Specialist
Former Head at Ørsted AS
Agenda
- Offshore wind outlook across mature and emerging markets, including entrance of oil majors
- Ørsted's (CSE: ORSTED) first-mover advantages, including changing competitive dynamics
- Project pipeline update and future win likelihood
- Siemens Gamesa and Vestas's offshore offerings, and Ørsted turbine selection
Questions
1.
How realistic do you think the EU’s announced target of 300GW of offshore wind by 2050 is? What does this target mean for the industry?
2.
How do you think the offshore wind industry will approach the challenges of high levels of renewable energy and non-consistent baseloads? Could that impact the way auctions work or how the industry is structured?
3.
Do you think the competitive landscape will change if auctions start to be won with the addition of batteries rather than the lowest price?
4.
Could you highlight some players that you think might be interesting targets for the oil majors?
5.
Do you think Ørsted still holds advantages in data, site clustering and site selection over the oil majors? We discussed these factors in a previous Interview [see Energy Transition – First Mover Advantage in Wind – 24 April 2020], each of which is worth a couple of Euros per megawatt.
6.
How long do you think Ørsted’s market leadership will last for? When could that disappear?
7.
Would you say Ørsted has a higher number of site leases because it participates in more auctions? Is this also due to the company having a higher win rate on the auctions? Can it win on a lower price?
8.
Would you say an established reputation helps a player obtain more site leases? Does it help a player win more auctions once they have the site lease?
9.
How does winning more site-releases in emerging markets translate into an advantage on euros per megawatt? Does it give a player an advantage on that or does it just make it likelier to scale quicker?
10.
You mentioned that Ørsted still has a small data advantage. There seems to have been developments around third-party software programme players such as Gram & Juhl, which is now owned by KK Wind – I believe it is being used on the Siemens Gamesa platform. Do you think the technology available at the OEM level will remove Ørsted’s data advantage over the oil majors?
11.
Does Siemens Gamesa get scale advantage on data with every turbine it sells? How can Ørsted stay ahead if it’s just one customer?
12.
How large a euros per megawatt-hour advantage do you think Ørsted will have over the oil majors when it builds out capacity with Siemens Gamesa turbines using third-party software?
13.
Would you say Ørsted’s data advantage has been almost negligible for a while? Is this a more recent development?
14.
Do you think Ørsted’s site clustering advantage is still present in emerging markets, even if it is absent in new markets?
15.
Do you think Ørsted’s site clustering advantage will remain in already existing markets?
16.
What proportion of auctions that come up do you think have a close-by site that benefits the incumbent player?
17.
Do you think there are still attractive PPAs [power purchase agreements] to be had within developing and developed countries?
18.
Could you outline how pricing per megawatt on auctions is trending? We’ve touched on the movement towards more full-system-level bidding processes and changes in the factors behind players winning a bid. How do you think the oil majors’ entry is impacting pricing, given they need to hit their capacity targets? They’re seeking to expand 40% YoY over the next five years, with utilities only expanding 10% over the same period.
19.
How frequently would you say the site leases come up for auction? Who currently owns the leases? Is it typically the government or private businesses?
20.
Could you estimate how many sites come up for auction in a given year?
21.
How many sites do you think will come up for auction in the next five years?
22.
Is a site’s number of gigawatts based on a proxy for average number of gigawatts per kilometre, or is it based on the wind as well?
23.
Could you estimate the number of gigawatts coming up for auction globally in the next five years?
24.
Do you expect oil majors to bid aggressively on the majority of sites auctioned in the next 3-5 years? Would Ørsted still be quite active in that bidding?
25.
Do you think Ørsted’s first-mover advantages over the oil majors around reputation and site selection will allow it to win an outsized share of the 10-30GW you estimated will be auctioned globally in the next 3-5 years?
26.
How could Ørsted, the utilities and oil majors’ shares of the site leases evolve?
27.
What share would you expect Ørsted to take of the 30GW coming up in the next 15 months? What share could the oil majors take?
28.
Ørsted uses a high number of Siemens Gamesa turbines. Could you outline the scale benefits of using the same turbine across the portfolio? What could be the switching costs if Ørsted were to move that share of turbines to GE or Vestas?
29.
What are your expectations around Ørsted shifting volume over to the 12MW GE Haliade-X? Would you say the scale benefits from the company’s 9MW Siemens Gamesa turbines are so large that it will be difficult for Ørsted to justify shifting significant share to GE?
30.
Would Ørsted benefit from having a portfolio of 9MW Siemens Gamesa turbines if it started to buy the company’s 14MW offering? Would that be a new portfolio and necessitate building the scale benefits from scratch?
31.
What would it take for Ørsted to shift significant volume to Vestas? Would it have to offer a 16MW turbine?
32.
How would you value Ørsted’s portfolio of site leases, thinking about the potential to sell them to oil majors?
33.
How could increased battery inclusion in projects to enhance grid stability impact or reduce ROIC [return on invested capital] for players such as Ørsted? Do you think any players currently have battery advantages?
