Standardization: How RWE Innogy is Minimizing the Supply Chain Cost of a Multi-Project Windfarm (Nordsea 1,2, and 3)

b2ap3_thumbnail_DNA-shutterstock_107069489Innogy’s Nordsea windfarm program is a model for supply chain leverage. The program is being constructed in three independent projects (Nordsea 1, Nordsea 2, and Nordsea 3). Each of the three was consented and will be constructed separately. This diversifies financial, legal, and regulatory risks. However, from a procurement and operational point of view, the projects are essentially replicas of each other, thereby allowing for standardization of processes, technologies, suppliers, and governance. The capacity of each project is similar, ranging from 295 MW to 369 MW. All three projects will utilize the same turbine make and model: the Senvion (formerly REpower) 6.2M 126. The chosen turbine is the largest available that has a successful track record of offshore performance, which reduces its risk of operational and maintenance problems. The WTG contracts are long-term and include 10-year maintenance contracts (at least for Nordsea 2 and 3), based on a 2b euro framework agreement between RWE and Senvion that assures close cooperation and mutual alignment of interests for the life of the farms. Bravo, RWE, for setting an example of how to run a cost-optimized windfarm business.

What Size and Number of Offshore Wind Turbines Should RWE Use to be the Most Cost-Efficient for its Targeted MW Output at Triton Knoll?

b2ap3_thumbnail_3-Cupcakes-shutterstock_25212865What size and number of wind turbine generators (WTGs) should RWE choose to produce the targeted power output from its Triton Knoll and other windfarms? Using small turbines (3.6’s) can minimize upfront per-unit costs (in significant part by leveraging economies of scale for ordering many units at once) and produce reliable and predictable operating and maintenance costs, but this choice requires more turbines to generate the same power, and at some point the units may go “out of service” or “no longer be supported” (think of your old software) by Siemens, potentially driving a need to train and develop in-house maintenance and operating staff. Using a larger turbine (RWE is apparently eyeing 8.0 MW units, which would require extensive development) would clearly reduce the number of units required, but typically dramatically increases both the per-MW purchase and the installation costs, as well as the the risk of “infant mortality,” model obsolescence (think Windows Vista), and possibly high operating and maintenance costs. Operators like RWE can borrow from the body of knowledge of capacity management (a subset of operations management), which basically offers three strategies: lead, follow, or match the anticipated demand (or in this case, the anticipated standard WTG size). Boston Strategies International has simulated “total cost” under each of the three strategies. The sum of the individual effects must be assessed over the life of the farm, taking into account the per-unit costs; per-MW costs, number of units required; installation costs; economies of scale in procurement, operation and maintenance; reliability; and risk of obsolescence; and other factors.

Can Seismic Survey Vessels be Used to Locate the Malaysia Airlines MH370 Jet?

b2ap3_thumbnail_Seismic-surveyHas anyone thought of deploying seismic survey vessels of the type that are used to do 3D and 4D surveys for subsea oil reservoirs, to locate the missing Malaysia Airlines jet (assuming it is under the sea, which seems to be a significant assumption this point)? I am not well-versed in the scientific aspects of seismic surveying — perhaps someone with relevant expertise could fill us in on the technical feasibility of this?

Offshore Project Time and Cost Compression: Observations from Topsides Conference

b2ap3_thumbnail_IMG_2071-640x480Last week’s Topsides conference in Galveston fostered discussion on a wide range of valuable “project supply chain” optimization ideas and case studies. Some observations from my supply chain perspective:

It is refreshing to see that the number and value of standardization initiatives is gaining ground. Modular design of vessels, platforms, and production systems is significantly compressing project timetables and yielding large cost benefits.

Innovative work vessel design is helping to reduce transit time and maintenance costs by allowing unconventional transportation options and in-situ installation and maintenance directly in deep water.

Material and technology substitution is always being improved, for example aluminum platforms, decks, and more.

Who Can You Trust for Reliable Data on the Profitability of Renewable Energy Projects?

b2ap3_thumbnail_shutterstock_3721864-640x427The World Future Energy Summit in Abu Dhabi this week will provide interesting overview and policy perspectives on the need for solar, wind, geothermal, and other renewables. We all need to better understand the economics of some of these technologies in order to pave the way for them to gain critical mass and a sustainable investment base. If you know of conferences that focus on the cost and revenue economics of renewables, please reply to this post with a Comment.

European Wind Power Projects Can Deliver Positive ‘Return on CapEx’ Through Forward-Looking Supply Chain Planning

b2ap3_thumbnail_shutterstock_4056883The upcoming Wind Developer Congress this week in Berlin should be interesting. I’m hoping that it will help owners, developers, OEMs, and lenders to develop procurement strategies that assure availability of long lead time equipment and services, while improving their assessment of financial and operational risks, such as regulatory hurdles and uncertainty of future lead times for wind turbines, installation services, and electrical equipment. In addition to furthering BSI’s work evaluating the financial potential of specific projects through supply chain optimization, I’m looking forward to learning more about energy storage and design improvements that can accelerate payback for offshore wind in general.

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