Stephen KerrBeatrice Offshore Windfarm

STW Offshore Wind Supply Chain

2nd February 2010Inverness

3

Introduction

• Developers & Sites

• Supply Chain Gaps

• Contracting Strategies

• Adding Value

Developers & Sites

The Crown Estate 2009

Site Name Developer Estimated MW

Argyll Array Scottish Power Renewables 1500Beatrice SSE Renewables & SeaEnergy 920

Inch Cape RWE Npower & SeaEnergy 905Bell Rock SSE Renewables & Fluor 700Islay SSE Renewables 680Forth Array Fred Olsen 415Kintyre SSE Renewables 378Neart na Gaoithe Mainstream 360

Solway Firth E.ON 300Wigtown Bay DONG Energy 280TOTAL 6438

Key Statistics

Approximate area of site 131.5km2

Approximate no. of turbines 184

Approximate generating capacity of site

920MW

Current Development TimescalesActivity Timescale

Exclusive development agreement awarded by The Crown Estate

February 2009

Commence boat based bird surveys October 2009

Scoping (first stage of the Environmental Impact Assessment)

Feb 2010

Scottish Government Strategic Environmental Assessment (SEA) Consultation Document

Feb 2010 draft / May 2010 final

Application for Statutory Consent and Licenses Aim is late 2011/ early 2012

Consent Granted Aim is early 2013

Construction Commencing Aim is 2014/ 2015

Fully Operational Aim is 2016/2017

Potential STW Supply Chain Gap

Level Code Description T

ypic

al Valu

e %

of

develo

pm

ent

Valu

e B

ased o

n 6

400 M

W

Insta

lled I

n O

ffshore U

K £

M

Average £

M /

year T

o 2

020

Estim

ate

d H

isto

ric

al Scott

ish

Take %

Estim

ate

d P

ote

ntial Scott

ish

Take %

Estim

ate

d G

ap %

Gap V

alu

e £

M B

ased o

n 6

400

MW

Insta

lled

1.00 Project Development 0.6% 108 13 5% 50% 45% 53 2.00 Legal & Financial 1.4% 259 32 5% 40% 35% 102 3.00 Project Management 0.3% 45 6 5% 60% 55% 27 4.00 Design & Construction 97.7% 17,508 2,188 3% 48% 46% 8,417

4.01 Detail design 0.3% 45 6 5% 50% 45% 22 4.02 Turbine 40.5% 7,258 907 2% 44% 42% 3,141 4.03 Construction Project Management 0.3% 45 6 5% 70% 65% 31 4.04 Substructures 20.0% 3,584 448 10% 50% 40% 1,747 4.05 Transportation & Installation 16.2% 2,903 363 0% 50% 50% 1,452 4.06 Electrical & Control Systems 13.0% 2,330 291 0% 60% 60% 1,398 4.07 Commissioning 0.5% 90 11 4.08 Export connections 7.0% 1,254 157 0% 50% 50% 627

Total Development CAPEX 100.0% 17,920 2,240 8,599

Level Code Description T

ypic

al Valu

e %

of

Operations

Annual Valu

e £

M B

y

2020

Estim

ate

d H

isto

ric

al

Scott

ish T

ake %

Estim

ate

d P

ote

ntial

Scott

ish T

ake %

Estim

ate

d G

ap %

Annual G

ap V

alu

e £

M

By 2

020

5.01 Service, Maintenance & Parts 35.0% 240 1% 40% 39% 96 5.02 Insurance 10.0% 69 0% 40% 40% 27 5.03 Grid Supply 2.0% 14 0% 50% 50% 7 5.04 Management & Consultancy 18.0% 123 2% 80% 78% 99 5.05 Vessel & Support Costs 35.0% 240 0% 50% 50% 120

Total OPEX 100.0% 686 349

Assumed 25 yr Lifetime 17,138

STW Supply Chain Value - CAPEX

STW Supply Chain Value - OPEX

Contracting Strategies

• Developments at early stage• BOWL will work closely with Tier 1 suppliers and contractors in offshore wind to

determine the most suitable procurement model:-• Single Stage EPIC• Single Stage EPIC with Nominated Supplier Packages• Multiple Package Construction Management

• Most likely model Tier 1 suppliers and contractors in the following categories:• Onshore Factory / Fabrication – Delivered to Quayside• Wind Turbine Manufacture• Substructure – e.g. Monopilpile or Jacket• Cable Manufacture• Electrical Systems• Substations – Onshore and Offshore• Control System• Installation (Marine Coordination, Transport, Install and Hook Up)• Commissioning

Contracting

Equipment manufacturer typically has 5 year warranty thereafter maintenance may be contracted to specialist or performed by owner or operator. 2 way link to operations

Wind Farm Asset Owner

Develop Finance MaintainOperate

Permit / Design

Build

Wind Turbine

Balance of Plant – Civils / Electrical

etc

Supply & Install Wind Turbine

Balance of Plant – Civils / Electrical

etc

Monitor / Control Performance

Metering / Billing / Financial /

Procurement / PR

• Understand where you want to fit – who is your customer?• Don’t assume developers understand your technology and capability• Understand their procurement process – Achilles, FPAL, UVDB...

Where Will You Add Value?

• Step change in installed cost required

• Series production techniques – economies of scale

• Innovation – eg structures, installation, control systems, condition monitoring...

• Develop technologies – learning from oil & gas experience

• Early engagement

QUESTIONS