The wind industry’s sudden implosion saw Siemens suffer a €5.8 billion ($6.3 billion) market value write-down in a single day in June, followed by another 40% write-down in October – slashing a further €3 billion ($3.16 billion) off its market value, following revelations by Siemens that it was demanding billions in government-backed guarantees from the German government.
At the heart of their woes is a machine that wears out much faster than promised, is naturally costly to maintain and, in marine environments, suffering catastrophic and often fatal mechanical failures, which requires the turbine to be removed and dragged back to shore for a complete overhaul. Needless to say the cost of all that is astronomical.
Because the failures are occurring so suddenly, ordinarily it’s the manufacturer who suffers the cost of repairs under the (exceedingly ambitious) warranties given by the likes of Siemens, and others. If the manufacturer’s warranty doesn’t cover those costs, the operators then call on their insurers to foot the bill.
However, as detailed in this piece from wind industry propagandist, Gareth Chetwynd, insurers are seeking to limit their exposure by carving out claims based on manufacturer’s defects using “serial defect clauses”. Those clauses mean that offshore turbine operators will have to carry the can, in the highly likely event that the salt-encrusted machines grind to a sudden and early halt. Precisely as happened with a fleet of 6MW Siemens monsters floating off the Scottish coastline.
World’s first floating wind farm Hywind Scotland faces shutdown for ‘heavy maintenance’
Recharg News
Gareth Chetwynd
12 January 2024
Norwegian energy giant Equinor will temporarily remove all five floating wind turbines from the Hywind Scotland array later this year after discovering a need for “heavy maintenance” on the Siemens Gamesa machines deployed there, Recharge has learned.
The 6MW turbines will be towed back to Wergeland on the west coast of Norway as part of a maintenance programme that is likely to take around four months. All units will be reconnected back on the Hywind Scotland site when the maintenance is complete, a spokesman for the Norwegian company confirmed.
The work will involve changing some components on the turbines, as well as more routine maintenance. “What we see from operational data is that there is a need for… heavy maintenance on the turbines,” he told Recharge.
Equinor declined to specify exactly which components would need replacing, but industry insiders consulted by Recharge suggested that the issues must be significant to require intervention on such a scale.
While acknowledging that towing all the turbines to shore for maintenance after seven years of operation was not planned at the outset, the Equinor spokesman claimed such actions are not entirely unexpected.
“We will conduct a combination of exchanging some components, maintaining others and using the opportunity to do regular service as well. All of this is something we regularly do at our other offshore wind farms. What’s different here is that we will tow the turbines to shore,” he said.
He added that the need for heavy maintenance became apparent through “ordinary monitoring and inspections, in close collaboration with the manufacturer.”
Siemens Gamesa was asked to provide clarification of the nature of the problems on Hywind Scotland’s turbines, but a spokesperson said the company would not expand on the information provided by Equinor.
The 30MW Hywind Scotland array was fêted as the world’s first commercial floating wind farm when it became operational in 2017, moving ahead of a number of demonstration projects.
Equinor and 25% project partner Masdar invested the equivalent of $194m in the project and celebrated achieving a 60-70% cost reduction, compared with the Hywind Demo project in Norway.
“Most offshore wind farms require heavy maintenance of turbines from time to time so this was always something that could happen. Towing the turbines to shore is currently the most safe, efficient and proven method to carry out such heavy maintenance of floating turbines,” the spokesman stated.
Insurability concerns
Floating wind ambitions have indeed mushroomed since Hywind Scotland came online, including a potential 19GW of capacity in the pipeline as a result of the UK’s Scotwind tender.
But the problems apparently surfacing on Hywind Scotland go to the heart of challenges facing the floating sector.
Although any issues with the 6MW direct drive turbines are unwelcome for Siemens Gamesa, which has faced high-profile quality problems with its onshore platforms, many in the industry warn that the worry is more about a broader perception of risk that is posing a threat to the fledgling sector’s burgeoning plans.
This is felt particularly when it comes to underwriting costs in the insurance sector.
Michael Bullock, director of consultancy firm Renewable Risk Advisers, underlined this point during a recent industry conference in Lisbon where participants discussed the knock-on risks from equipment failure in relation to issues such as the availability of vessels, access to ports and reconnection challenges.
In addition to policy deductibles, insurers usually limit their exposure through serial defect clauses in policy wordings and in renewal negotiations, posing a risk of residual exposure to the project itself, to the extent that protection is not provided by OEM warranties and despite existing cover provided by insurers, Bullock noted.
“Serial defects happen in the offshore wind sector as elsewhere, even with the proper due diligence and certification in place (but) the risk is potentially aggravated by the frequency of new larger turbine designs with different loadings and fatigue rates, and other characteristics,” he told Recharge in a recent interview.
“The costs of an unscheduled maintenance campaign across multiple offshore units will invariably be considerable, in addition to the substantial loss of revenue arising from turbine downtime.”
Bullock added that project developers can mitigate the risks through scenario analysis and contingency planning, feeding into operation, maintenance and spare parts strategies, including pre-negotiated call-off agreements for suitable vessels.
Anchor handlers
As one of the world’s leading companies in the offshore production of oil and gas, Equinor is better positioned than many to get its hands on anchor handling tug supply (AHTS) vessels.
The Norwegian offshore giant currently has two AHTS vessels under fixed-term charter, namely the Vega and Ferking but the operator has apparently been arranging extra cover for anchor handlers ahead of the Hywind Scotland operation, according to shipbrokers active in this segment of the market.
“[Equinor] came out with a term charter for an AHTS late last year. They haven’t concluded it yet, but essentially they have two AHTS on charter right now. Ferking goes offhire around October and Vega continues. So from April to October they will have three term-charter AHTS vessels,” a Norwegian shipbroker told Recharge.
Equinor is no stranger to risks emerging in the offshore wind sector, and is among those developers that have stepped back from deals struck for US projects made uneconomic by a surge in supply chain and capital costs.
But recent moves, such as the cancellation of the deal for New York’s fixed bottom 1.2GW Empire Wind 2 project were presaged by the decision, back in May 2023, to suspend the subsidy-free 1GW Trollvind floating wind project in Norway “based on several challenges facing the project, including technology availability, rising cost and a strained timetable to deliver on the original concept”.
A sector-wide need for operational and maintenance experience or “learning opportunities” was also flagged by Victoria Toft, head of data at Danish research consultancy Aegir Insights. She noted that concerns about operational requirements and the implication of repairs of large components raise serious questions for floating wind.
Some technology providers, such as Aker Solutions and Encomara, have come out with new products and solutions aiming, among other things, to facilitate the efficient connecting and re-connecting process with floating turbines.
But a silver bullet solution to the problem of serial defects or failures in large components has not yet emerged, Toft reckons.
“Units in need of larger repairs or major component exchange often need to go far to find suitable ports, due to dimensions of the foundations,” she added.
In the case of Hywind Scotland, Wergeland was identified as the closest yard that was suitable for heavy maintenance purposes, the Equinor spokesperson said.
Recharge News
STOP THESE THINGS 
Oh dear… how sad… never mind!
A colossal waste of $$$, time and resources.