20161213 Maintenance subsea power cables for offshore wind - summary

Main takeaways to interviewees

Paris/Amsterdam, December 2016

Maintenance policies of subsea export power cables for offshore wind farms in Europe

2 20161213 Maintenance subsea power cables for offshore wind - summary.pptx

We have conducted a benchmark of maintenance policies for export power cables in offshore wind projects in Europe

Methodology Objective Results

Map maintenance activities for subsea power cables in offshore wind

Understand options for subsea power cable maintenance policy

Identify drivers for option choice

Highlight industry best practices in export power cable maintenance

Mapping of subsea cable players along four business models

Identification of preventive and corrective maintenance measures

Identification of TSO profiles relative to involvement in corrective maintenance setup

Suggestions of industry best practices such as contingency planning, frame agreements and top spare parts management

Source: Roland Berger

Project approach – Overview

Interviews with >30 players from the offshore wind industry and adjacent areas

Databases, press releases, experts reports

Secondary research


Summary

> Offshore wind generation capacity is expected to boom in the coming years in Europe. Availability and efficiency of subsea export power cables will be paramount to deliver expected results in terms of value and of performance. This business issue is chiefly handled by power cable maintenance policies

> Maintenance consists in inspection, predictive and corrective actions. Policies are typically defined well before the wind farms enters operation. Their ultimate goal is to limit impact and duration of events, through: prediction of failure, limitation of revenues’ losses, shortening of failure duration, reduction of repair costs.

> Cable failures are unpredictable events, typically occurring once per year and per 1000km cable. Corrective actions require assembling means and capabilities that can hardly be possessed by TSOs. Hence, TSOs typically seal agreements with contractors, of one of the following types: turnkey cable OEMs (who sell cables, installation and maintenance services), charterers / installers, survey specialists and/or cable maintenance specialists

> We have identified two models adopted by European TSOs for their corrective maintenance:

– Interface: the TSO is responsible for supervising the repair work and organizing the interface between contractors

– "Hands off": the TSO transfers a large share of the responsibility of repairs’ execution to a single contractor

> TSOs' best practices towards corrective maintenance consist in

– Preventive measures, including inspection and regular appraisal of risks and consequences on the state of the grid connection

– Contingency planning i.e. risk pre-identification, cable breakdown scenarios description and definition of the technical response to be implemented; this is a pre-requisite to establish frame-agreements with contractors

– Spare parts i.e. maintaining a stock of spare cables, joints and equipment for each farm/cable, as grid connections are not standard



If you have further questions, please contact us

Eric Confais

Partner Paris

[email protected]

+33 6 76 98 59 83

Heloise Dheilly

Consultant Boston/Paris

[email protected]

+33 6 76 98 80 25

Ward van den Berg

Research Senior Expert Amsterdam/Paris

[email protected]

+31 643973016


A. Landscape overview


Offshore wind capacity is growing fast in Europe

2015

11.0 8.0

2013

6.6 5.0

2011

3.8 2.9

2009

2.1 1.5

2007

1.1 0.8

2005

0.7 0.6

2003

0.5 0.3

2001

0.1 0.0

+19% p.a.

2023

Other countries2)

44.0

Germany 16.3

United Kingdom

13.0

2017

20.0

24.6

2018 2019

France

Denmark

2021 2020

35.3

40.5

2022

32.0

Netherlands

Belgium

2016

Offshore wind historical cumulative capacity in Europe [2000-2015, GW]

Offshore wind expected1) cumulative capacity in Europe [2016-2022, GW]

Offshore wind European market

Source: WindEurope; 4COffshore; Roland Berger

1) Estimates drafted when offshore wind had a LCOE (levelized cost of energy) around 80-100 EUR/MWh. Recent project awards have reached a LCOE of ~50 EUR/MWh and subsidies are shifting from onshore to offshore wind projects, which may accelerate growth, 2) Other countries include Finland, Norway, Sweden, Poland, Italy, Portugal and Spain

> The first offshore wind farms were largely subsidized by

governments with the objective to support energy mix

diversification

> Equipment improvement and competition intensification in the

turbine market has driven down cost of construction and

operations

> Offshore wind farms are now perceived as a competitive and

sustainable energy generation solution


We identify four business models in the subsea export cable submarket

Turnkey OEM

Charterer - Installer

Survey specialist

Maintenance specialist

Source: Interviews, Roland Berger

1) ABB is the most advanced player in terms of turn-key maintenance offer. An obstacle to the cable manufacturers' ambition to offer turn-key solutions is their limited balance sheet that prevents them from large risk taking. Larger players such as Japanese Sumitomo could establish turn-key offers faster.

Offshore WA

FEED Detailed engineering

Equipment manufactu-ring

Cable installation

Commis-sioning

Preventive maintenance

Corrective maintenance

Inspection

Osiris Marine

Ambition to offer a turn-key solution1)

Partial sub- contracting


Players (selection)


EDS

Subsea cable value chain

http://hughessurveys.com/


B. Maintenance policies


Several maintenance levers exist to limit losses related to cable failure

Objective: Limit losses linked to cable failures Levers

Losses

Contingency planning

Preventive maintenance

Frame agreements

Revenues/day

Repair cost

Probability of failure

Duration of the failure


Regulation & contract terms


A mature and effective maintenance policy combines a preventive and corrective maintenance based on a risk-consequence approach

> Maintenance policies are established around two dimensions:

– preventive measures

– corrective maintenance

> The set up of preventive measures is based on regular assessment of risks and consequences on the state of the grid connection

> An effective corrective maintenance policy relies on upstream work involving risk identification, cable breakdown scenarios description and definition of the response to be implemented with potential frame-agreements with contractors

Take aways

A good maintenance policy includes preventive maintenance procedures and a contingency planning to be activated in case of an anomaly. Contingency planning requires heavy technical work beforehand

The OFTOs that did not have a contingency plan had to define and implement procedures on the go during cable failures and it did not go well.

Operator

O&M expert at an operator

Ideally, in case of a problem, the operator has already done all the preparation work and only needs to look into the file off the shelf to find the right procedure with permits and pre-filled authorizations. It requires an upfront investment but it's worth it as you can save several days of lost revenue. Maintenance specialist



Preventive maintenance is an imponderable of subsea power cable O&M

> Cable parameter monitoring and preventive maintenance of risk-prone zones have become the norm

> Offshore wind stakeholders have different approaches to preventive maintenance: cable specialist advocate for conditional maintenance while financers and insurers demand more guarantees through inspections

> The risk of repairs and costly penalties incentivize TSOs to implement preventive maintenance initiatives

Take aways

When we detect that a cable is in free span, we assess the situation, the risks and consequences of an incident at the location and then decide to keep status quo or organize an operation for cable re-burial or rock dumping

Operator

There were almost no monitoring or inspection initiatives five years ago. Now cables are equipped with DTS allowing for constant monitoring and cable owners organize regular cable inspections

Operator

Project financing can only be closed when sufficient guarantees have been showed on preventive maintenance of the cables, which may include visual inspections several times a year or additional protection agreements with local fishermen

Consultant in project finance

In the telecom industry, there is no planned visual inspection of the cable due to long distances and relatively low cost of repair. Only zones with specific environmental protection are regularly inspected

Telecom



> Cable manufacturers initially believed that cables would virtually suffer no failures during the useful life of an offshore wind farm

> Insurers now estimate that there is on average 1 cable failure every 1,000 km every year and that approximately 10 cable failures are subject to insurance claims every year (including export cables and interconnections)

> Cable failures are the costliest incidents in the offshore wind industry due to revenue lost and insurance claims that amounted to more than USD 60 m in 2015

> At the installation phase, the cable (manufacturing + installation) represents app. 15 to 20% of an offshore wind project but cable failures account for 77% of total cost of offshore wind losses

> Cable repairs is time-consuming: only 40% of cable failures are repaired in less than a month and more than 25% take more than 3 months

Cable failures are frequent and costly

Source: Gcube, WINDPOWERoffshore, Global Marine Energy, ISCPS, WindPowerMonthly, 4COffshore, Interviews, Roland Berger

Main insured offshore wind losses (as of end 2010)

1) Property damage

Project Event

Estimated

cost –

PD1) only

(EUR)

Danish windfarm - CAR Anchor drag on cable -contractor vessel 1m - 5m

UK windfarm - CAR Damage to cable caused by plough tipping 1m - 5m

UK windfarm - CAR Water damage to cable following capping 1m - 5m

UK windfarm- CAR Transformer damage following testing 1m - 5m

UK windfarm - CAR Damage to cable during onshore laying 1m - 5m

Dutch windfarm - CAR Blade damage during rock dumping Less than 1m

Dutch windfarm - CAR Storm damage to railings 1m - 5m

Belgian windfarm - CAR Foundations / J tube 20m+

Danish windfarm - Operating Step-up transformer damage 1m - 5m

Irish wlndfarm - Operating Dragged anchor 1m - 5m

UK wlndfarm - Operating Cable fault 5 m +

Cable-related incident


Telecom statistics on cable failure causes

Cable failures generally happen during construction or during the first few months of operations

Source: Interviews, Tyco, Roland Berger

> Industry experience from telecom subsea cable indicates that the majority of cable failures are related to fishing activities or anchors

> However, subsea power cable industry players point our that electric cables are larger and more resistant to external aggressions than telecom cables

> Power cable failures seldom happen during operations. Most breakdowns take place during construction or during the first three months of operations due to internal defects or installation problems, e.g. quality issue at cable hang-off or a cable cut off by a jack up barge leg during construction

4% Abrasion

Anchor

Internal defect

7%

9% Others

21%

Unknown

44% Fishing

15%


TSO are mostly organized along two models for their corrective maintenance policy set up

Interface TSO Hands off TSO

Vessel chartering

Jointing team

Service specialist

Project manager contractor

TSO

Contract or frame agreement

TSO

Vessel chartering

Jointing team

Survey specialist

Broker

> The TSO transfers the responsibility of executing the repairs to a single contractor which manages the interface of the different activities

> Contingency plan often developed with the principal contractor

> The TSO is responsible for supervising the repair work and organizing the interface between the different contractors

> A frame agreement is generally signed with each contractor


Frame agreement

Frame agreement

Frame agreement

Contract

Potentialy sub-contracting


Cable failure anticipation and pre-contracted frame-agreements can significantly accelerate repairs

Simplified indicative timeline of a cable repair

Month 1 Month 2 Month 3 Month 4

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

Cable failure detection and localization

Contract negotiations

High-level localization

Precise localization

Repair vessel mobilization

Jointing team mobilization

Repairs

Cable failure

Vessel mobilization

Activity

Sea operations begin

Vessel search

Cable repowering

High level cable failure localization necessary for vessel choice

Levers

Frame agreements allow for contract signing in a matter of days

The best specialists are able to localize a defect precisely in just 7 days

Vessel identification beforehand enables to decrease vessel research and mobilization to 3 weeks

Potential decrease in repair duration by 7 weeks



The cable can be damaged by UV exposure. Joints include perishable elements and they have to be checked regularly Developer

Proper storage of spare parts and equipment supports timely and effective repairs

> Spare parts (cables, joints, other equipment) management is a key element of an effective maintenance policy

> The TSO must respect the storage conditions recommended by the cable manufacturer in order to preserve cable performance

> Minimum bend radius and joint perishable elements have to be particularly monitored with extra attention

> It is recommended to regularly test that the spare cable is working properly (beyond visual inspection)

Synthesis

If you want to preserve the cable's performance, it is very important to respect the cable minimum bend radius and to be mindful of the pulling system Cable manufacturer

In the past, there have been some misunderstandings regarding cable storage. Some TSOs have kept cables in the drums they were originally delivered in and this damages the cable

Ship owner

Ideally, the spare cable would be regularly tested to ensure that it is working well Telecom



E. Introduction to Roland Berger


Roland Berger is a truly global firm

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Founded in Germany as a one-man business in 1967, we now have successful operations in all major international markets

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20161213 Maintenance subsea power cables for offshore wind - summary

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