The Baltic Sea has very promising conditions for the offshore wind development

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Offshore wind energy is growing rapidly worldwide. The Polish-British group, Jaworski Energy Services (JES), participated in some of the biggest OWF investments in the world across all continents. Since entering the polish market, consultants from JES aim to aid partners developing the offshore wind investments on the polish EEZ of the Baltic Sea with their comprehensive expertise and experience. JES advise the developers and investors in the scope of technological solutions, supply chain management and general project management. Companies entering the OWF market benefits greatly from services of a professional consultant – says Krzysztof Jaworski, CEO of the company.

Who is JES advising currently?

We are heavily involved in development of the offshore wind sector in Poland, but we also maintain our activities in other markets. For instance currently we are participating in construction of a high-voltage transformer station for TenneT, that will be installed on an offshore wind farm in the Dutch zone of Hollandse Kust Noord. The tender for that project has been won by a consortium made of ENGIE Solutions and Iemants NV in November 2020. ENGIE and Iemants joint venture undertakes the investment in a EPCI (Engieneering-Procurment-Construction-Installation) formula while JES in a joint venture with polish partner, Ultra NDT S.C., has been awarded quality assurance, supervision and technical support role. In February 2021, the scope of works assigned to JES has been extended to cover the production process of a jacket foundation supporting the HKN topside, together with Deme Group responsible for T&I scope (Transportation and Installation). Biggest projects in which JES is currently involved in are the German offshore wind farm Baltic Eagle, and French offshore wind farm Saint-Brieuc. Both developed by the Spanish utility giant – Iberdrola. In Poland, however, we work closely with the Polish Offshore Wind Energy Society (PTMEW) in the field of building a national supply chain for wind farms. We also advise many private companies and public entities on activities in the OWE sector, but also represent investment funds in acquiring operational assets from various renewable energy sectors, e.g. photovoltaic farms.

What kind of companies are those?

We work with the companies that have been long active on a Polish market, delivering steel construction, machinery or other components used in the process of erecting offshore wind farms worldwide. We help them win tenders opened by the developers entering polish market. We support them in bidding and auctioning activities. Currently there is a lot of companies set to position themselves within the supply chain for the Polish OWF sector. But it can be tricky, since a lot of them have none or very minimal previous experience in that industry. Offshore wind sector is characterized by demanding quality and distribution requirements, also when it comes to quality and ensuring safety, which can lead to higher costs and workload than what the companies are used to. If the companies do not approach it cool-headed, it may turn out that indeed, they will participate in the offshore wind supply chain in Poland, but ending with no profit, or even suffering a loss. Such a threat was present in all countries where offshore wind began. We have seen first handed quite a few companies that couldn’t bear the high costs of offshore wind investment participation, and bankrupt in the process. In order to avoid those mistakes we educate Polish companies about the risks, and how to prepare to handle them. We also work with enterprises who have solutions and products and are determined to find a way on how to utilize them in the offshore wind sector. At the moment, among other we advise the Baltex Group which is developing three projects in the Polish exclusive economic zone of the Baltic Sea with a total estimated capacity of less than 2GW  (MEW Baltex 2 – 594MW, MEW Baltex 4 – 378MW and MEW Baltex 5 – 990MW) and Baltic Industrial Group (GPB), an entity belonging to the Industrial Development Agency (ARP).

Which companies operate under the common name of Baltic Industrial Group?

The GPB holding group is made of companies operating within the shipbuilding and offshore construction sectors. A little over a year ago ARP decided to integrate its production assets of similar profile; Stocznia Gdańsk, GSG Towers, Baltic Operator and Energomontaż Północ Gdynia into the Baltic Industrial Group. Thanks to the holding, there is a greater chance for these entities to participate in the offshore wind supply chain in Poland and to win tenders for maritime units for Polish shipowners.This is a significant production potential which fits the definition of local content. The investors and developers can take advantage of that.

Recently, a dispute arose between the government and investors over the maximum price for electricity generated in an offshore wind farm. Has a compromise already been reached?

There is no final decision on this yet. The Ministry of Climate and Environment has proposed the amount of PLN 301.5 per MWh as the maximum price for electricity produced in an offshore wind farm and fed into the grid. This proposal faced push back from investors, developers and suppliers. We estimate that this rate will be higher, somewhere in the range of PLN 320-325 per MWh.

Would such a rate be satisfactory for the companies involved in these activities?

It’s difficult to judge. It is important that a dialogue has been established on this matter. You can see that there is understanding and willingness to reach a compromise between the government, developers, suppliers and other parties involved. Whether the amounts that are being discussed are satisfactory, it depends on the nature of the entities, because this discussion involves parties with different activity profiles. What is beneficial to one side, may not necessarily be to the other, and vice versa. From the perspective of my company, working mostly with developers and investors, I believe that a higher starting price would be better for the market, not permanently, but only in a specific period, say the first 5 years. This would allow the market to adapt to handling this type of energy, and then, gradually, as the infrastructure assimilates and optimizes, lower rates can be introduced. However, this is an extremely complex topic, which has not only a purely economic background, but also the issues of economic and energy security, making it difficult to clearly assess. There is a conviction within the European Union that offshore wind energy is an optimal and financially beneficial solution, therefore there are pressures from various environments to keep the starting price low in order to emphasize the profitability of this energy.

How are these rates regulated abroad?

The rates are in the range of EUR 50-60 per MWh, but these markets are more developed and familiar with offshore wind infrastructure compared to Poland. Only recently have we had specific legislation in the form of the „offshore act”. Despite the fact that in Poland there are many entities that have already participated in OWF projects unfortunately they operated only as individual suppliers. There aren’t any companies with significant experience in comprehensive management of this type of investment. This is a new market for Poland, so we cannot compare directly with countries with developed market. It takes several years for the Polish energy system to fully assimilate a new source of power in the form of OWF and for the market to create enterprises fully ready to function as their comprehensive operator.

How do you see the cooperation with Polish offshore entities?

It all depends on the characteristic of each client. The approach of the State Treasury companies is different, as is the private companies. In the case of these two types of entities, we have a different approach to risk. We work best with companies that keep their feet on the ground. They are aware of their abilities, potential, experience, knowledge and achievements. It is more difficult to work with companies that follow the global trend of investing in renewable energy, but are not fully prepared to participate in offshore wind energy projects. We make such partners aware that without a solid foundation, it can be a painful and costly experience for them. Our company is a supporting member and co-founder of offshore wind energy associations around the world, thanks to our activity in them, we have access to comprehensive industry knowledge in this field and it is worth considering our support.

And follow the tips and recommendations of an experienced partner

Yes, indeed. In the light of the current rapid growth of the offshore wind energy, within all environments in which we work, we are an advocate of common sense and diversification of the portfolio of renewable energy assets. In many countries around the world, offshore wind farms are starting to account for a noticeable percentage of domestic energy production. We pay attention to the issues of energy security, but also national security. JES actively supports the energy transformation of our planet, recommending the even development of various renewable energy solutions, so as to prevent the export of production of the overwhelming share of domestic energy beyond its shores. The protection and security of maritime facilities and installations in the military context is a huge challenge.

– Was entering a polish market a good move for JES?

Our activities on the Polish market do not bring profits that we achieve in the Benelux countries, Taiwan, Great Britain or Japan, but we are not only guided by the economic and financial aspects. We are essentially a Polish company. Most of our staff come from Poland. Me personally, I come from Gdynia. So as You see it is also a matter of personal ambition and patriotism. We believe that this is the time when this industry must develop in Poland, because the Baltic Sea has a unique wind energy potential. These are the very promising conditions for playing a key role on a European scale in the production of energy from offshore wind farms. Poland may become the leader of the Eastern European cluster it the OWF sector. We want to participate in this process, supporting developers as well as the local content with our international experience. Our team in Poland is currently involved in the creation of a service based on digital twin technology, which, using robotic solutions and IoT sensors, will significantly extend the projected lifespan of offshore structures. They will be able to operate for longer than 30, which is of great importance for the operators and the marine environment.

Is such technology already used in other countries?

Digital twin is a technology widely known in other sectors, but its use and potential for the offshore wind is still being explored. We are also involved in these activities, but it is too early to talk about technical details. We want to get to the point of obtaining a patent for our proprietary solutions, then we will be able to openly boast about it. The most advanced in this respect are the achievements of the international consulting, engineering and design group Ramboll, which commercialized its solution during the ROMEO pilot project. In this dynamically developing industry, a technological race has been going on for some time, but for investments in new areas, such as the Baltic Sea, proven and well-thought-out solutions must be selected. We are currently conducting intensive talks with four Polish companies to establish a consortium that will be able to play a significant role in the offshore wind energy sector in Poland, but also expand worldwide. After signing the consortium agreement, we will be happy to show you the composition and joint plans. It is difficult to predict when exactly this will happen, as it depends on the work of our respectful law firms. I must admit that this is a very interesting initiative with great economic, financial and environmental potential.

With Krzysztof Jaworski, the CEO of JES, spoke Jolanta Czudak.

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