Offshore wind

Crown Estate Round 4 will be most competitive yet

This article first appeared in

With the UK taking a global lead in offshore wind, the Crown Estate’s fourth leasing round will be highly competitive, with multiple developers vying to take a slice of a 7GW opportunity. Here Tristan Chapman, Senior Vice President of Renewables and Innovation and Will Hodshon Geoscience Project Manager from Lloyd’s Register examine how bidders can optimise their tenders to maximise their chances of success.

Round 4 (and the forthcoming Scottish round) are a golden opportunity for the UK to cement its position as the global leader in offshore wind.

The sector has demonstrated its ability to innovate and drive down costs, and with regular CfD rounds on the horizon there is a clear route to yet more volume and cost reduction.

And whilst we are already well along the innovation pathway, the Round 4 leasing areas bring new challenges, and the need for developers to consider carefully their site assessment and project design.

In what is becoming an increasingly congested marine environment, new schemes may need to co-exist with current and future oil and gas infrastructure, and the competitive nature of the tendering process means winning bidders will need to provide best-in-class wind resource evaluation, onshore grid connectivity optioneering, ground risk management, constraints evaluation, metocean analysis and cable route engineering.

Add in the desire from the Crown Estate (and possibly BEIS) to incentivise further innovation – including floating projects – and it is clear a comprehensive approach to developing a commercially competitive bid will be key.

Complex and evolving

It is a complex and evolving picture and any bidder’s site selection will need to take into account a range of factors including finding the most favourable ground conditions for foundation installation and capacity, whilst considering constraints including marine protected areas, visual impact, fishing, oil and gas and subsea hazards such as unexploded ordinance (UXO) and existing infrastructure including pipelines and cables.

Whilst much of this information is already in the public domain – it is vital that bidders assemble a team that can bring together experience in the marine environment as well as experience in wind. This is where Lloyd’s Register (LR), with its long maritime heritage, believes it has a strong role to play – and we are already working with a number of bidders in this current round.

It is a very exciting sector to be in. The competitive drive to reduce cost continues to spark innovation and we need to continually review the latest technologies being utilised on current projects. For foundations this includes suction caissons and BLUE piling, and each bidder will need to take a view on how these technologies will evolve in the decade ahead.

Onshore grid connection availability and options will also be key and all entrants in the round will need to think about not only the most economic routes but also the installation methodologies required, and the cables post-lay longevity – which can have a major impact on project viability and ultimate return.

Altogether this is a complex mix, and although the end goal is straightforward – to select an optimal site which offers the best overall economic feasibility within each bidding area – in reality balancing and weighting each factor to arrive at the best solution is a major challenge.

Geospatial platform

Given this complexity, at LR we believe that multi-disciplinary teams are the best way to assess and analyse these multiple and inter-related inputs.

Access to data and clear decision making is critical, and the ability to share data between all of the decision makers is key. This is why we have developed our own web-based geospatial platform to share and optimise data across all members of the team.

Unlike traditional GIS systems, this common platform is continually updated in real time and is viewable on any device without the need of specialist software.

This means that every analyst and professional involved in the bid has the very latest information at hand – which we believe streamlines processes and enables the most effective decision making.

Co-existence with O&G

As the demand for competitive seabed access heats up, so does the need to safely and operationally co-exist with current and future oil and gas infrastructure.

This is very much the case for Round 4, and is complicated by the separation of authority between the Oil and Gas Authority and the Crown Estate.

Whilst manageable, there is the risk that limited consideration of co-existence could sterilise project development areas in the long term.

Again, this underscores the desirability of working with advisors who can successful navigate both industries and their regulatory bodies.

On the upside, there is tremendous potential for the two sectors to share data on routes for cables and pipelines, whilst the oil and gas sector has a growing appetite to be involved in offshore wind. This is driven both by their desire to reduce the carbon impact of their own sector and the scale of the opportunity – and potential synergies that offshore wind brings.

Future schemes could see oil and gas players involved in long term O&M, whilst we could see end of life re-use

of accommodation modules or the re-purposing of other oil and gas offshore infrastructure.

It is good to bear in mind that the current bidders for Round 4 may not be building their projects for another ten years, and in that time innovation will have a huge impact on how the sector will evolve.

The growing imperative to decarbonise our whole economy may mean that future schemes will be used to generate hydrogen or drive carbon capture and storage, whilst floating offshore wind projects, such as Hywind, give a taste of what else is to come.

At LR, we are proud to have participated in a number of floating wind projects and we believe this will be invaluable in the years ahead.

So, whilst it is impossible to predict exactly what will happen in the 2020s, we can clearly see that offshore wind is a still-evolving sector which is becoming increasingly complex and competitive as new entrants bid into this £multi-billion opportunity.

Only a certain number of entrants will win in Round 4, and these will most likely be the bidders who have undertaken the most comprehensive analysis to arrive at their winning bid.

It is our belief that, given the complexity involved, multi-disciplinary technical specialists will be pivotal cogs in any bidder’s investment analysis machine.