Show notes
We discuss the new document from Vestas titled "This is Not a Wind Farm", which criticizes the U.S. approach to offshore wind development and proposes solutions. Allen, Joel and Phil analyze Vestas' suggestions and debate whether states will implement any of the proposed changes.
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Allen Hall: Welcome to the special edition of the Uptime Wind Energy Podcast. I'm your host, Allen Hall. I'm here with Joel Saxum and Phil Totaro, and we are discussing the new document from Vestas called This is Not a Wind Farm. And if you've gone to Vestas website and looked at the U. S. offshore wind tab, you can find this document.
And you may want to follow along during this podcast because we want to dive into the details here. And remember that Vestas released this document during IPF. Basically the offshore wind energy symposium conference that happens in the United States this year down in New Orleans. And we felt like this document summarized some of the things that we have been feeling and seeing, but this is as proposed solutions.
Now we may not agree on all those proposed solutions as we're going to discuss. But, at least they're putting out, they're putting their stake in the ground. They're saying these are the things that need to be done to move the U. S. into offshore wind quickly. Let me give a little bit of background here, and I'll list the items that Vestas has a problem with, or where the issues are.
The key problem areas are, and remember that there's almost up to 50 gigawatts of offshore leases that are going to be proposed in the next couple of years. So in, from Vestas point of view, there's a lot of real estate for, and for turbines to be put into the water. So this is the perfect time to get these US projects moving.
Now they list four to five. I broke them into five. Problem areas, and I want to go through the real quickly here. Number one, offshore bidders proposing projects are based on immature technology. So what Vestas is saying is that the turbines that are still on paper are being proposed for projects. Two there's a lack of focus on the supply chain readiness to ensure the timely project delivery.
And generally what Vestas is talking about here is that if they choose a 20 megawatt turbine, all the supply chain has to be able to deliver a 20 megawatt turbine versus a 15 megawatt turbine in their case. State and local content mandates are leading to recent project cancellations along the East Coast.
Four, long lead times between offtake awards and project execution. Is leading to speculative bidding behavior, which increases cost uncertainty in the supply chain. And number five, as I've outlined it, there's limited or no indexation adjustments within PPA. So once you lock in a PPA, you're stuck with it forever, regardless of interest rates, so there's no interest rate adjustment if interest rates goes up or down for that matter now.
All right, guys. So here we go. This is where I think it's going to get a little contentious. There are four Vestas solutions here. Number one, prioritize the award of off take contracts to bidders that have selected turbine technology that is mature, tested, and commercially available to ensure on time project delivery and industry scalability.
Now, Phil, this is oriented towards turbines that do not have type certification yet. I assume we would have been talking about the GE 18 megawatt, which does not have type certification because they're not going to build it. What are the turbines as Vestas implying shouldn't be considered in these offshore contracts?
Philip Totaro: Turbines that already weren't going to be considered, predominantly anything from China or whatever else, the Siemens, 14 platforms are all either already type certified or getting type certified, and so is the GE 15 and a half megawatt platform already or in process for type certification, so look at the end of the day what Vestas has put out is their little wishlist here of the way they want the world to work.
And it's lovely and everything, but the reality is it's a little bit self serving on their part. Some of the things that they're suggesting would be helpful in general to the industry, but most of it's just, Hey, if you did things our way, then we'd be winning a lot more business.
And. Sure. That's true. Vestas. Thanks.
Joel Saxum: I think that the, when you talk about the, machines that aren't ready of course it goes GE 18 megawatts. So now, if I think about that in my head, we're looking forward 24, 28, I think the plan that the that Boehm put out at IPF is auctions all the way.
They planned out auctions all the way through 20, 28, 20, 2030, even. So we're talking about for the next six years, right? Now the next six years, of course, there's going to be someone at maybe even Vestas that goes, Hey, we're going to make this, or, GE or whoever, we're gonna make that, we're gonna make this.
What they're saying here in my thought process is, Let's, those are no longer cool for bidding. Maybe there's, you could put a change order in, if that, type of turbine is readily available, commercially available, mature at the time you build your wind farm, but you shouldn't be able to bid on the idea that something else is going to be in place that works for it.
I agree with Vestas on this one.
Philip Totaro: Yes and no. See, here's the thing, when they do one of these tenders in Europe, they bid an envelope. They say, we're going to, we're going to do something up to a 20 megawatt wind turbine. They don't specify what the turbine is. I, and I, that's why I don't, Recall offhand, particularly in New York, if they were mandating a specific turbine be selected for the project permitting the OREC all the other submittals, I don't know if they were mandating that a specific turbine model be specified as the preferred vendor, even if they didn't have an agreement in place yet.
That's one thing that potentially led to some of these consternations between NYSERDA as a procurement agent, on behalf of utilities and others and the developers and the rest of the supply chain. But again, look the market's the market.
And the reality is a developer is going to submit a proposal with whatever They're going to submit a proposal with for financial or other reasons that they have. And at the end of the day, it should be down to, if NYSERDA is the one issuing the OREC then it should be down to them to have sufficient technical expertise to be able to say, you know what, yeah, this is the best, tech, most technologically feasible, bid that, that we've received.
But that's not even what's happening. They're getting bids from the projects that happen to be like the most mature in terms of shovel readiness in the, there's not even enough projects that have been leased yet. You have a finite number of projects. You have a finite amount of offtake that you want to be able to procure.
Those are the, these are the projects. Like, why do we have to keep going back into this, all this rebidding and all this other malaise? When, okay, we know what the technology is today, or, a year and a half from now when they could, hope to be able to start, the offshore portion of the construction.
You want it, if you want to get projects done now, here's what the state of technology is. Who's serving as a technical advisor to NYSERDA? Nobody.
Joel Saxum: Yeah, that's what I was going to hit on, Phil. I think you hit a big nail on the head there is, you've got all this, these things happen with Offshore Wind, NYSERDA, all these different agencies.
Who are their technical experts? Who are the people there that are reviewing the bids going, this is feasible for Offshore Wind or this isn't? Because, And to my knowledge, I don't know. I don't want to point at that person on, maybe I'll get some LinkedIn hate mail from someone at NYSERDA.
That's me. You're talking about, I don't know. I don't know who that person is, but as far as I know, do they have a team like an of Orsted type back office, people that know all kinds of things about offshore wind energy. I don't think so because that doesn't, that hasn't existed in the United States.
So unless those people are Danish or British or Belgian
Philip Totaro: I'm sorry, Joel, that does exist in the United States. They just don't use us. I've been doing offshore wind since frigging 2010, and I have not once been called by NYSERDA or any other state or local agency to provide expertise whatsoever.
Joel Saxum: So the resources are available and it's not just me. There are others that have experience dating back to, decades and decades over in Europe, over in Asia. And we are not utilized. And that's part of the other part of the problem is the people doing the procurement frankly don't know what the hell they're doing.
And I don't care if I get hate mail I'm putting that out there. They just don't know what they're doing.
Allen Hall: Vesta said the same thing, Phil. Vesta said and solution number two is regularly evaluate supply chain infrastructure and interconnection readiness in state RFPs and prioritize the award of Octave contracts for projects that demonstrate maturity.
Okay, great. That sounds wonderful, but you were, who's People or who are the people at the state level that have the skill sets to do that?