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Stormy Waters Ahead for Offshore Wind

Angelica Oung

Monday, June 19, 2023

Chris Keefer  0:00  

Welcome back to decouple. Today I'm joined by three time returning guests, Angelica Huang. And we are going to have an exciting conversation today about offshore wind. But before we do a couple of words about Angelica, many people are familiar with her.

She is according to her Twitter profile, the original manic nuclear scheme girl

on LinkedIn, she keeps it a little more dialed down. She's the founding editor at Taiwan offshore wind unredacted. And, of course, you know, I'm most proud of her for her contributions to decouple this batches. But Angelica is a busy bee. And I'm really excited that she's making some time to come on to talk about offshore wind. We have been planning this for some time to cover this topic. And I can't believe I didn't think about Angelica earlier.

For your reference, just because we have this catalog of 200 episodes and there's some there's a lot of people that are tuning into the podcast recently and are a little overwhelmed with the archive.

You can check out Angelicus first performance on decouple Taiwan's energy gamble and we think we'll be touching on Taiwan again, as a location that has bet big or has big plans for offshore wind. Angelica, Elsa did a great book review, I think anyway, of Benfleet Burke's how big things get done, and that interview and some others is actually led to introductions of Gary rose VP nuclear OPG, as well as his Excellency, His Excellency Mohammed Al Hammadi, being introduced to Benfleet Burke to update his database and understanding of how big nuclear things can get done well. And lastly, the last episode i'll recommend before we get started here, and thank you for your patience, loyalty couple listeners. I think the episode you know, we're always trying to come up with spicy episode titles, and I think this one still endures as the best ever. It was a very interesting interview, and and it's Hannah Rosenbloom, I think anyway, the episode was called What's the windrow Europe's lust for the gust. And that was all in the context of the 2021 windrow, which really threw Europe's power systems for a run. So lots to dig back into the archives to explore. But without further ado, Angelica, welcome back to the couple. Always glad to be here. And I'm so excited for this one, Chris, because I think probably most of the couple listeners know of me as the manic nuclear scheme, girl, but I actually have another identity, which is I'm also Taiwan's top winflo answer. I am.

Angelica Oung  2:42  

I don't make the rules that's just never heard that.

I love that. But yeah, I actually started doing offshore wind reporting, before I got into nuclear. And at one point, it was my favorite technology.

Taiwan went big into it. And it was actually my first time ever doing energy reporting. So I certainly know well, I have a different relationship with offshore wind than I do with nuclear. I'm really very much a supply chain reporter. I know about all the projects that's going on in Taiwan. I know where they're at what problems they have. And, you know, if anything should go awry, I always have eyes and yours, who tells me what's going on, so I can share it with everybody in the industry.

Chris Keefer  3:35  

Awesome. Awesome. And you know, like, obviously, my listeners are very aware of my biases. But I'm glad to bring someone on who's you know, fan of nuclear, but also I think has a nuanced take on wind. We're not here to sort of score cheap points. I don't think that would make for a very interesting podcast. I'm genuinely interested in learning more and challenging some of my assumptions and just trying to figure figure this, this very important form of energy out that obviously consumes a lot of headlines. Absolutely. We were kind of, you know, discussing in the pre chat some of the themes but for you for your goals for this episode, like what's what's like, the key takeaway for our listenership? Or what do you think the key theme is about this technology that maybe makes it interesting in 2023?

Angelica Oung  4:17  

In many ways, it's a very inspiring story. Offshore wind wasn't a technology that really had any traction at all. 20 years ago, the idea of sticking this these giant wind turbines in the middle of the ocean, even back around the early 2000s. CS was considered really a gamble and really foolhardy. But they really made it work. And a lot of smart people, smart engineers, really did amazing things with this technology. But we've also seen that the assumption that renewables are always going to get cheaper with time is not borne out with offshore wind. I think I'm not as familiar with solar photovoltaics. But looking at a lot of the charts out there, I think there's certainly a case to be made that they are costing down like more dramatically and new technologies marching on in this really, really incredible way. But offshore wind started off being very expensive, did cost down in a steady manner. And it really hit a plateau. And I think that actually, if anything, it's going to be going up in price.

Chris Keefer  5:36  

Well, let's, let's go back to basics here and discuss I mean, people know what wind is, you know, I think those of us who are landlocked have seen a lot of onshore wind, in jurisdictions where it's been widely deployed. But you know, what is offshore? Wind? Sounds like a simple question, but let's explore it in a bit more depth. I mean, what's, what's the rationale? What's the hype? What's the excitement? How is it different than than onshore wind? Why, Why the rush to go maritime with it?

Angelica Oung  6:05  

Well, there are drawbacks with onshore wind, you have land use problems, you have nimbyism, and also, as you go offshore, there is the potential for the wind to be both stronger and more steady, so you get a better capacity factor. So I think that that that's the original rationale for it. And also for, let's say, Taiwan, or anywhere, really, where you have ocean resources, if you can go and tap those ocean resources. If you're surrounded by them, it can help you out when you're tapping out of your onshore resources. So that's also the push outwards. The technology, it's not quite the same as taking a onshore turbine onto a foundation. Basically, it has to withstand at least 20 or 25 years of some crushing, brutal conditions in the oceans. Incredible corrosion. And of course, if you have a wind turbine that requires repair, work, it you can drive some guys up there and do the repairs in a truck. But if it's offshore, all of a sudden you're involving a vessel, it becomes extremely, extremely expensive. So everything out there has to be incredibly rugged.

Chris Keefer  7:43  

You mentioned, like avoiding land conflicts. But clearly, there's kind of still some aesthetic conflicts. I remember a famous case, I think it was members of the Kennedy family in Martha's Vineyard, very climate concerned, very poor renewables, but making a big stink about an offshore wind firm being planned there. But also conflicts with shipping fishing, Navy. I mean, maybe maybe Taiwan is pursuing this, because, you know, offshore wind turbines are the equivalent of a tank trap. I'm being facetious there. But you know, there are some conflicts that do arise, and we'll maybe get into the whale thing still, which I think is pretty unsettled science. But yeah, I mean, what are some of the the conflicts that come up just on that sort of maybe nimbyism basis or conflicts with other economic activity like like fishing, for instance,

Angelica Oung  8:31  

sure. There are still conflicts remaining, the biggest one is with the fishers. It is, you know, there's no two ways about it, it conflicts with their livelihood, because once you have those turbines there, you're going to have a hard time fishing around them. And this is especially going to be the case when we go into floating offshore wind. Because right now, for what we call bottom fixed offshore wind, that's when it's attached to the bottom of the sea. There's two kinds of structures you can have a monopile which is just like, you know, sticking a fence posts into the ocean floor and holding a wind turbine on top of that, or you have a jacket, which is a more complicated three legged or four legged structure was was trusses to make everything stable. Well, they are absolutely huge. But that those go down maybe like 5060 meters is probably the maximum for jacket structures. Beyond that, you're going to have to go with float with floating and they tend to have mooring lines, multiple mooring lines to hold down each each of the floaters and they are in the shape of a catenary like that. So they reach out pretty far on all sides. And these mooring lines make it really difficult For the fishing vessels to operate, and that's a major source of conflict in terms of wildlife. There is there's possible dangers in several different directions, we might as well talk about the whales. Now, since we're on the subject already, in Taiwan, there is the very rare Formosa white dolphin, which is on the verge of extinction we have we don't know how many individuals are out there, but probably in the double digits, and we're really keen to keep that species around. And the major threat is in the installation of offshore wind farms, because you have to drive those piles into the seafloor, that creates a lot of noise. And that has the possibility of deafening any kind of cetaceans, you know, and they say a Deaf whale is a dead whale, because once that those sound waves destroy their hearing, they lose the ability to feed. So there are mitigating measures, mainly called a bubble curtain, basically, it's just something that lays on the sea floor, that creates a circle of bubbles around the piling action. But that is only a partial mitigation method. So you also have to observe and make sure those precious white dolphins are not about before you start piling in Taiwan. The good thing about it is the piling is a limited time activity. After construction, there shouldn't really be the wind turbines shouldn't really be doing any damage to cetaceans, however, of course, they do spin so they catch the birds. And that is something that is somewhat unavoidable.

Chris Keefer  12:00  

I guess, you know, it's interesting, you know, because obviously, we can see what's what's above land. I mean, with onshore wind, there's this massive concrete foundations. But yeah, I mean, learning about these monopiles the trust's I think you said trestle piles,

Angelica Oung  12:14  

their coat jacket, they call jacket jackets,

Chris Keefer  12:17  

jackets. Yeah. I mean, and now on to floating, you know, with a lot of what you say weather dependent. I mean, I guess so because we can think of hydro is as weather dependent as well. But, you know, we use the best sites first. And I want to talk about where, you know, offshore wind has really taken off the most, and I think that would be you know, I'm thinking Denmark, I'm thinking the doggerel you know, that almost ancient landbridge that used to connect the UK with Europe. Tell me a bit more about that. And how if there is this kind of, we've used the best spots already, or whether there's, you know, tons more opportunity for relatively shallow areas where we can do the more simple, you know, mono pile or jackets rather than the floating, which sounds more challenging?

Angelica Oung  13:05  

Well, yeah, it's all. I mean, mono pile construction is a simplest and it is preferred everywhere, where it can be done. And monopiles have, in fact, gotten huge, I believe. The US vineyard one, the first commercial scaled offshore wind farm that just started constructing in, in Massachusetts, they have the biggest monopile in the world, and it's something like 1800 tonnes per monopile. So that absolutely enormous. In Europe, these

Chris Keefer  13:42  

are just like big, big hammers that are smashing these.

Angelica Oung  13:46  

Yeah, the amount of PA would be placed in place. And they'll have a monopile gripper to hold it. And then yeah, they'll have a hammer that either it's a vibro hammer that vibrates it in or they'll actually yeah, a giant hammer that hammers it in. You can imagine. Yes, it and it does, cause you know, sound in terms of the jackets, they're kind of more like a structure like an upside down stool. If you can imagine that. And then the trusses are holding it and they have pin piles on each of their little legs that kind of pin them to the to the sea floor. Yeah, I Yeah, it's a they are putting in incredible than new the new goals are just absolutely absolutely incredible for Europe. And I actually don't know how, how they're going to fit all that capacity in there. I'm just looking up the numbers now so that I can be accurate about it. But this was a nine European countries pledging a huge The expansion of the North Sea offshore wind capacity. And, yeah, they are expanding the capacity to 200 Sorry, 120 gigawatt by 2030 and 300 gigawatts by 2050. And I believe that 2050 Number is like an eight fold increase of what they have right now. Now, I am focused on the Taiwanese market, so I'm not going to be completely expert in the European market. But my understanding is that they're definitely going to have to push majorly into floating. And I as a, as a reporter, working in this industry, I'm actually very concerned that they're trying to run before they can walk. Because I think that cost down journey for offshore wind itself, the bottom fixed type is already extremely uncertain. I think floating offshore wind, which is like nose bleeding, the eye watering the expensive right now. I just don't think you can take it for granted that you're going to be able to make it cheap.

Chris Keefer  16:23  

Again, just one last question, because I'm trying to understand, you know, what lies beneath the surface here, but does in a floating platform? Like how deep is the water? And is there there's Yeah, because the guy wires connect to the ocean floor. But the actual like two 300 ton 500 tons structure is literally floating in water. Am I misunderstanding that?

Angelica Oung  16:44  

Well, as it says, right on the tin, it is a floating offshore wind platform. And I can't describe them to you, because there's no industry standards. There are in fact, dozens. This is this is another reason why I don't believe that it's going to cost down in any kind of a predictable way. Because the industry haven't even settled on a technology, there is a spar, which is just like, imagine a bobbing cork on the ocean itself, it's longer and narrower. There's the semi submersible, which seems to be emerging as a bit of a leader. And this like, basically like n number of steel tanks in a triangular formation. And like it says, you know, in there, it feels filled with air, and it's it's a semi submersed. In the water. There's tension leg platforms, which have a smaller footprint. And that's when you have the mooring instead of going out like, like a container or a shape, they go straight down. And then of course, they have to hold a lot of tension, hence the name tension leg platform, but I can keep going. There are so many different types of borings. And to me, what's incredible, is that there are projects out there with investors, Mo use, completion dates, whatever, like fairly mature on the pipeline. And they haven't even chosen the technology. So that's a

Chris Keefer  18:23  

sounds like the nuclear industry recently or like unfinished.

Angelica Oung  18:27  

I actually actually do feel like they are starting to make some of the same mistakes in the nuclear industry. Because here's, I think, where really see where the offshore wind industry and the nuclear industry might be falling into the same trap is the, the push for bigger and bigger turbines. And they're doing so at a very, very quick pace. And right now 15 Mega Watt is kind of like the outer limits, but we also take it for granted that that's going to be the industry standard in a few years. And

Chris Keefer  19:03  

just to get a sense of that scale. I was just reading up on the 15 mega mega watt, I think it's best a v 236. It's 280 meters tall. I didn't have time to look up, like comparator, you know, architectural wonders of the world that we could compare them to, but I mean, that's tall. Yeah. 280 meters. And is that was that a floating or that's a that's an onshore technology.

Angelica Oung  19:31  

Definitely, they're going to start with onshore. But I think they're doing it so that the floating platforms can accommodate those big turbines, but the huge turbines, the bigger the turbine, that's that's going to be another stress on the ability for floating platform to carry it.

Chris Keefer  19:51  

Yeah, I mean, I'll have to have to deep dive this a bit further and just look at some pictures and understand these moorings, better because it just seems insane to have like such a heavy structure being battered by the wind on some kind of a floating platform. I mean, humans are ingenious engineers are incredible, you know, if it's if it's even been modeled, or there's prototypes out there, you know, I believe it. But it's extraordinary in terms of, you know, the cost reductions to date. I mean, with solar cells, it makes a lot more sense to me in terms of, you know, the degree to which it's kind of almost like a nanotechnology and it's not digital, let's let's, you know, it's still grounded in the physical world and constraints of commodities prices and things like that. But But when seems to me to be kind of less forgiving, is that just simply, you know that we've ramped up manufacturing, and we're getting those kinds of cost reductions, or, you know, what has been driving cost reductions in offshore wind today?

Angelica Oung  20:43  

Well, I'm, I'm looking at a wind Europe chart right now. And at 2012, the capex, which is the cost of manufacture of building and installing these things per megawatt, was 5.5 million euro, per megawatt. And it seems to go down very, very nicely, just doing some fat every year, until 2018. And then all of a sudden, it bounces up again. And since then, it's kind of settled at this for your business for Europe, like maybe 3.5 million euros per megawatt. And I think it's going to go up again, because these things are made of steel, and made of copper and rare earth metals like magnets. So as things gets more expensive, then they are going to get more expensive, too. And they're also vulnerable to other sources of costs increases, such as installation vessels. So imagine, imagine, Chris, you are a intrepid marine entrepreneur, you've invested and a billion US dollars in this fabulous wind turbine installation vessel, and then you turn around next year, they're like, Oops, we can't use your vessel anymore, because the wind turbines just got bigger. Imagine how, how that hurts the companies that supply this industry. So people are really, really careful about making sure that demand is there, before they make any investments. And currently, right now, the number of vessels big enough to install one of those 15 megawatt turbines, you can count them on your fingers and toes in the whole world. Yeah, so you know, the it's, it's a, it's not like Moore's law or anything. It is a very much a industry that is complicated. And there's a lot of human factors, supply chain factors, commodities factors, that has complicated the journey cost down. Now, the principle everybody's held on to is, if you make the turbine bigger, it should be more efficient. And if it is more efficient, than it should cost down. Lately, I'm not quite sure if that logic is going to hold anymore. Because what you're what you're discovering is that there's no time for everybody to amortize their costs in their investments, right? Like the onshore wind platforms, well, their costs have been low, relatively low. And because they've used the same platform, maybe the 4.5 megawatt turbine for years, they perfected it, and they can get more money out of it. But with new, bigger turbines coming out every few years for offshore, the whole supply chain is exhausted. And I think there's even like a fear that's cropping up that we don't fully understand what going bigger does to stress the components. So we might also have a problem with durability.

Chris Keefer  24:38  

It's interesting, I mean, there's that famous quote I'm not sure if it's Alex Epstein or someone else but you know, energy being the secret ingredient and everything. You know, the in the gearing and Adam Rose inspired we've had those folks on the podcast and I think it was their q2. Investor report they were talking about energy return on energy invested and just how the decade of 2010 to 2020 All major forms of global primary energy dropped from peak to trough by 90%. Whether that was oil, coal, gas or even uranium. I mean, it's been sort of easy street. And I think economists have ignored the price of energy because it's been so cheap and a relatively small contribution to costs. And is my understanding that has been one of the key drivers as to why, you know, these commodities that are so critical for, for wind, in particular, have have risen so much, or is there more to that story,

Angelica Oung  25:30  

there's, let's go chronologically backwards from now in time. So the global interest rates are no longer we're no longer in zeros in interest rates environment, like we used to be, yeah, that's a huge driver and cost already in and of itself. And then you go back, there's a Ukrainian Russian war that really just messed up. So many supply chains, including commodities were a mess after that, including cost of shipping and all that. And then before that, you had you had COVID. And COVID really mess things up in a number of ways, both in terms of the temporary disruption of installation. And, and then it's just like, it causes bullwhip effect where things were cheap, and then expensive, and then cheap and expensive. And it ended up just that fair volatility really, really hurt the industry because they were used to such not as cheap, but also stable commodity prices. And there's a feeling that those times are not are not coming back. So we are in a realm where we're just permanently going to be more expensive because of these factors.

Chris Keefer  26:59  

So Angelica, in the introduction, you were saying, Hey, this is a relatively new technology, people might have been laughing about the idea of putting even, you know, especially floating turbines out in the water, you know, even 20 years ago, well, they

Angelica Oung  27:12  

weren't thinking about floating turbines. Any turbines was crazy.

Chris Keefer  27:18  

Right, but so now now they've been deployed. So you know, and they've been out there sitting in the ocean for how long? Like, is Denmark? Like the first real big adopter on this? And if so, who else? And what is the record been? We now have 20 years of deployment experience, maintenance? You mentioned the corrosion difficulties. What's the experience been like so far, not just in terms of the construction, but the operations,

Angelica Oung  27:44  

Denmark, Germany, and UK, they all have a lot of wind turbines. And I actually think the first ones that are just coming up to 20 years now, from what I've heard, they've held up really well. And I think, if anything like the the unexpected component, or problems are cropping up in more, more recent, more recent models, but yeah, in a way, like I have a different point of view than most people when it comes to wind. I see it as a tremendous. When I first came to in contact with this industry, I thought it was a tremendously inspirational story. Like they really did the impossible, like people told them, they couldn't you couldn't, couldn't do it. And they went ahead and did it. And they unlocked this power of the ocean, on the ocean. And, you know, these amazing installation vessels are just so all inspiring, you know, absolute, Fantastic Beasts of the ocean. I didn't think of them as eyesores. I thought they were, you know, Giants and very inspirational and kind of almost a visual representation of how the human spirit can overcome the elements. Yeah, so I that was where I was starting from, but I think the where I started having some doubts about the technology is really in the skill to which it has been. We're planning to deploy it and rely on it. And the fact of the matter is, no matter how big, how powerful your turbine is, it doesn't work when the wind doesn't blow.

Chris Keefer  29:43  

And I mean, even we talked about this, we brushed on it very, very quickly, but you know, the increased capacity factor is on an at sea, but also the higher wind speeds. I think it was Hannah Bloomfield I'm recalling her name correctly. You know, if you go from 12 miles per hour winds to 50 mile per hour winds, you double the power output Just you know, the physics of how these things harvest energy. There is an incredible advantage. But But as you say, I mean, what what kind of capacity factors? are the best offshore wind turbines hitting these days?

Angelica Oung  30:11  

Oh, shoot. Sorry. I think it's different for different places. It certainly is, it certainly is better, I don't want to give a number just because, you know, within the Taiwan market where I know the best, you know, they're still like, you know, accumulating data. It certainly is going to get better as you go further out into the ocean. But, you know, there's still the seasonal factor, like it's going to produce more in the winter, where, rather than summer, and Taiwan on the demand goes the other way, we want more wind in the summer. And that's in the winter.

Chris Keefer  30:55  

Interesting. I mean, again, listeners should should check out that episode on on wind drought, you know, to kind of try and summarize that quickly. You know, it's this theory that, you know, the poles are heating relatively quicker than the equator. And one of the big drivers of global wind patterns is that temperature differential, you know, it's still pretty theoretical. But it's certainly something that that, you know, is coming up. And I don't think it's likely to just be something where all of a sudden the planet goes still. But just as we're seeing with other forms of extreme weather, these, these wind drifts, such as what Europe experienced in 2021, may become a more frequent event instead of every 20 years, or 30 years, every every 10 year. So certainly posed, I think, a pretty big challenge. I was in Europe in 2021, pre Russian invasion, and that's when you know, coal went back to being the number one source of electricity on the German grid prior to their nuclear closures just because the wind was underperforming. Anyway, all that aside. You know, I've been following stories about I guess, in a similar way, as there used to be a fair a fair amount of solar manufacturing in Europe, that is mostly or maybe almost entirely migrated over to Asia, primarily China. Do you have a sense of what's been happening with the offshore wind industry in general, that offshore wind industry in particular? It's certainly seems like it had a strong showing and origin story in Europe, with the Danes in particular, what what's going on in terms of the the manufacturing side of things?

Angelica Oung  32:24  

Sure, we need to talk about China. But first of all, I did a to Rila a Google search. And apparently, the capacity for offshore wind power oscillates between 35% and 45%. That sounds really good to me, actually. From the other figures I've heard before, I think the problem is that, you know, you get a whole bunch of different figures, they're all over the place, but hopefully that gives you some idea. In terms of manufacturing, I think we have to talk about China. You know, China is its own beast within offshore wind. They have their own domestic supply chain, and unlike the Western OEMs, so who makes the wind turbines, basically three companies, that's non China. There's Siemens, Gamesa. There's Vestas, and there's GE, within China, they have like, you know, think like a dozen different wind turbine manufacturers. And they do massive like both onshore and offshore. And it's always hard to get complete transparency. But it seems like their costs have been going down, down, down, down, down, unlike Europe, unlike which has stagnated. And unlike Taiwan, where the costs started off high and just never moved from that very high place. So I don't know what's going to happen. And people are always wondering if the Chinese turbines are going to slip the whole market and start exporting. But it's something that really hasn't happened so far. And the reason why I think it's because these are such long term investments. So it doesn't pay to buy a cheaper turbine. If you don't feel like you can count on that company. First of all, to do Oh, nm for you. And then to operations and maintenance. Yeah. And guarantee the performance for 2025 years.

Chris Keefer  34:50  

Interesting. Yeah. So so obviously, I mean, I'm obviously comparing this story to you know, the nuclear world where you have like a fixed plant and a staff that's always there. Armand that develops this kind of symbiotic relationship with the plants, you know, people that work there their entire lives. Whereas, you know, this more modular approach to energy of, you know, hundreds of offshore wind turbines, that becomes a much bigger deal, I think organizing that that continuity of maintenance, given that there's not a local community right next to the wind turbine that's kind of married to it in a sense, I don't know if that makes sense. Oh,

Angelica Oung  35:22  

well, I think there is like a small number of people who are who there will be your own, like, here in Taiwan, for instance, Orsted has an O and M center. And they have a few people there too, not not a lot, but to watch it and make sure it's okay. And then every season, maybe they'll go out there and wind up with a vessel to make sure you know, all the ball bearings are, where they're supposed to be, and stuff like that. It can be very, very expensive to repair one of those things. So they really try and make sure that the maintenance is done well.

Chris Keefer  36:00  

So going back to those European suppliers. You know, I read a story, probably a year ago about, I'm not sure which of those three companies it was, but you know, part of a major deal with Scotland was that they would localize manufacturing. And so for a number of years, they were rolling the towers there in a big steel mill. But pretty quickly and silently that was offshore to Vietnam, where they're, I think, doing some of the more kind of low skilled parts of the supply chain. You know, I've heard Siemens, Gamesa posted massive losses, I think billions of dollars just in one quarter last year. I mean, what do you think the relative health of these European companies are? Are we likely to see what happened to European solar happened to European Wind?

Angelica Oung  36:43  

So the major turbine makers have been in voluntary nonprofit organizations for a few years now. And the outlook for 2023 is bad. We, we've talked before about the inflation and the commodity price driven headwinds, but I really think that those are like extra problems that piled on later on, that they couldn't exactly control. But the problem within the industries that they're always trying to get to the bigger turbine, the turbine wars, right. So they, they they're so aggressive about getting to the next size up that and getting a bigger piece of the pie having the biggest turbine that nobody seems to notice that they're just not making any money in the industry. It's like, it's like that. It's like that joke, right? Oh, the food tears terrible, in such small portions, well, within the offshore wind industry is like, oh, nobody's making any money in this business, let's make up for it in volume. And they do have, I think, they do have a lot of volume coming, because all these countries have set all these really ambitious goals. And turbine prices are gonna go up, they've pretty much said so. And they pretty much said to their governments, if you want your goals to actually be achieved, you were going to ask for, for some sort of support some sort of government support. And they, of course, in the US, you have the IRA that has made it very sweet for them to build factories, they're, you know, even comply with the US localization requirements, which are completely ridiculous. Do you Do you know, Chris, they actually, you know, New York State, Connecticut, they're all they all have their own localization schemes on a state by state levels, and they're totally willing to, like elbow each other and fight each other for, for, for the factories, and it, it results in a really expensive product.

Chris Keefer  39:11  

In terms of so in terms of the manufacturing, again, like I think a lot of us myself, certainly included, maybe shouldn't project onto others. You know, we think of this as being a fairly simplistic technology. It's very, very old. But you know, in terms of modern wind turbines, there's a ton of complexity in terms of, you know, just the gearing, the motor, the rare earth minerals, the magnets, I think, but also the, you know, the high tech programming computer software that goes into them. So first off, let's talk a bit about the high tech side of of wind. And then I think, my sense is that that high tech stuff is sort of staying in Europe, but a lot of the manufacturing you know, even if you're just buying the commodities, those commodities are tending to come from where they're lower cost and China but as in that story on Scotland, you know, rolling some of the more simple parts like the towers in Vietnam, how was the supply chain, sir? of breaking apart in that regard, between the high and the low tech stuff.

Angelica Oung  40:04  

If you want to do things in Europe, it is just going to cost more. And, yeah, sure there's some higher, higher value products, maybe some, I'm not sure how high tech it is actually. But the difficulty comes from having to make something very big, absolutely enormous. But it also has to be tremendously, tremendously precise. Because imagine those blades spinning in high winds, they're going under enormous stress. So I really am a big believer that localization is a bad idea for this industry. We've seen we've experienced that pain in Taiwan, we tried to localize a number of the components here. And it's resulted in Taiwan, with the most expensive offshore wind farms in the world. And it's, it's really a shame, I think, at some point, you have to make a decision. What's your product? If your product is electricity, then you have to go to those lower, lower cost suppliers. And, you know, not necessarily Vietnam, like Korea is very, very strong in the manufacturing of foundations, Indonesia, places like that. I think there are some factories. I mean, it depends on what they're making in different places. But yeah, it's it's one of those things where you shouldn't try and localize it everywhere.

Chris Keefer  41:51  

So again, just in terms of that question about the high tech component of this, can you can expand a little bit on that in terms of again, my sort of the misconception of it being a low tech technology?

Angelica Oung  42:02  

Well, let's see. Is it a high tech technology or low tech technology? The Vestas model is used as a gearbox. In a nutshell, the Siemens model uses something called direct drive. So that's, you know, basically using using magnets so that you don't have to have a gearbox. Of course, they're doing things like digital twins to model the performance over time of these foundations and the steel and stuff like that. But it's not high technology, like we're not using AI or anything like that. It it is incorrect, incredibly complex engineering, based on how big those things are. And based on how much stress they're under, for such a long time. I think that's where the tech technology comes in. Right.

Chris Keefer  43:00  

So another challenge, obviously, with a dilute energy source, and needing to harvest large land area is what strike me transmission. You know, how much of the cost is is related to transmission? And how much of a challenge is that two projects real and imagined so far?

Angelica Oung  43:19  

Let me give you an example. This is not exactly an offshore wind example. But it's a it's a wind example, in Vietnam, which is undergoing a terrible electricity crisis right now. They actually have wind farms that are either onshore or near shore, near shore, meaning it's just in the title area, that are not plugged into the grid. They're complete. They're not producing electricity, because they're not connected to the grid. And within the industry, you know, I think people tend to take the attitude, oh, my god, the Vietnamese are being so silly. Don't they understand they need a proper functioning grid, and now they're wasting all this, all this wind farm capacity. But I but I think that the Vietnamese I don't think they're stupid. I think if this will be an easy matter, it will be done already. Because they need the power very, very badly. The truth of the matter is, whenever you have a more intermittent source, you know, I don't understand too much like dilute or whatever. But whenever you have a more intermittent source, you're going to need so much more grid to accommodate it. Think about it this way, right? If you have a certain number of cars on the highway, it's coming at a very constant pace. That's the ideal. That's a that's a decent amount of highway you need. If the cars is coming. If the cars are coming in intermittently, you have rush hours, all of a sudden, you're going to need a much bigger highway to accommodate the same number of cars because they're not spaced properly. So yeah, you know it with any intermittent source, you are just going to need more grid. And that's something, you know, everybody has to figure out.

Chris Keefer  45:22  

I guess in terms of the energy dilute nature, I'm just referring to the fact that rather than having a big centralized power plant, like a coal station, or a gas station or nuclear station, with a set of lines coming out of it, you need to have a whole bunch of branches and trunks that are going off to each individual turbine, and I'm not sure what the spacing is, like out at sea versus on land, if it has to be greater or lesser. But I imagine that's a lot of copper.

Angelica Oung  45:43  

Yeah, well, you know, you see those cables, like coming off, coming off each, each turbines already big and then they all get patched in a in a fishbone manner into a substation cable that's like huge, it's absolutely enormous. And then they, you know, ramp it up to high voltage, and then they ramp it down and they feed into the grid. It's actually, it's a lot of, it's a lot of equipment to take care of, for sure. Yeah. I think we also need to talk about how, in the case of Taiwan, which is the market I work in, we used to have a grid that did have these big producers. And we have a very centralized grid, where it goes up and down the island, almost like a spine, and then the grid reaches out. And it was, it actually worked really well. It's really efficient. But now all of a sudden, because you have a lot of these resources are more on this side of the island, and you had to go to that side of the island. That's another. That's another reason why we need more grid is the just geo geographically, the place where they're being generated might not be where your load center is. And that means you just need more grid to take it there.

Chris Keefer  47:16  

And you know, Robert Bryce did some great work on the skyrocketing price of transformers, which I think is something that energy modelers might have taken for granted. But there's any number of transmission infrastructure, and we're going to have a show on that coming up pretty shortly, which are our potential limiting factors. Getting back to you know, this this highway analogy. And the idea around capacity factor. I mean, this was something where Simon Holmes A court did school me very appropriately this, you know, idea that I had, which was, you know, if the capacity factor is 30%, that means 70% of the time the resource is not working, that's obviously not true. It's kind of over a yearly basis, what percentage of power is is produced. However, as you mentioned, you know, there's seasonal limits, and you know, looking at these compass graphs, and maybe we'll post them in the show notes of wind production. In order, you have the yearly production in a circle, and you see just how incredibly spiky it is, Meredith Angwin, just put out a post on LinkedIn about common mode failure. And she was talking about the example, in engineering, I'm an aerospace engineering, you know, there was this famous incident of jetliner think flying from Indonesia towards Australia. And they ran into some volcanic ash, and it affected all the engines, all the engines went down. And they did this incredible gliding, landing and made it to Australia. But this, this pointing out the idea that the common mode failure for solar is when the sun goes down. And similarly, when the wind stops blowing, you can have these really dramatic drop offs in power, which which, you know, pretend trouble for the grid, and require a lot of accommodation, I guess. But I just thought that was a very kind of interesting side of understanding, you know, more nuanced than just capacity factor some of the qualities of intermittent energy that have, you know, this this common mode story to them.

Angelica Oung  49:05  

As far as I'm concerned, they just need to be backed on a one to one basis with something that you can rely on, like gas, or hydro. And that's all there is to it, you you need to have. You need to have the reserve margins to account for the fact that it might not be there. This is especially I think, for now, it's not a danger because we only have like, you know, if you count onshore and offshore together, we have less than 3% of wind. So it's growing from it's growing very, very slowly. But we have big ambitions because we actually do have excellent wind resources in the Taiwan Straits and we are surrounded by the ocean, right? The problem with solar in Taiwan is we don't have the land. We're topping out like at 4% solar is like we already, like nobody wants to use rare, valuable farmland and for for solar panels. So we're going to run out of space. And so we were going to rely a lot on offshore wind, if we're going to because the thing is President's high, when she came in power in 2016, she had this big picture vision of okay, we're going to get rid of nuclear by 2025. And the way we're going to do it is pretty much like, well, we'll just have renewables come in. And guess what, they're pretty much on track for phasing out the nuclear by 2025 to renewables is way behind and offshore wind is way behind. But even when it gets there, you know, I just, I don't know, at what percent good penetration, the intermittency becomes a serious issue for the Taiwan grid, because we are isolated, we're not connected to anywhere else.

Chris Keefer  50:57  

And that's been I guess, the saving grace of within Europe is this massive, interconnected grid. Right? Right. For them, they can you know, 500 to 700 million people.

Angelica Oung  51:07  

Yeah, they can, they can soak up that power shifted around. And I think what they really want to do, why they're building so many planning to build some so much new capacity, they want to make hydrogen with it. Now, again, is that something that's going to be economical and cost out? Question mark. But that's the plan.

Chris Keefer  51:29  

So I want to spend the last few minutes zooming in and Taiwan we've talked in fairly global terms about the technology. But you are an expert in the Taiwanese wind industry and Taiwanese energy more generally, I do want to touch just on some of the changes in tone on that nuclear phase that it sounds like, yes, it's coming for Taiwanese politicians and energy planners. But first off, yeah, just any other kind of comments on, you know, this very ambitious set of proposals and commitments. And Taiwan, like have offshore wind firms already been built in Taiwan. Yeah, how many? How's it going compared to what's been promised,

Angelica Oung  52:07  

we finished, we are, we are behind. And there's been a lot of construction challenges. And, gosh, we really in Taiwan, we just went go go go, we kind of really plunged into it without too much of a policy framework. And just to speed things up, because there's a lot of inside baseball, that's not going to apply to other markets, I'll just want to give my advice from were at a very troubled time in the Taiwan market right now, where there's even some talk that the next round of auctions could collapse. Because basically, they don't cost out anymore. And by the way, that's happened here and there in other places, too. But, please, if you're a country seeking to do market entry, in offshore wind, you the commodity, the thing that you're really trying to produce this power, please don't do localization. Or at least if you want to do localization, do it in a flexible way. Otherwise, it's going to kill you on costs. Taiwan tried to do too much on localization. And it's creating some jobs, but those jobs are not even that. I mean, they might be well paid. But in terms of manufacturing, once we build those wind farms, they're done. Like, you really want a Taiwanese family with our, you know, babies, young people are very scarce right now. Because people just stop having that many babies, and you want to train him or her to be a welder, and which is highly, highly taxing highly, also hard, dirty job. And then they might be paid a lot. But then in a, you know, a couple of, you know, in a decade and a half or two decades, or whatever the buildout Stan is saying, Okay, that's it, they don't have a job anymore. It just doesn't. It's not that appealing for a lot of people in Taiwan. So as a result, you know, we're importing labor. So we're not importing the stuff or we're importing the labor to weld from Indonesia or Thailand, all those places where they do have excellent welders. So please don't do localization. Please make sure your legal frameworks are in a in a good place. And make sure all your government departments are talking to each other before you do set off on this thing because it's probably going to be more expensive than you thought.

Chris Keefer  54:54  

Okay, well, maybe we'll close off just with you mentioned the nuclear phase outs planned to be completed in 2025. There was a referendum that seemed like the nail was driven into the heart of Taiwanese, Taiwanese nuclear industry and its nuclear plants. glimmer of hope. Is this kind of like Belgium situation where the president's doing a trial balloon and seeing what what people's Yeah. What was the state happening?

Angelica Oung  55:19  

So basically, we know from our previous episode, in case you guys haven't heard it, that the ruling, DDP basically grew up on being anti nuclear, they were formed the year of the Chernobyl disaster, if you believe it, and that anti nuclear DNA has remained with them. All this time, President Ty was elected on a new nuclear homeland platform. But lately, the DPP presidential candidate had been saying the oddest thing. He said, when he was asked by because president's highest energy plan was to really rely on natural gas. And that is a very insecure form of energy, like any kind of a blockade situation is no bueno, we can hold 11 days supply on the island as a maximum not a minimum. So student was asking, asking him, well, what's your plan in the in the case of a blockade or anything like that? And he said, Well, yeah, we can, we can maybe, you know, keep those nuclear power plants on standby or whatever crazy thing, maybe we can bring them back in emergency. Now, this doesn't make any sense. Because nuclear power

Chris Keefer  56:32  

plant day 11.

Angelica Oung  56:34  

Nuclear power plants are not exactly like Easy Bake ovens. And, you know, even if you have a plant that can be brought back, it's going to be a process. And what are you going to do? Are you seriously going to phase out nuclear power in 2025? Tell everybody to go home. And then if something happens in 2028, you're going to tell people to sorry, you know, hey, can you come back into work? That's, um, it's, it's totally absurd, except people are interpreting it as a way to open the conversation up a crack on reversing the non nuclear homeland pledge, which is President sighs thing. I don't think the candidate running for president now the VP lie? I don't think VP LY is necessarily that beholden to it. So now, we have three potential viable presidential candidates in Taiwan. And they've all said, either pro nuclear, or in lies case we can call it crypto pro nuclear things. And to me, that's very exciting. I think it's something I didn't expect this early on. I did expect whoever got elected would probably probably change the policy, because I just don't think we can do without our nuclear power plants. But you know, this this is earlier, earlier than scheduled.

Chris Keefer  58:15  

Right? Well, I mean, what a turnaround we saw in South Korea. I'm not sure if I don't think the antinuclear ism is in the DNA quite so much. No, like I understand it was a film Pandora's box that had a huge impact on South Korean president Moon himself, but massive turnaround there. And, yeah, the South Koreans obviously did a marvelous job in collaboration with the Emiratis. And I'm pleased to say I'm going to be hosting a delegation of South Koreans on part of their as part of their Ontario tour. And I think we have a lot to learn from the country in the industry that has most recently delivered new nuclear, on a on a schedule that's acceptable in a budget. That's acceptable. So as Canada looks to deploy 10 new candidate reactors, one of our first exports was was candy reactors to South Korea. Maybe we can ask them for some tips now, in terms of how to reboot our own our own new build industry. Anyway, that's an aside. Very excited about that. Very excited to have you on the podcast Angelica. And looking forward to two more and to some more decoupled.

Angelica Oung  59:23  

Getting can't do in Taiwan. It's just manifested. Kidding kidding. We've got a lot of work to do.

Chris Keefer  59:32  

Well, first, you got to just say it, right. That's the first step. All right. We'll talk soon. Angelica. All right. Bye.

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