Clifford Chance

The recent Scotwind auction can be seen as a huge vote of confidence in floating offshore wind, awarding projects at 100x the current installed floating capacity, to say nothing of upcoming projects and licensing rounds elsewhere.

This blog covers 5 things that need to happen to turn a widespread roll-out of commercial scale floating projects into reality:

1. Port infrastructure – Platform designs vary enormously in their scale and draught. Developers are already scrambling for suitable port facilities, so an integrated development plan is needed which avoids projects (and countries) having to stagger development because of this potential bottleneck.

2. Local content – Commitments to invest in local economies and jobs have been an important feature of recent offshore wind auctions. Nonetheless, government facilitation may still be needed to avoid project delays from competition over limited local resources.

3. Phasing – We expect that resourcing constraints will require phasing of implementation of the mega-fields. This may lead to further equity sell-downs of different types, which may bring nuances to the now well-trodden processes for bottom-fixed projects.

4. Floating technology and scale-up risks – Even with phasing, early developers of commercial scale floating projects would do well to canvass potential project lenders and investors (and their technical advisers) on their expectations in relation to construction risk to avoid repeating the experience of bottom-fixed offshore wind projects. For example, many of the current floating projects did not have to address the recourse available in respect of stability risks outside of required WTG parameters and so platform design procurement was not structured in a way to absorb performance risk. For projects in deeper waters, there also remain concerns about the impact of movement on cables.

5. Grid connection – A distance and cost issue. Full market deployment may need hub development or conversion and storage solutions - it is not surprising that hydrogen storage is being increasingly touted for floating projects further from shore.