IN DEPTH: Behind DNV GL merger
The merger between certification and advisory firms DNV and Germanischer Lloyd (GL) — creating global giant DNV GL — may have been concluded last September, but it is only recently that the behind-the-scenes integration between the two entities was completed.
DNV GL-Energy, the renewables-focused arm of the new company, now finds itself with a team of over 2,500 people, covering almost every aspect of green energy — from wave and tidal to concentrating solar power (CSP) and floating offshore wind.
So where is this expanded unit focusing its energy and where does it see growth opportunities?
First and foremost, the business has to get its proverbial ducks in a row.
“What we are now doing is rewriting the rules, because we had a set of GL certification rules, and DNV which certified against International Electrotechnical Commission (IEC) rules,” says chief executive David Walker.
Walker says bringing together these two sets of rules has been a major exercise. “We have done the same on the wind assessment side, where we had a DNV and a Garrad Hassan [renewables advisory firm merged with GL in 2009] methodology for due diligence of wind sites, which were merged in June.”
Walker highlights solar as an area where DNV GL is looking to expand its business globally. “We have created a much bigger solar group having moved from being two smaller solar units, to having 100-plus consultants in the US and Europe.”
As part of this plan, it purchased US technical due-diligence company PV Evolution Labs (PVEL) this year.
“PVEL runs a small laboratory to test the degradation of solar panels over time. The panels are locked into special cabinets which reflect the climatic and environmental conditions they encounter in the field.
“So we can look at how solar panels will perform at a particular site where they are to be located. For instance, we have looked at panels where there is supposed to be a 2% annual degradation, and found this varies quite widely.
“So if you are a development company or financier, then this could see your cash flow dropping off much more dramatically than you had planned.”
The enlarged group is looking to Europe and the US Southwest as the principal markets for its solar business, with an eye on the Middle East and “one or two other areas”.
Offshore wind is the prime example of a renewables area that has grown in strength from amalgamating the various businesses now under the DNV GL umbrella.
“We are building on our oil and gas experience in both operations and maintenance; and substructures, which came from DNV and GL, and combining it with the wind experience of Garrad Hassan. And you can add to that mix the grid experience of Kema [the Dutch energy consultancy bought by DNV in 2011].”
Walker sees offshore wind — including floating wind — plus wave and tidal, as areas of particular expertise in the new company.
For Europe, he argues there is a need to make new large-scale investments work more effectively and in a more integrated way.
“Our view is that we support renewables and greater interconnectivity, and we would also like to see storage and energy efficiency have a greater role to play.”
He emphasises the important role energy storage at an industrial scale will play. In July, the company unveiled a joint project to develop recommended practice to help drive grid-connected storage systems.
“One thing that has disappointed us as a company is that we would have much preferred to see individual countries in Europe have to adopt specific 2030 renewables targets. We feel the current 2020 targets have helped drive the offshore industry forward.”
Walker describes the US wind market as “reasonably buoyant at the moment”, based on the latest production tax credit revamp. “What we are seeing in the US is both onshore wind and solar becoming very competitive in certain states.”
In Asia, India is proving an attractive market, while Thailand and Malaysia are places DNV GL would like to participate in.
However, he admits China remains “a very hard market for us”, as Chinese companies often prefer to use domestic consultancies.
“We have done a little bit of work on grid integration in China, and on the renewables side have worked for Goldwind and others on type certification of turbines, particularly if they are for export.”
DNV GL also recently signed a partnership agreement with Chinese wind turbine blade manufacturer Sinoma for the certification of its products to improve the reliability and quality of blades made in China.
“With Japan we have a lot of people involved in discussions, but I wouldn’t say we have made a breakthrough yet. However, we are still pressing our expertise, because as a group we have a long history in Japan on the maritime side.”
Walker says there are certain issue with floating structures in Japan as to how they are actually classified, or certified, for use in Japanese waters. “These issues still have to be clarified, but we certainly believe floating wind is applicable in Japan.”
He believes Norway’s Hywind project has already answered a lot of the bigger questions as to whether floating wind technology will work or not.
“At the end of the day, the actual floating structure — the spar equivalent from oil and gas — is not particularly advanced technology.
“The issue that needs addressing is how do you connect large-scale floating wind or wave to the grid, and deal with all the offshore cabling and connectivity problems in deeper waters.”
Walker says on floating offshore wind the generation technology is moving faster than the connectivity and regulatory side.
Generally speaking, Walker is pleased with the development of the renewables industry and DNV GL’s place within it. “We are concerned when some of our main renewables markets in the UK, Germany and the US are having problems, but equally we have a certain confidence our new joint brand will be able to capture market share.
“Being a global company that can look to other parts of the world is now one of the big pluses of our expanded capability.
“DNV GL tends to take a long-term view, in that we believe renewables will be a significant part of the energy mix, and we will be supporting that going forward.”