Offshorewindtage 2019 Heiligendamm - Optimizing Operations Implementing lessons-learned Supporting global expansion Attracting new investors
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Offshorewindtage
2019 Heiligendamm
Optimizing Operations
Implementing lessons-learned
Supporting global expansion
Attracting new investors
0 March 2019
Ørsted develops energy systems that are green, independent
and economically viable
• Revenue (2018): DKK 76.9 bn Major Shareholders (voting share %)
• Danish State 50%
• EBITDA (2018): DKK 30.0 bn
• Seas NVE 10%
• 6,080 employees • Capital Group 5-10%
• Active in Scandinavia, United Kingdom, Germany, The Netherlands, USA, Taiwan and Japan
Offshore Onshore Bioenergy Customer Solutions
– Global leader in offshore wind – US onshore wind portfolio with – #1 in Danish heat and power – Develop green, innovative and
with 5.6 GW operational capacity 813 MW operational capacity generation with 25% of market cost efficient solutions for our
– Develop, construct, own and B2B customers
– Develop, construct, own and – Converting heat and power
operate offshore wind farms operate onshore wind farms plants from coal and gas to – Provide competitive route-to-
– Significant and attractive build- biomass market for own and customers’
– 184 MW under construction and a
out plan of 3.4 GW towards 2022 generation portfolio
pipeline of more than 1.5 GW – Innovative waste-to-energy
– Ambition of 15 GW installed technology (Renescience) – Optimize activities within natural
offshore wind capacity by 2025 – Energy storage solutions with the gas
first 20 MW battery storage
project in operation – Market trading operations to
optimize hedging contracts
– Solar: first large-scale solar PV
project Permian Solar 250 MW
1
Ørsted’s strategic playing field
A purpose-driven, global, green energy leader
Renewables generation Storage T&D Consumption
Wholesale
Offshore wind
Corporate customers
Electricity
storage Electricity
Onshore wind transmission
Residential customers
and
distribution
Solar PV Electric heating
Power-to-gas
Bioenergy Electric vehicles
Invest to grow Explore potential Exit No presence
2
Significant transformation of Ørsted over the past decade 1
CO2 emissions reduced Operating profit (EBITDA) Capital employed International expansion
by almost three quarters DKK bn
Renewables
DKK bn
Renewables
Share of operating profit (EBITDA)
g/kWh %
- 72% 37% International
share +5x
462 15.0 83
57
9.3
87%
131
16%
2007 2018 2007 2
2018 2007 2018 2007 2018
Note 1: figures taken from Ørsted’s Annual Report 2018 and Capital Markets Day 2018
Note 2: excludes EBITDA contribution from new partnerships
3
Ørsted strategic transformation
Green share of power generation ~99% in 2025, approximating zero emissions
Ørsted share of green power and heat gCO2e/kWh
99
% 95 600
80 500
Global energy sector emission target to
stay below 2-degree global warming
64 400
300
Ørsted CO2 emissions
200
17
100
0
2006 2017 2020 2023 2025 2010 2015 2020 2025 2030 2035 2040 2045 2050
4
Ørsted green growth ambition for 2030
Installed renewables capacity
GW Offshore wind Onshore wind Bioenergy Renewables1
+30 GW
Volume growth not an
objective in itself – focus is
on value creation
10 GW
2 GW
2010 2020 2030
Note: 2020 includes Borssele 1&2 capacity, COD expected in Q4 2020/Q1 2021
1. Includes onshore wind, offshore wind, solar PV, storage and biomass
5
Ørsted Offshore overview
Ørsted offshore wind global footprint Unparalleled experience and track record
North America Europe Asia Pacific
Bay State Wind
Revolution Wind
South Fork
Block Island
Ocean Wind
Garden State 25+ years of experience
Skipjack Formosa 1.1
Coastal Virginia Formosa 1.2 1991 and track record in the 2018
Greater Changhua projects offshore wind power sector
Anholt
26 offshore wind farms 5 offshore wind farms
West of Duddon Sands in operation under construction
Walney Extension Horns Rev 1 & 2
Westermost Rough Avedøre
Hornsea 1
Walney 1 & 2 Hornsea 2 Vindeby
Hornsea 3 & 4
Isle of Man Nysted
Race Bank
Gode Wind 2
Lincs Gode Wind 4
Barrow 5.6 GW ~ 2,450 3.4 GW
Gode Wind 3
Gunfleet Sands 1 & 2 Gode Wind 1 Constructed Dedicated under
Burbo Bank Ext. capacity employees construction
Borkum Riffgrund 1
Burbo Bank
Borkum Riffgrund 2
Gunfleet Sands 3 Borssele 1&2 Borkum Riffgrund West 1&2
London Array
OWP West
~ 1,150
13 million
turbines 23
In operation people
World's Partnerships
Under construction with clean
leading
electricity
Under development operator
Decommissioned after 25 years
6
Ørsted built a strong integrated end-to-end business model
Ørsted Offshore core competencies ~2,450 Full-time employees
~250 ~1,300 ~700 ~200
Develop Build Operate Own
Identify and Manage Conduct life-cycle M&A, attract capital
mature projects construction, maintenance through partnerships,
sourcing and supply asset management
Full-time employees
2,450
ü Ability to design and optimise projects with a 'total life-cycle cost of wind farm' mindset
ü Experience and expertise along the entire value chain allow for better understanding
and management of risks
650
ü End-to-end model reduces LCoE through fast feedback and learning across the entire
organisation
40 70 75 100 160
250 250
Northland
Equinor CIP SSE WPD Innogy E.ON Vattenfall
Power
7 Ørsted Offshore, February 2019
Ørsted pioneered the offshore wind industry …
Unrivalled track-record in offshore wind
Ørsted cumulative constructed offshore wind power capacity, MW 12,760 MW
8,943 MW
7,557 MW
5,587 MW
3,849 MW
3,009 MW
2,487 MW
2,098 MW
1,371 MW
1,004 MW
476 MW
5 MW 50 MW
1990 2000 2005 2010 2012 2013 2014 2016 2017 2018 2020 2022 2025
Pre-2009: Project by project Post-2009: Industrialised approach to planning and execution of offshore wind projects
Selected projects
Vindeby Horns Rev 1 Walney Extension Hornsea 1
First offshore wind farm First large scale offshore wind The largest operational offshore The world’s largest offshore wind
in the world farm in the world wind farm in the world farm once constructed
5 MW 160 MW 659 MW 1,218 MW
Turbine capacity 0.45 MW Turbine capacity 2 MW Turbine capacity 7-8.25 MW Turbine capacity 7 MW
Nr. of turbines 11 Nr. of turbines 80 Nr. of turbines 87 Nr. of turbines 174
Rotor diameter 35 m Rotor diameter 80 m Rotor diameter 154-164 m Rotor diameter 154 m
Distance to shore 1.8 km Distance to shore 18 km Distance to shore 19 km Distance to shore 120 km
8
… and is today the global leader
Largest offshore wind power player globally today Ørsted Offshore’s scale enables cluster synergies
Global offshore wind capacity, GW
30% 10% 7% 10% 2% 2% 3% 4% 2% 1% 0% 1% 2% 1% 1% 1• UK West coast (East Irish Sea): Barrow, Burbo Bank,
Burbo Bank Extension, West of Duddon Sands, Walney
9.0 1, Walney 2, Walney Extension
2• East UK North: Westermost Rough, Lincs, Race
Other Bank, Hornsea 1, Hornsea 2
30% 3• East UK South: London Array 1, Gunfleet Sands 1,
3.4
UK 5.7 GW Gunfleet Sands 2, Gunfleet Sands 3
40%
Germany 1.4 GW 4• Germany: Borkum Riffgrund 1, Borkum Riffgrund 2,
3.6
Denmark 1.0 GW ~30GW Gode Wind 1, Gode Wind 2
Netherlands 0.8 GW 5• Danish waters 2: Anholt, Avedøre, Nysted, Horns Rev 2
Dutch waters: Borssele 1 & 2 5
16% 6
3%
4%
RWE / E.ON
EnBW 7%
1
Iberdrola
4
Vattenfall 2
2.8 2.7
5.6 6
0.9 3
1.4
2.0
1.1 0.9 0.9 0.8
2.0 2.0 0.7 0.6 0.4 Synergies
1.4 0.7 0.6 0.3 0.5 0.4 0.4 0.4
0.3 0.2
0.4 0.3
0.6 0.8
0.4
0.3
0.3
0.5 0.3
0.2
0.4
0.2
0.2
0.4 ü Lower logistics costs
0.1 0.3
Mitsubishi ü Fewer technician hours
Northland
Vattenfall Iberdrola
Power
CIP Shell WPD Diamond ü Fewer facilities needed
Generation
China ü Lower inventory levels
Innogy E.ON EnBW Equinor SSE Eneco
Longyuan
Operational offshore wind farms
Constructed Under construction % share of global constructed capacity
Offshore wind farms under construction
Cluster
Source: Bloomberg New Energy Finance , February 2019, Ørsted analysis Note 1: London Array is operated by London Array Limited
Note 2: Horns Rev 1 is operated by Vattenfall however owned 40% by Ørsted
9Ørsted offshore proven construction track-record and
leading operating capabilities
Strong construction track-record due to full EPC1 control Leader in operating offshore wind power plants
# of operated turbines, February 2019
Country Asset FID Gross capacity (MW)
Borkum Riffgrund 2 2018 465
1,147
Walney Extension 2015 659
Siemens 551 2x
Race Bank 2015 573
Burbo Bank Extension 2014 259
E.ON 526
Gode Wind 1&2 2013 608
Vattenfall 437
Westermost Rough 2013 210
Borkum Riffgrund 1 2011 312 Innogy 317
West of
2011 389
Duddon Sands
MHI Vestas 236
Anholt 2010 400
Equinor 162
London Array 2009 630
Walney 1&2 2009 367
SSE 142
Horns Rev 2 2007 209
1. Engineering, procurement and construction
10Robust and highly visible offshore wind build-out plan
11-12 GW ambition secured ahead of time – new ambition set towards 2025
Ørsted installed capacity projection towards 2025, GW
15
~ +2
12.9
1.0
0.9
1.1
9.0 0.9
1.4
0.8
5.6 1.2
2018 Hornsea 1 Borssele 1&2 Hornsea 2 2022 Greater German Greater Deepwater 2025 New 2025
1,218 MW 752 MW 1 1,386 MW Changhua Projects 2 Changhua portfolio 3 ambition
1&2a 900MW 1,142 MW 2b&4 920MW 954 MW ~15 GW
Country
On time / budget / / / / / / /
FID timing Feb. 2016 Jul. 2016 Sep. 2017 Exp. 2019 Exp. 2021 Exp. 2023 Exp. 2020/2021
Expected
Commissioning H2 2019 2020/2021 H1 2022 2021 2024/2025 2025 2022/2023
1. Ørsted will, in accordance with the Dutch tender regulation, build Borssele 1 and 2 within four years from December 2016 with a flexibility of 1 year
2. Ørsted has been awarded 5 German offshore wind projects with a total capacity of 1142 MW. The projects are planned to be commissioned in 2024/25, subject to Final Investment Decision (FID) by Ørsted in 2021
3. Subject to award of the Construction and Operations Plan (COP)
11Ørsted has a long standing and proven track record in
developing successful partnerships
European partnerships1 North American partnerships1
United Kingdom Denmark United States
Walney Extension (50%) Race Bank (50%) Horns Rev 1 (40%) Garden State South Fork (50%) Bay State Wind (50%)
659 MW (2017) 573 MW (2016) 160 MW (2006) 800 MW (2018) 130 MW (2019) 800 MW (2016)
Walney 1&2 (50.1%) Hornsea 1 (50%) Nysted (42.7%)
367 MW (2009 / 2010) 1,218 MW (2018) 166 MW (2010)
West Duddon Sands (50%) Westermost Rough (50%) Anholt (50%)
389 MW (2010) 210 MW (2014 / 2018) 400 MW (2011)
Coastal Virginia2 Revolution Wind (50%)
12 MW (2017) 704 MW (2019)
Asia Pacific partnerships1
Germany
Gode Wind 2 (50%)
263 MW (2014)
Gode Wind 1 (50%)
344 MW (2015)
Burbo Bank Extension (50%) London Array (25%) Borkum Riffgrund 1 (50%)
258 MW (2016) 630 MW (2009 / 2014) 312 MW (2012)
Taiwan
Gunfleet Sands (50.1%) Lincs (25%) Borkum Riffgrund 2 (50%) Formosa 1 (35%)
173 MW (2018) 270 MW (2017 / 2018) 465 MW (2017) 128 MW (2016 / 2018)
Note 1: The percentage in brackets represents Ørsted ownership interest and year when the partnership was created
Note 2: In 2017 Ørsted and Dominion Energy entered into a strategic partnership in which Ørsted will construct two 6-megawatt turbines off the coast of Virginia Beach
12By 2030 offshore wind power will be truly global…
Strong growth in established and new offshore wind power markets
Installed capacity, GW
~ 13 GW
12%
153.7 Offshore wind capacity with firm political commitment1
11.4
Targets in existing footprint markets
The UK government has a CfD roadmap with bi-yearly auctions of
2-4GW towards 2030 to reach 30GW
Target of 15GW offshore wind by 2030
~81
Offshore Wind Energy Roadmap 2030 outlines 11.5GW by 2030
through 1GW per year post 2023
70.1
~ 10 GW MA 2027 (2035) target: 1.6 (3.2) GW. VA 2028 target: 2.0GW.
NJ 2030 target: 3.5GW. NY 2030 target: 2.4GW.
GW
19% Current 2025 target of 5.5GW which has already been reached
86.0 through grid allocation and price auction
4.1 Outlined plan for three 800MW (2.4GW) offshore wind projects before
2030 by the Danish Government leading to a total of 5GW in 2030
Authorities of Belgium have announced plans for offshore wind targets
of 2.2GW by 2020 and 4GW by 2030
39.5
~ 5 GW
Targets in next horizon markets
25%
36.7
72.1 The Indian government has target of 5GW before 2022 and 30GW by
~46
~ 1 GW
12.4 2030
The South Korean government has a total wind target of 18GW by
42.4
GW
2030 of which 13GW is allocated to offshore wind
33% 12.1
24.2
France has a 2023 target of 3GW installed and 6GW in the pipeline
0.7 11.0 post 2023
2005 2015 2020 2025 2030
Americas Asia Pacific Europe
# GW addition/year % CAGR
Source: Bloomberg New Energy Finance (BNEF), 2H 2018 offshore wind market outlook Note 1: Firm political commitment is defined by a country’s public offshore wind target by 2025/2030
13 Ørsted Offshore, February 2019At the forefront of making the industry cost competitive
Multiple levers to drive down cost in offshore wind
1 2 3
Scale Innovation Industrialisation
§ Turbines and rotor size § Foundation design (e.g. monopiles) § Transition from single supply to
multiple global suppliers
§ Sites § Electrical
§ Vessel size
§ Cable capacity
ü ü ü
220 m
Rapid technological development 164 m
Wind turbine rotor diameter, year of commissioning 154 m
120 m
107 m
Boeing 747, 76m 90 m
80 m
2002 2005 2007 2011 2014 2016 2021 1
1. In Mar. 2018 GE unveiled a 12 MW turbine. Each Haliade-X unit, will be capable of powering 16,000 homes and producing 67 GW/h per year, based on wind conditions on a typical German North Sea site
14Levelized cost of electricity for different technologies
The rapid cost reductions in the industry, have made offshore wind power competitive relative to conventional power
generation based on fossil fuels
EUR/MWh 2016 prices
- 60%
2012
2017
165€ 65€ 55€ 66€ 70€ 72€ 113€
Offshore* Offshore** Onshore Solar PV Natural gas Coal Nuclear***
Source: Bloomberg New Energy Finance (BNEF) for CCGT and Coal plants for Northwest Europe, Danish Energy Agency and BNEF for Offshore WInd.
For offshore wind: Including cost of transmission – Calculated as Levelised revenue (subsidy and market price) of electricity over 25yrs lifetime as a proxy for the levelised cost of society. 3,5% real discount rate
used. *Generic Offshore Wind, Northwest Europe, FID 2012. In 2012 our goal was to reduce offshore wind costs to 100 Euro/MWh in 2020, ** Hornsea 2, UK, *** Hinkley Point, UK. Same approach as for Offshore
Wind. Strike price of 92,5 £/MWh in 2012 real prices. Lifetime of 60yrs, 91% capacity factor.
15Initiatives to improve performance
Initiatives to improve, optimize and execute the daily Initiatives to optimize the
service performance of the wind farm
New SOV, Wind of Change Advanced
Analytics Lab
Inspection methods Control and
monitoring centre
Develop analytics models that can
optimize production, and correct
inefficiencies in wind turbines
CMC center to improve diagnostics
Purpose-built SOV to start in and troubleshooting, increase # of
May 2019. This will have remote resets and reduce reset
improved accessibility and be a response times has now opened
long-term solution
Testing of drones for external
blade inspection
Site office Back office
$
1617
Performance improvement through combination of access
methods
Accessibility to the wind farm with full logistics set-up
100%
80%
60%
Days
40%
20%
0%
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
Helicopter SOV CTV
17Ørsted is continually developing operational improvements, with
40 products released by Ørsted Lab in 2018
Example; release of HYPE (Yaw misalignment solution)
Situation pre and post solution Solution development
1. Smart wind sensors installed replacing wind vanes (at
low cost) for high accuracy wind speed and direction
data
2. Turbine yaw misalignment data captured
Turbine alignment pre-solution 3. Data used in the Ørsted Lab developed HYPE (patented)
algorithm to correct yaw misalignment
4. Additional service agreement entered into with JV
partnerships to implement solution at site
Results
Turbine alignment post-solution
ü Uplift in production of 0.2-0.3% for Siemens fleet
ü Reduced lifetime integrity costs due to reduced loads on
the structure and componentsPerformance improvements through faster and safer inspection
methods
Drones (autonomous / piloted by ABJ Drones) Optical- and thermal-imaging; vessel based and
pile-based
1. Optical and thermal
imaging data collection
via custom Unmanned
Aerial Vehicle (UAV)
2. Structural and internal
data processing
through advanced
artificial intelligence (AI)
technology
3. 1 day for inspecting full
turbine (three blades) 1. Optical and thermal imaging data collection via vessel-
based or pile-based camera, measured at app. 100-200
metres distance
2. 1 day for inspecting full turbine (three blades)
19Performance improvement through optimized feed-in
via Transmission Capacity Management
Transmission
System
Capacity
Ørsted Trianel Trianel Ørsted Merkur AC 130 160 MW
BKR01 WP Borkum 1 WP Borkum 2 BKR02 Offshore AC 131 160 MW
312 MW 200 MW 200 MW 450 MW 400 MW
AC 108 200 MW
AC 109 200 MW
OWF DolWin a 800 MW
Scope
DC 602 800 MW
AC AC
33 kV 33 kV AC 154 225 MW
155kV 155kV
AC 155 225 MW
TSO Scope AC 130 AC 108 AC 154 AC 156
AC 131 AC 109 AC 155 AC 157
AC 156 200 MW
Offshore
AC 157 200 MW
AC Interlink DolWin a -g DolWin g 900 MW
DC 604 900 MW
AC DC AC DC AC Interlink
800 MW
155kV 320kV 155kV 320kV DolWin a - g
DolWin - a DolWin - g Model based Temperature
Monitoring of DC and AC Cables
Nord- DC 602 DC 604 and Transmission Capacity
TSO Scope deich Dörpen / Management (TCM II)* for
Onshore connected Offshore windfarms
Control HSL West • Determination of Feed-in Profile
Room Lehrte based on Power Output, Wind
AC Forecast and Turbine
380kV Availability
*Main Goals of TCM II:
• To avoid thermal overloading of offshore DC Cables (TSO’s AC Cables in a later stage)
• To avoid overloading and consequently shutdown of HVDC converters and entire offshore grid connection systems
• To avoid the violation of the 2K criterion of offshore DC Cables (TSO’s AC Cables in a later stage)
20 • To ensure the utilization of the highest possible transmission capacity considering bullet points aboveChallenges (1): Grid build-out not matching offshore wind build-out
Energy Demand
2018 2025?
2020
21 Source: TenneTChallenges (2): Additional Offshore Wind Farms In-feed of
1,715 MW in 2019 (Diele, Dörpen West and Emden Ost)
NOR-2-3 (DolWin3) 900 MW NOR-8-1 (BorWin3) 900 MW NOR-6-2 (BorWin2) 800 MW
• BKR02 (450 MW, COD in 2019) • Global Tech 1 (400 MW, COD in 2014) • Veja Mate (400 MW, COD in 2016)
• Merkur (400 MW, COD in 2019) • Hohe See (500 MW, COD in 2019) • Deutsche Bucht (252 MW, COD in 2019)
• Albatros (113 MW, COD in 2019)
+850 MW +500 MW +365 MW
22Challenges (3): Scarcity of experienced offshore resources for
worldwide expansion
North American partnerships1
United States
Garden State South Fork (50%) Bay State Wind (50%)
800 MW (2018) 130 MW (2019) 800 MW (2016)
Coastal Virginia2 Revolution Wind (50%)
12 MW (2017) 704 MW (2019)
Asia Pacific partnerships1
Further countries and regions with build-out plans in
the next years: Taiwan
France, The Netherlands, Italy, Poland, Sweden,
Japan, South Africa, South America, … Formosa 1 (35%)
128 MW (2016 / 2018)
Note 1: The percentage in brackets represents Ørsted ownership interest and year when the partnership was created
Note 2: In 2017 Ørsted and Dominion Energy entered into a strategic partnership in which Ørsted will construct two 6-megawatt turbines off the coast of Virginia Beach
23Challenges (4): Secondary market for offshore wind investments
catching up and requiring substantial resources
• Market for secondary offshore
wind transactions catching up
• Increasing interest from Asian
players (not only to invest but also
to learn from operating wind
farms)
• High effort needed due to level of
support and interaction during due
diligence phase
24 Source: Intralinks Deal Flow PredictorQ&A
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