Floating wind: next UK government should think big to seize leadership role, says Vargronn CEO

The UK remains central to Vargronn’s ambitions of becoming a strong player in floating offshore wind due to a “rare political alignment” around offshore wind there, according to the CEO of the Norway-based company.

Created in 2020 as a joint venture between Eni’s Plenitude unit and Norwegian private equity firm HitecVision, Vargronn’s two most advanced projects are currently in the UK.

One is a 20% stake in the giant SSE-operated Dogger Bank fixed bottom wind farm and the other is the 560MW Green Volt floating offshore wind project in Scotland, where Vargronn is partnered by the UK’s Flotation Energy.

“In any case, I think it’s really important to have a competence in all types of foundation concepts – just look at the hybrid development areas that Scotland offers, where you could be in 50 metres but then you are suddenly in 70 metres or 100 metres,” Bull states.

The Green Volt project came out of Crown Estate Scotland’s Innovation and Targeted Oil and Gas (INTOG) leasing round and, when completed, it will deploy up to 35 turbines to deliver electricity to power oil and gas platforms, as well to the UK grid.

With its leaning toward offshore wind in the North Sea, Bull says the company sees decarbonisation of oil and gas through electrification projects as an opportunity for Vargronn to carve out an attractive niche areas of business.

Green Volt has qualified to take part in the UK’s AR6 round for CfD offtake, Bull says, adding that the company is “fairly confident on the technology side, with some solid concepts in hand,” but not yet ready to reveal which ones it prefers

He is also upbeat about how Green Volt and a second project called Cenos can meet INTOG’s other objective of helping to derisk the supply chain for floating wind.

The exclusivity agreements signed by Vargronn and Flotation Energy for the two floating offshore wind developments extend to almost 2GW capacity.

Bull adds one proviso to this: the UK government must put enough resources into the promised funding for the INTOG floating wind projects.

“At the end of the day, it's going to come down to the pot of money for future CfD rounds that the (UK Department for Energy Security and Net Zero) or the new secretary of state will decide. It’s the sizing of that pot and how many hundreds of megawatts we can get into that that's going to be a key aspect of this,” he says

A rare thing

In this sense too, Bull is upbeat about prospects, even with elections looming.

“Looking at the politics of the UK, especially over the last 10 years, it is rare to find a government so aligned around a single technology, offshore wind,” he states.

While noting that most UK political parties are also keen on nuclear and support carbon capture and storage, Bull thinks support for offshore wind and the employment that it creates is likely to strengthen rather than weaken the case for floating wind, whatever the outcome of the UK’s election on 4 July.

“So whichever government may be coming in we’ll find there’s a solid base for wind in the UK. The excitement around floating wind, and particularly what it could do for Scotland and Wales and English regions that have not been as well served yet as the East Coast, is such that I think there's a real chance to level up in a different type of way [based on floating wind] and also an opportunity for the UK to maybe take that leading space that is up for grabs," Bull states.

Tough period

The Vargronn boss acknowledges that the last two or three years have been very tough, for offshore wind generally and for floating wind in particular.

“It was tough enough for bottom fixed offshore wind and anything more technically difficult seems to move further to the right,” he states.

If part of the challenge for floating wind is that the industry hasn’t managed to get to proper scale yet, Bull believes vehemently that it is on the cusp of step up.

“Apart from Scotland, we've seen new developments moving in France and in Korea as well as Scotland, and they will come in Norway,” he states.

“We'll also see it happen at some point in the US, whether it's Maine or California.”

Bull thinks he got a glimpse of what can be gained when the industry can get to the point where it can make real economies of scale through his involvement in Norway’s pioneering Hywind Tampen project, first with the Equinor, the developer and then with Aker Solutions.

In the latter position he was overseeing a contractual scope that covered the engineering, procurement, and construction of 11 floating concrete hulls plus marine operation services which included project management, engineering, assembly site management, mooring system installation, tow-to-field and installation of the floating wind turbines.

“I saw the speed that we got up to when the pace of the development picked up and we started getting closer to a plug and play platform for those particular floaters. And that was just 11. Imagine the economies of scale if we could do 50 or 100,” he says.

Among the challenges that floating wind must overcome to reach the Elysian fields of lower cost gigawatt-scale project developments, Bull joins the chorus of voices identifying vessel availability and port capacity – in addition to offshore transmission and grid access – among the top challenges.

In this he supports the argument put forward by trade associations such as RenewableUK that well-placed port investment bring significant benefits along the value chain.

“Here we are looking at ports here that need to be multipurpose,” he says, citing early examples of ports that have benefited from a collaborative approach between industry and the supply chain to include Espjerg in Denmark and Cuxhaven in Germany.

On ports, Bull reckons a step change needed to add depth to a sector that currently has a slant toward private actors that are not always fully capitalised.

To foster more direct investment in ports he wonders whether UK might consider a return to something like the UK government’s Green Investment Group (GIG), which later became the Green Investment Bank before that entity was acquired by Macquarie in 2017.

“That was a really interesting policy (instrument) which reduced the risk around offshore wind by putting bankability on the table,” he says, pointing to options for taking equity positions for derisking and offering tax breaks.

“There are many initiatives you could have here to try and drive that investment, and you don't have to expect government to be there forever,” he added.

Norway's wind pivot

Norway’s wind resource may not be as attractive as the UK’s, with a much heavier reliance on floating wind, but regulatory, economic and political fundamentals in that country – including a strong commitment to the electrification and the decarbonisation of heat, transport and oil and gas – exert a strong pull when it comes to Vargronn’s own investment strategy.

With limited scope for upgrading hydroelectric capacity, Bull is adamant that Norway cannot reach any of its climate targets without solar and onshore wind and, he points out, this is a nation where onshore wind turbines have encountered resistance.

"The 40 terawatt hours that this country needs to add… is essential for electrification of the society and the only big bang for the buck you get there is offshore wind,” he declares.

Bull lists Norway’s attractive deepwater ports, top notch contractors, high skills levels and impending peaking of oil and gas activites, as pointing unequivocally to a major wind sector in the future.

“All those blue collar jobs need to be replaced somewhere, we need to find, you know, the right kind of just transition jobs for them. And offshore wind offers all of those opportunities, he says.

“So I think you know, the fundamentals are in place.”

Bull acknowledges the challenges in a high cost country like Norway which does not have its own OEM and recent “difficulties” in obtaining the right level of support in the regulatory and political sphere, but he detects strong cross party support in parliament to push, particularly for oil and gas electrification from offshore wind. “And I think that's an interesting stepping stone in itself,” he adds.

In terms of subsides, Bull acknowledges that there are requirements for initial support, particularly with floating, but he cites consultancy studies suggesting that wind sector investment will pay for itself “many times over” in terms of actually impact on the economy afterwards.

“Norway is a country that is highly reliant on electricity, and there's an energy security element around this as well” he notes, pointing out nuclear power is not on the agenda in Norway either.

“So this is something where I think there's a willingness also to pay because we've seen incredibly high power prices in Norway. And if you had a CfD in the back of it, then you actually have a hedge for consumers as well” he adds.

“So I think there are some policy mechanisms here that Norway could learn from the UK would actually reduce the increase in power prices for consumers as well.

Vargronn has worked with Equinor in preparation for a possible bid on the Utsira Nord floating offshore wind area.

Looking outwards to other floating wind markets in Europe and beyond, Bull urges host nations to keep in mind the benefits of a solid policy mechanism, such as an inflation-adjusted CfD which "remains the gold standard policy mechanism for offshore wind, both floating and fixed".

Providing this, along with a continuous auctions available for pipeline of projects and an efficient regulatory and permitting approval process, creates the positive feedback loop for the supply chain that helps solves problems like vessel shortages, Bull reckons.

"If you see those things put in place, private companies will invest. And that's the key bit you'll see probably co investment with developers with the supply chain, you'll see investments in vessels as well... you can unlock those elements, but you have to get the rest of the first part in place. And that's what policymakers and politicians need to fully understand."