduce costs and risk – The Nissum Bredning project, DK

Preparing for Offshore demonstration of jacket

foundation and other concepts

• Prototype of SWP Gravity Jacket

• Test of new tower concept

• Test of new array cables

• Demonstration of 66 kV

• Test of LIDAR power curve measurement tools

• Synchronization of rotors

• Optimized use of sensors for lowering OPEX

What else is needed?

The offshore supply industry needs sufficiently large market volume to continue to lower costs and sustain innovation

1) Assuming an average turbine size of 10MW from 2020 onwards for easy calculation

A minimum of

4 GW/year from

2020 onwards

= one turbine per day1

A market size of at

least 7 GW/year

- sufficient volume for

strong future development

Ambitious and clear targets – ++ concrete Deployment Plans with long term visibility

Ambition Targets

Secure <2C COP21 commitments Deployment plans –

per year and –

per country

2017 – 2025 20%

27%

share of energy consumption produced

by renewable sources

of energy consumed will be produced

by renewable sources

2020

2030

European Union, targets Gt of CO2 emissions

0

10

20

30

40

50

1990 2000 2010 2060 2070 2080 2020 2030 2040 2050

LCoE >50% in 3 years

30% of energy consumed will be produced

by renewable sources

2030

+