Offshoreenergy.dk Kriegers Flak leverandørnetværksmøde 2016

Offshoreenergy.dk Kriegers Flak leverandørnetværksmøde 2016 Arne Rahbek - Vattenfall Haslev 7. september 2016 Kriegers Falk

Agenda Introduction & Agenda Vattenfall Offshore Windpower Experience from previous projects Trends & Developments Supply Chain Summary

Vattenfall Offshore Windpower: Strategy Our ambition is to invest as much as possible in renewable energy. We shall be the leading operator when it comes to the changeover towards renewable energy. Thus, wind energy is a natural part of our expansion options Renewables are Vattenfall s core business. Magnus Hall, Vattenfall CEO Investment split by type (SEK bn) Growth investments by technology (SEK bn) 1 62% 30% 7% Grow th investments (12.2) Wind pow er (9.1) 17% Replacement investments (3.1) Fossil-based pow er (1.9) Maintenance investments (25.7) Nuclear pow er (0.01) 82% Biomass, w aste (0.05) Investment plan 2015-2016

Wind Power at Vattenfall FROM START-UP TO MAIN FOCUS AREA Installed capacity (GW) 4 3 2 PERSPECTIVE Vattenfall plans to invest more than SEK 50 billion over the next five years in renewables - Magnus Hall, CEO, Dec 2015 One of the largest players in wind in northern Europe Total installed wind power capacity of 2.5 GW incl. projects under construction Annual growth target of 400-600 MW of new capacity 1 0 2005 2007 2009 2011 2013 2015 2017 2020 Strong platform and track record to build on Strong track record in developing, constructing and operating on and offshore wind farms Strong approach to LEC* implemented and proven performance in HR3 tender Team and performance recognised by competitors * Levelised Cost of Energy 5 OWIB Supply Info Day Arne Rahbek 2016.08.31

Existing Offshore Fleet Vattenfall s presence in the offshore wind market dates back to 2000 Among the top 3 in the world for offshore wind Operating portfolio of 1.4 GW (gross) with further 800 MW in construction/ late development Installed gross capacity (MW) United Kingdom 730 In operation 640 Thanet 300 Ormonde 150 Kentish Flats 90 Kentish Flats extension 50 In late development 90 Aberdeen bay 90 Denmark 566 In operation 158 Horns Rev 158 In construction 408 Horns Rev 3 408 Germany 636 Sweden 121 Lillgrund 110 Utgrunden* 11 Total 2160 MW In Operation In construction/ late stage development Netherlands 108 Egmond aan Zee 108 In operation 348 DanTysk 288 Alpha Ventus 60 In construction 288 Sandbank 288 786 1 374 6 OWIB Supply Info Day Arne Rahbek 2016.08.31 * Currently being decommissioned

Esbjerg cluster: A cluster approach increases synergies during the installation, but esp. during the operation phase > 400 WTGs Close vicinity of projects/plants Relative close distance to service port Esbjerg Similar geophysical conditions Similar geotechnical conditions Similar conditions and geographical vicinity of different projects/assets enable: Further development of Installation Logistics concepts and Bundling for the O&M logistics Increased production capacity

The Project: Facts & Figures Site 29-44 km west of Houstrup Strand, DK. Area 88 square km Turbines 49 MHI Vestas V164-8,3 MW Foundations Monopiles Water depth 11-19 metres Total height 187,1 metres Hub height 105,1 metres Wing span 164 metres Total output 406,7 MW Production 1.700.000.000 kwh P. equivalent to 425.000 households annual use of el. power KW price 0,77 Danish Kroner = 0,1027 Construction 2016-2019 Commissioning 2018-2019 Total invest. 7,5 billion Danish Kroner = 1 billion Owner Vattenfall Vindkraft Horns Rev 3 A/S Transformer, EnergiNet.dk cables & grid 8 OWIB Supply Info Day Arne Rahbek 2016.08.31 Background February 2015: Vattenfall Board of Directors (BoD) approved the submission of a binding bid for the 400 MW Horns Rev 3 project. Subsequently, Vattenfall was awarded the project based on a winning bid of 77,0 øre/kwh for 20 TWh of production. April 2015: The Concession Agreement, including the right and obligation to build the wind farm, was signed. June 2015: VF BoD approved a pre-fid budget. May 2016: Offshore substation installation completed by Energinet.dk. June 2016: VF BoD made a positive final investment decision, taking the project into the construction phase. Following FID: All major contracts have now been signed and the date for the main construction campaign is fixed as 2018.

DanTysk Offshore Windfarm: Contracts DanTysk Offshore Wind

Sandbank Offshore Windfarm: Contracts

Kentish Flats Extension: Contracts

Horns Rev 3: Contracts

Lessons learned from previous projects and current developments, will have to be challenged again Experience from previous projects Under deck stiffening required to cope with full tower weights. (Installation) blade lifts to be thoroughly engineered to enable smooth operations with sufficient operational limits. Offshoreenergy DK 2016 Etablering af leverandørnetværk Kriegers Flak 2016

... taken as a basis for further improvement of the project implementation phase and reduction of CAPEX Experience from previous projects (cont d) Detailed Daily Progress Report analysis allows identification of time consuming activities and determining a realistic approach for net installation durations per WTG Handling of large, larger and even larger monopiles and towers are considered to constitute a challenge, either due to manufacturing capabilities or due to handling procedures Offshoreenergy DK 2016 Etablering af leverandørnetværk Kriegers Flak 2016

Trends & Developments Source: EWEA January 2015 Report

Bigger turbines.

The logistic challenges will impact the supply chain

An overview Political Boundaries Grid Foundations WTGs, incl towers, nacelles, hub, blades etc. Off- and onshore substations Transformers/Converters Cables Vessels Harbours Cranes People Soil Authorities

Foundation TP - Tower

WTGs going 4 to 8 MW Development WTG components weights & dimensions Lenghts (m) 180 4MW 8MW Weights (t) 700 120 59 80 90 105 250 140 290 Rotor (m) Blade length (m) Hub height (m) Offshoreenergy DK 2016 Etablering af leverandørnetværk Kriegers Flak 2016 Tower (t) Nacelle (t) Source: MAKE 2014

Development of new blades using carbon fibres

A lot of challenges!

Bigger Vessels Horns Rev 1.2002

Things grow bigger and bigger and safety is toppriority

Use the right people for the right job

Supply Chain Design: Although campaign based, a holistic approach of an offshore wind project shall be chosen Opportunities to further reduce LEC In order to make wind power affordable for the society as a global energy source, the scope of innovation has to be expanded. Innovations - Also in other parts of the value chain Industrialization - Infrastructure has to be developed Cooperation - Is mandatory to lift wind power from the concept level into a real life implementation Henrik Stiesdal, former CTO Siemens Wind Power Source: Carbon Trust interview 2014 Combined with the individual needs of a project : Standardization of logistical means & procedures as well as an individual adaption of the relevant tiers in the supply chain are considered as key elements for future offshore wind projects Offshoreenergy DK 2016 Etablering af leverandørnetværk Kriegers Flak 2016

What to do Get in contact the the preferred bidders in the tender. Establish contact to potential main contractors in an early phase Join different associations and get a local network established Invite potential main contractors to your area let them see the potentials. Many of them don t think that there is anything outside Esbjerg

Local network an opportunity to create benefit and synergy One point of contact Learn from others e.g. Esbjerg, Grenå and Hvide Sande Stand alone is not an option Invite potential sub suppliers

Focus points Look for good and professional sparring Be able to deliver on time and budget Be aware that your counter part has a professional setup e.g procurement and legal departments EU-rules can be part of the agreement

Summary where is the limit? Offshore wind Farms are really big projects demand effeciency and size among potential sub suppliers Squeeze the lemon we have to bring down costs Multicontracting contra single contracting Turn-key contractor Special companies adding value offering special solutions/equipment Selection based on ressources available Selection based on logistic challenges Big, fast and safe Industrial standards or demand driven solutions The developers, the pioneers, the first mover advantage vs go safe The bottlenecks The projects further offhore and in deeper waters will call for new products, companies, equipment and solutions but also local involvement and local supply and necessary

Questions?

Thank you for your attention