Episode Transcript
Speaker 1 00:00:08 Hello, this is Kesa Shrine. Today on the show we're featuring another interview from our net zero conversation series. The series was reported at the net zero delivery summit hosted by the City of London Corporation and Association with the COP 26 UK presidency 2022, and the Glasgow Financial Alliance for net Zero, also known as G Vans. As always, we love hearing from you. So reach out on social media r at our show inbox fmt lse g.com. Now over to Jane Goodland Group, head of Sustainability at Lseg
Speaker 2 00:00:55 Span. Welcome, and thank you for joining us on net zero conversations. Happy
Speaker 3 00:01:00 To be here. Thank you very much.
Speaker 2 00:01:01 So you are from R W E Renewables Offshore Wind Business. Tell us a little bit more about that.
Speaker 3 00:01:08 So we are the second largest operator of offshore wind farms in the world. The majority of of our business for the time being is in Europe, because that's obviously where we started from. But we are expanding beyond Europe to the US and also to Asia-Pacific markets such as Japan, Korea, Taiwan, and India. We have about two and a half gigawatts of offshore wind capacity installed, but we want to more than triple that to more than eight gigawatts by 2030. The investment program that we have laid out last November as part of the R W E Growing Green Strategy foresees that and we are on a very good way to achieving that. We are constructing two very large offshore wind farms as we speak. We've just finished one here in the uk, the Triton Null Offshore Wind Farm with partners from Japan. We are constructing the 1.4 gigawatt project Sophia here in the UK as well. We are constructing a wind farm in Germany and have plenty of others that are in various stages of development. We are very well on path for that eight gigawatt target by 2030. Just
Speaker 2 00:02:09 To help people understand, how does the eight gigawatt target compare to more traditional energy sources?
Speaker 3 00:02:16 Eight gigawatt would probably roughly be what you had in eight nuclear power plants. However, of course the full load hours are a little bit lower. Typically for offshore wind in Europe, they range between four and a half to, you know, 5,000 full load hours. So it's very, very good. It's clearly the highest full load hours of any renewable energy source. Mm-hmm. <affirmative>, if you compare it with onshore wind and and pv, and that is obviously one of the particular values of offshore wind.
Speaker 2 00:02:43 I mean, obviously in your business, you, your business is integral linked to transition to net zero. Can you talk to us a little bit from a personal perspective, what's your journey being like on that net zero? Absolutely.
Speaker 3 00:02:57 Yes. It's interesting. You know, my background is geophysics. I studied geophysics and, uh, what you do if you don't aspire to an academic career, which you could also do, you actually go into oil and gas exploration. Mm-hmm. <affirmative>, and that's exactly what I did for the first six years of my life. I, my professional life, I was, uh, in oil and gas exploration. I then went into, uh, uh, strategy consulting and in 2006 I went back into the power industry or energy industry and started working in renewables. And ever since I've been working in renewables with an emphasis on offshore wind. And I have to say, you know, there are two areas around it which are absolutely fantastic. Mm-hmm. <affirmative>, the first one is really that sense of doing the right thing. Mm-hmm. <affirmative> the sense of the right purpose. And I have kids, uh, two twin boys of 13 years old, and, you know, leaving a planet that is still livable in the way that we know it and protecting the planet, that is definitely a purpose that is worthwhile getting up for every single day.
Speaker 3 00:03:55 Mm-hmm. <affirmative> and being passionate about. And the second wonderful thing about my work is the, the passion of our team. Mm-hmm. <affirmative>, and the degree to which they really love what they do. And I have to say, you know, the best thing in my job is going out and visiting an offshore wind farm. Mm-hmm. <affirmative>, which I regularly do. It gives me goosebumps every single time. It's such a fascinating thing, and I know it's difficult for many people to do that because obviously they're relatively far away from, from the shoreline, et cetera. But it's absolutely fascinating. And that combination of the passionate team that we have mm-hmm. <affirmative> and the people really, you know, doing that for a purpose and doing that with real, you know, personal motivation and conviction and the fascinating technology, it's an absolute blessing. Mm-hmm.
Speaker 2 00:04:43 <affirmative> and the technology presumably has evolved quite a lot from the kind of early farms.
Speaker 3 00:04:49 It absolutely has. The early offshore wind farms that we built, uh, for example in the UK had individual wind turbines of about two megawatts mm-hmm. <affirmative> at the moment, what we are constructing is going to have 14 to 15 megawatts, and that is probably not the end. Mm-hmm. <affirmative>. So it's a massive improvement or a massive evolution of the technology and many, many other aspects that we have developed. We are at the moment developing solutions for floating offshore wind mm-hmm. <affirmative>, so when you actually don't have fixed foundations, which will unlock the potential for offshore wind in deeper waters. So there is still a lot of innovation to be done and a lot of technological, uh, development.
Speaker 2 00:05:28 So in the past we've seen a certain amount of opposition to offshore wind. Uh, are you still seeing that now or, or has that kind of fallen away?
Speaker 3 00:05:35 It very much varies really from point to point, depending on where the offshore wind farm project is. So in some places we still obviously have people who have concerns around offshore wind farms in their vicinity, either because of visual impact, even though the majority is so far from the coast that you barely see it or don't see it at all. But of course, there are also other stakeholders, for example, fisheries or, uh, sometimes there are nature protection areas in the vicinity. So what we do is we engage as early as possible with those stakeholders, engage in a, in a really extensive dialogue and consult, uh, with all the stakeholders. And usually we reach very good results with that and compromises that allow us to actually go ahead with the project in really almost all cases. Mm-hmm. <affirmative>. So usually it's really a matter of engaging in dialogue and, you know, giving people the right facts and usually then we find good solutions.
Speaker 2 00:06:29 And, and you've been involved in this business now for, for some time and, and the debate around net zero is obviously becoming more prominent and accelerating. Have you seen that in your business? Has that changed your business the way that, you know, it's captured the global attention now? Yeah,
Speaker 3 00:06:45 It, it certainly has. You know, I've been active in offshore wind, as I said, since 2006. And at the very beginning it was a, a small niche then for some time, you know, it started to take off, but we still needed a lot of conversation in particular with politicians to really convince them that offshore wind was going to be part of the future en energy, energy supply and, and giving them the arguments as to why. And now I would say probably over the last two years, broadly, that has really made the next step change. And now there is very wide recognition in society and politics that offshore wind absolutely should be part of the answer has to be part of the answer for reaching NetZero, reaching an energy transition that really fights climate change. And that is now really a, a situation where there is almost more pull by, uh, societies and politics than anything else, which obviously is a, is a great place to be. And
Speaker 2 00:07:43 To what extent do you think that COP 26 being the finance cop has helped bring that sector in more towards looking at the investment into renewables?
Speaker 3 00:07:55 Yeah, I think it certainly has helped to, uh, let's say increase the, the awareness and increase the understanding for our sector. Mm-hmm. <affirmative>, that said, you know, a lot of the big banks and financing institutes had already been engaged in various offshore wind projects in Europe, and I think it has already prior to COP 26, has been widely seen as a, you know, an investible business case. Mm-hmm. <affirmative> because it's, it's really a mature business now from a technical point of view. And from a, from a risk point of view, I think it's widely seen like that, but nevertheless, certainly COP 26 uh, helped to deepen that understanding further.
Speaker 2 00:08:30 Sure. And let's talk about the policy environment because any business needs the right policy environment to, to succeed in what's that like in the UK and across Europe and perhaps in other countries as well. From your, from your experience, do we have the right policy environment? Could we be doing more to make it easier for renewables? Yeah,
Speaker 3 00:08:47 Let me start with the positive side. The positive side, as I said, is there is a strong pull and a strong desire by governments across Europe and in many other countries around the world. Now, I, I can come back to that in a minute to say, yes, we want offshore wind, we want more offshore wind, and we want it faster than ever before. So that's very positive. And there is also a, a general recognition about some of the things that, that need to happen to get to those targets. We have seen increasing targets in almost all European states that have a meaningful coastline to say, yes, we want more. So we, so that's positive and there is a recognition of saying, well, that needs to go together with a respective build out of grid infrastructure or investments into a changing grid infrastructure. And of course also all the maritime special planning needs to be up to the task i e the areas for all those megawatts need to be identified. And they also need to be developed by the member states in a way that these become really projects that that can achieve a permit, you know, a building permit in foreseeable timeframes. So that general recognition is there. It is, however, also obvious that in order to really reach the massive acceleration that we need, and let me maybe really put that in perspective again, we need to about 15 fold the deployment of offshore wind between where we stand today and 2050 mm-hmm. <affirmative>. So 15 times as much as we have built so far. How
Speaker 2 00:10:17 Realistic is that? Can we do that?
Speaker 3 00:10:19 It is realistic. The areas are there of, uh, maritime space. And as I said, the technology is mature and it can be done and, and companies are ready to invest like my own, to say, yes, we want to do this, we want to invest in this business, we'll continue to invest in this business and we can do it. However, in order to unlock that, there are a couple of things that also from a regulatory and policy side need to be insured. And as I said, one is we also need in line with that massive acceleration of building the generating asset. We also need a massive acceleration of reinforcing the grid infrastructure. Mm-hmm. <affirmative>, that is an absolute requirement. The second thing is it is required that the permitting, and that goes both again for the wind farms, but also for the grid infrastructure, that the permitting is accelerated at the moment.
Speaker 3 00:11:07 These, these, uh, procedures are still taking many years depending in, in which country, you know, you are talking three to seven or eight years of permitting, and that needs to be accelerated. And also the final but not least important point is the auction regimes and market designs also need to be such that the investments can really be or are being attracted and can really be made against a background of a relatively uncertain at the moment uncertain cost side when it comes to cer some of the raw materials, not only steel, but also copper, aluminum, nickel. I mean, you can quote almost any of these at the moment. Not only have the prices increased very recently, very significantly mm-hmm. <affirmative>, but also the outlook has become much more uncertain at the moment. And that puts a lot of challenges onto the supply chain by either manufacturers or wind turbines and foundations and, and substations.
Speaker 3 00:12:06 And it also makes their investments increased capacities, uh, more challenging. And of course, we need to find mechanisms, market mechanisms, and auction mechanisms that allow players to make these investments, even though the ingoing cost, let's say are more uncertain at the moment mm-hmm. <affirmative>. So we need mechanisms that allow us to say, okay, I can, I see a perspective of matching my true cost with my returns. And there are some very good examples of that. For example, here in the uk, the CFD mechanism is such that it's indexed linked to the inflation rate. And that is a very good mechanism that should be adopted in, in more states. Mm-hmm. <affirmative>, what we should minimize is negative bidding. So at the moment in some states, companies like R W E need to actually pay money for the right to develop a project mm-hmm. <affirmative>, and of course, ultimately all that does is it makes offshore wind more expensive, and that at some point, uh, further down the road will find its way into prices of, of consumers of the power mm-hmm. <affirmative>. And that's actually not what we need. So that should be minimized.
Speaker 2 00:13:18 And then one final question, uh, if I may really talking about kind of the wider impacts of offshore wind, because obviously they're creating a renewable energy source, but the manufacturing of them and the production of the installation are not without their environmental impacts. So can you talk a little bit about how rws minimizing or, or its partners are minimizing some of those?
Speaker 3 00:13:40 Yeah, absolutely. I mean, of course, you know, as an industry, and I really mean, you know, the, the whole supply chain of this industry, uh, there is a clear path that we need to go to go to net zero through the entire supply chain. And, uh, as r w e we, we, we have our, uh, ESG targets and, and they cover all the three, uh, sectors. We, we definitely look into that and we will be playing a major role in ensuring that whatever we procure, uh, you know, from, from our, uh, suppliers is green or is on a path to becoming green and becoming net zero. So there's no doubt about that. Let me say one additional thing though. Obviously what this industry also does is it brings a lot of really high quality and highly skilled jobs and, and labor to our economy that is a, a growing business. And in that sense, it, it certainly also has a very positive impact on the wider economy. And what we're also doing is we're investing a lot of money into ensuring that not only are we carbon neutral in the foreseeable timeframe, but that we also have biodiversity targets. Mm-hmm. <affirmative> to, to, uh, to add one more example along the e s g scope where we want to ensure that our, uh, wind farms post 2030 or from 2030 are actually net positive on biodiversity. It's
Speaker 2 00:15:02 Great to hear. Thank you very much for your time.
Speaker 3 00:15:05 Thank you.
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