Opportunities for Cost Reductions in Offshore Wind Energy Logistics
Thomas Poulsen1, Charlotte Hasager
1Aalborg University, Copenhagen, Denmark, 2Technical University of Denmark, Roskilde, Denmark
The aim of research was to identify possible opportunities for offshore wind cost reductions through logistics innovation. The hypothesis of the research was that the area of logistics within the supply chain could bring cost reductions within offshore wind energy. The research included a case study within a company involved in offshore wind farm planning, construction and operation. One of the results from the case study was that the company, at the time, had no company-wide logistics organization that supported horizontally in the organization of logistics in general. Also, it was found that logistics was not well defined within the company and the offshore wind industry in general. The case study results were compared to literature on logistics innovation in other industries. Conclusions from the study suggests that a focused organizational approach for logistics both horizontally and vertically within company organizations in the offshore wind industry could be a way to organize towards cost reductions, coupled with a long-term legislative environment to enable the necessary investments in logistics assets and transport equipment . A main conclusion of the research was that logistics makes up at least 18% of the total levelized cost of energy for offshore wind farms which is higher than in other industries.
 Poulsen, T. and Hasager, C.B. (2016) How expensive is expensive enough? Opportunities for cost reductions in offshore wind energy logistics? Energies, 9, 437; doi:10.3390/en9060437
The case study was conducted within a single company during 18 months. The research used a combination of 15 interviews and a survey sent out to a total of 115 survey respondents. The interviews were carried out with a researcher as lead and with a company representative participating based on a detailed interview guide. All interviews were taped and transcribed by a team of 5 researchers. The survey was created with an initial survey to 15 respondents after which an updated survey was sent to 100 company respondents. The interviewees and survey respondents were chosen to represent best possible a subset of the 1600 employees of the company organization across 4 organizational layers segmented into the 4 life-cycles of an offshore wind farm.
Key results from the research included the finding that logistics makes up at least 18% of end-to-end levelized cost of energy for offshore wind farms. Compared to other industries and the trend in the US over the past decades in terms of logistics as a share of GDP, the level of logistics costs in offshore wind is very high and cost reductions should be possible. The research looked at innovation as a path towards cost reductions. A definition of offshore wind logistics was created as part of the research and the main organizational implication from the research is that logistics is generally not organized in a horizontal manner within companies of the offshore wind industry.
The research was qualitative in nature and looked at offshore wind farm mega-projects at a strategic level. Cost savings can be generated both through innovation and cost-out programs. Further research would be required to create quantitative models which support the qualitative conclusions and framework of this research. Further research within each of the four offshore wind farm life-cycles should also be conducted in order to further understand how logistics plays a role in one life-cycle phase versus another.
Acknowledgements: Funding from the Danish Maritime Foundation (Grant 2012-097) and Aalborg University is acknowledged. We acknowledge DONG Energy for granting case access as well as their active participation in the case study.
Key learning objectives center around logistics as a significant cost component within end-to-end levelized cost of energy for an offshore wind farm.
Another learning centers around logistics as a key organizational focus area to reduce levelized cost of energy within offshore wind.
In addition, learnings derived include how terminology and language differs within the offshore wind industry including the definition of logistics itself.
Delegates who attend this presentation will be able to: