Floating wind is 'dangerously close' to being commercially viable

**Ian Griggs** (0:04)
Hello, and welcome to the Windpower Podcast with me, Ian Griggs, editor of Windpower Monthly. In the final part of our series recorded at the recent WindEurope Conference in Madrid, I spoke to three specialists in the floating wind sector about the prospects for this technology and how close it is to becoming commercially viable. I also asked whether current offshore auction models were fit for purpose and explored the likely consolidation of technology players as the sector matures over time. I began by speaking to Hugh Kelly, CEO of the developer Simply Blue Energy.
So Hugh, the benefits of floating wind in unlocking deeper waters or creating offshore wind where fixed bottom foundations would not be viable are clear. How close do you think the industry is to making it a commercial reality?

**Hugh Kelly** (0:57)
I think we're getting dangerously close. I think the floating technology itself is maturing well.
I think our bigger challenge is supply chain. The port developments and all of the other elements of the supply chain need further investment. There are other aspects of that constraints on the development of floating, but they're the same constraints as there are on other renewables. We're talking about grid, for example. But in terms of floating, I would really focus in on the ports. We've got to see more investment in the ports.

**Ian Griggs** (1:24)
As a developer, what types of specific auction model could tempt developers to invest in what could be a risky venture? How do you gauge the current appetite of investors to back those projects?

**Hugh Kelly** (1:36)
So we're obviously working with the CFD system at the moment in the UK. And that CFD system has served the UK well, particularly the more mature fixed bottom technology. Whether it's the best auction system for an emerging technology like floating, I think is a good question. We're essentially asked to bid for projects we've never built before. That is inherently risky. It is a system that also rewards people who are eligible with no guarantee that they'll carry through.
When you're driven down to the lowest price possible, it doesn't encourage the pursuit of innovation. It encourages instead the pursuit of cost minimization.

**Ian Griggs** (2:17)
Safety first.

**Hugh Kelly** (2:18)
Safety first, following paths that have been worn already when innovation is what's required.
I would argue that it may be better if we had a system that projects that are ready to go and that have the backing can secure a collaborative support structure rather than a secure support through a competitive system. I understand the imperative for a competitive system from a political perspective, but there's only a few hundred megawatts of floating deployed globally yet. In the greater scheme of things, even these projects, if they're expensive, are not going to move the dial hugely. But what we do need is we need to get more deployed. Cost will only come down with the deployment of further floating projects, not with the simple passage of time.

**Ian Griggs** (3:03)
So it sounds to me like you're saying we need an entirely new auction model.

**Hugh Kelly** (3:08)
Arguably, yes. I mean, CFTs are well suited to tried and tested technologies. They've been a fantastic success for Bottom Fixed. But you know, when we look at solar and recognize that it was a thousand times more expensive in 1972 than it is today, one has to recognize that at the present cost of floating wind, it is far from mature. The prices will come down, the reward and benefit will be there, but it has to be supported and considering the imperative to deliver more renewables at scale and the opportunities in floating, it seems to me like a good risk to take to invest a little bit more now.

**Ian Griggs** (3:44)
Right. You mentioned risk a couple of times. How do you gauge the appetite of investors to actually risk their money?

**Hugh Kelly** (3:51)
It varies. It has struggled in the last few years, but we're seeing renewed interest. I mean, we've recently taken inward investment from Kansai Electric Power, which is the second largest utility in Japan. We're seeing great support and great interest from Japan and great vision. We're seeing the same out of the UK. I think we're seeing a stabilization in the market. But risk is the game of business. It's a risk and return.
It's about managing that risk. And certainty is part of that. And certainly regulators and government can help by providing certainty. And I have to compliment, at least the CFD system does that. The regularity of it provides that confidence now that we're over the hump and the bump that we hit in AR5. It's good to be back on track.