Collaboration is Key for Technology Innovation in Offshore Wind

At Ørsted, innovation has been a core part of our DNA and has helped us in transforming our business. In 1991, we were the first company to install turbines in the ocean, creating the world’s first offshore wind farm off the coast of Denmark.

At that time, the cost of offshore wind energy was significantly higher than energy from fossil fuels, but we saw an opportunity for the future. Through our focus on innovation, we’ve increased the scale of our offshore wind farms with technological advances and improvements to installation methods, foundation designs, logistics and digitalization. In 2019, Ørsted completed construction of the world’s largest offshore wind farm, Hornsea 1, that is capable of providing renewable energy to over 1 million homes. Throughout this journey, we’ve helped to continually drive down operational costs at each stage of development so that today, offshore wind energy is cheaper than fossil fuels in an increasing number of markets globally.

INNOVATION HUB

Over the last three decades, we’ve grown our offshore wind business to a global leadership position and have transformed from one of the most carbon-intensive energy companies in Europe to being ranked the world’s most sustainable energy company in the Corporate Knights Global 100 Index. But the offshore wind industry has matured tremendously since we started, and we believe there is now immense potential to identify novel ideas and solutions from the external environment, and work together to create a world that runs entirely on green energy. For this reason, we launched the Innovation Hub. Based in Rhode Island, the Hub will act as a bridge between Ørsted and external innovation ecosystems, partners, and solutions.

The Innovation Hub will identify, develop, and at times finance companies focused on driving next generation technologies in offshore wind and adjacent markets with complementary applications in offshore wind, like blue tech. The scouting focus is driven by internal business challenges and opportunities identified by business unit leaders.

However, the most important aspect of external, or open, innovation is understanding the needs of the companies pioneering new technologies and processes as well as finding ways to help enable their mission and remove obstacles in their path. The Innovation Hub is working vehicles and partnerships to help companies with their challenges at each stage of their development:

Early stage:

• Access to expertise: Whether it’s connections to internal subject matter experts or industry partners, insights can help early companies develop products that are more likely to fit potential customer needs and it helps them avoid costly pitfalls.
• Patient capital: We work in an industry of long timelines and “hard tech” challenges. This requires funding that has longer timelines than standard venture capital. Corporates are in a unique position to deploy patient capital.
• Lab/test space: This often ties directly to capital, but even well capitalized startups in offshore wind and blue tech tend to work on unique challenges that require specialized testing space and needs.

Commercialization:

• Proof of Value Projects: Offshore Wind is a highly regulated industry and “up time” is critical. This means testing new solutions in a live environment is difficult to do because we need high levels of certainty that a new solution won’t cause unforeseen issues, even if they don’t perform as intended and in some instances, we need regulatory approval to perform the test or will at least need to test alongside currently approved methods, which drives up the cost. In a little bit of a catch-22, “live” proof of value tests are also necessary to evaluate the efficacy of new solutions and provide a path to scale as a supplier.
• Path to Scale: If a live proof of value project can be scoped and executed, it’s important that an internal path to scale the company as a supplier is identified for both companies to understand the future potential impact across their businesses.

Established industry adjacent:

• Starter projects: Often, established companies with proven solutions in adjacent industries can adapt their solutions to offshore wind challenges, however they may not fit in to a typical tier 1 or 2 supplier status. This makes it difficult for them to compete in procurement tenders. In these cases, smaller projects with paths to increased future work may need to be scoped on an ad hoc basis.

CRITICAL TIMING

If there’s one thing that’s constant about innovation across all industries it’s that it always wants to go faster, and to win, incumbents and challengers alike must play a fast-paced offense. Speed can seem daunting in offshore wind considering the average timelines we currently work with – which are critical for companies at all stages hoping to work in offshore wind to understand.

• Bids and awards: 1 – 2 years
• Site investigations: 5 – 8 years
• Construction: 1+ weeks per turbine
• Operation: 30+ years

Those are very rough approximations with a lot of dependencies, but when you consider that each one of those steps has many smaller components that all ladder up to these huge timelines, you start to see how small deviations in the process could extend the timelines and the costs, so it is critical it is for companies developing new technologies for offshore wind to be in lock step with these timelines. This is particularly true for proof of value projects because attempting to do it after these stage gates encounters higher costs and potentially further permits and regulations.

COLLABORATION IS KEY

More than many industries, innovation in offshore wind will require close collaboration from various industry stakeholders. We need more partnerships like Ørsted has forged with NOAA on physical and biological information and data in Ørsted-leased waters. It’s not enough for startups to work solely with Ørsted to advance their solutions and ideas. It’s critical that they work with industry stakeholders, spar on potential paths forward, and gain collective approval. This level of collaboration will help innovation in offshore wind move at the speed it desires, and it will save critical time and capital on our collective paths towards a world that runs entirely on green energy.

This story was originally featured in ON&T May 2021. Click here to read more.