Like any executive leading the planning and execution of massive offshore wind farms, Olivier Terneaud has plenty going on that could easily get in the way of a good night’s sleep.
For a start, as vice president for offshore wind he’s leading a charge into the sector by TotalEnergies that by the oil & gas supermajor’s own admission started late, but is now making up for lost time with a global push that from a standing start in 2020 already takes in three continents and includes big ambitions in both fixed and floating turbines.
There’s the stress of competing in the tenders that have become the lifeblood of developers seeking new seabed or power deals from New York to Taipei, in the case of the ScotWind leasing round off Scotland – TotalEnergies’ latest foray to be made public – attracting no less than 74 entries.
There is also the responsibility of keeping giant infrastructure projects on track, especially in a pandemic. “Working on billion-sized projects especially during Covid means that every day is a challenge. We don’t solve all the problems – but most of them have been encountered in other projects,” Terneaud tells Recharge.
But there is one particular obstacle in the path of TotalEnergies and the wider offshore wind sector that Terneaud singles out – connecting the sector’s ever-larger projects to power grids.
“Grid access is a real challenge for renewables, especially in Scotland where grid charges can be extremely high,” he says.
“But that is exactly the same thing in the vast majority of countries in the world," says Terneaud.
“When you add 1GW of extra power in the system, that’s the equivalent of a nuclear power plant,” and networks are too often simply not geared up to smoothly receive it.
The UK has already seen one of TotalEnergies’ biggest successes globally so far in offshore wind when it scooped seabed rights in the North Sea for development of 1.5GW in conjunction with Macquarie’s Green Investment Group (GIG), one of 8GW of projects awarded in the Crown Estate’s Round 4 that the UK government hopes will help it hit its target to have 30GW in place by 2030.
Terneaud says the project is on track but speedier options for connection to the grid would help the whole sector.
“We are very careful not to develop an offshore wind farm without a grid connection to welcome the additional power produced. This can be a limiting factor in our development speed.”
“[There are a] lot of sources of power on the eastern side of England,” he adds, reflecting a wider industry concern over how to best get the massive amounts of development planned for the North Sea to where it is consumed in cities like London or Birmingham.
The TotalEnergies executive would like to see more nations follow the lead of the Netherlands, where “grid availability is a given” as part of a state-led package offered to developers with many of the variables they encounter elsewhere handled for them.
The hydrogen connection
In Scotland, TotalEnergies is looking at a different way to solve the grid challenge. The supermajor revealed in October that the project it has bid into the ScotWind process, in conjunction with GIG and local developer RIDG, includes plans for “industrial scale” green hydrogen production linked to its 2GW West of Orkney Windfarm.
From a technical perspective, hydrogen is a right way to reduce network connection problems.
Quite apart from the potential to produce significant volumes of green H2, the project would offer a destination for the wind farm’s power that is not reliant on a grid connection.
“TotalEnergies’ ambition is to become a leader in the mass production of low carbon hydrogen. As a large energy producer, we also want to decarbonise our own production.
“From a price perspective, H2 is as volatile as power markets. But from a technical perspective, H2 is a right way to reduce network connection problems,” Terneaud says.
“There are the same problems everywhere. H2 gives a way to avoid this, to have a direct connection, which is what we want to explore. How can we create value by direct connection?”
'Pretty decent portfolio'
Success in ScotWind would give TotalEnergies a “pretty decent portfolio” in the UK of close to 5GW. As well as its Round 4 interests, the oil & gas giant is also majority owner of the 1.1GW Seagreen 1 off Scotland with partner SSE, and has a stake in the 96MW Erebus floating project in the Celtic Sea and its follow-on 300MW Valorous.
Terneaud said TotalEnergies’ choice of the UK as its biggest initial market has allowed it to dovetail with the existing oil & gas expertise in its North Sea operations – and he is quick to fly the flag for a sector that has received a mixed welcome in some quarters, both because of claims that it is driving up prices and because of its fossil fuel legacy.
“I am proud to work for an oil and gas company that is undergoing a great transformation towards renewables. As a later entrant in the market, you have to put your best foot forward. Being an oil and gas player, with offshore expertise, is a great start.
“We went to our oil and gas colleagues in Aberdeen and asked, can you support us with talents? And it was a great surprise, we found extremely good professional whose expertise could be used offshore wind without transition.”
TotalEnergies has now opened an offshore wind hub in Aberdeen ahead of expectations that its skills base there will play an increasing role in the sector. “We have a lot to contribute, some key supply chain players [in offshore wind] are common to the oil and gas sector.”
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“The more we have pressure on cost of energy, the more the supply chain is going to go global. An oil and gas player that is used to working with Chinese yards or Korean yards is a real asset.”
That ability to act globally is, Terneaud claims, one of the factors that will set fossil players apart as offshore wind becomes more global and reaches further out to sea with floating platforms, which he expects to remain more expensive than fixed-foundation projects for at least 10 years, but which he believes will become highly relevant in markets such as South Korea and Japan where shallow waters are at a premium.
Another positive for the hydrocarbons sector is what Terneaud claims is the unparalleled global reach of players such as TotalEnergies, which can help it be early into new markets even if it was something of a latecomer in European offshore wind.
Its expansion agenda recently grew to include the US, where it will work in a joint venture with floating wind specialist Simply Blue. Its foray into Asia began in September 2020 with announcement of a 2GW floating wind floating wind portfolio it will advance with GIG, and it this year entered the Taiwanese market with a 23% share in the 640MW Yunlin project that is already under construction.
The French group has a highly active APAC team assessing opportunities in the region.
Regional ambitions in Asia
“We want to be one of the first movers [in Korea]. As a global multi-energy company, we are actively looking at the offshore wind markets in countries like Japan, China and Australia, where the potential is huge.”
The TotalEnergies offshore wind boss suggests this shortlist of markets is just the tip of a very large iceberg as far as the oil and gas giant is concerned, as it makes the sector a cornerstone of its wider ambition to develop 100GW gross of renewables by 2030, one of the highest targets of any corporation globally.
“Total Energies is in 130 countries. When I presented the South Korean case a year ago I told the CEO we want to do offshore wind in Korea.” The response was, “we know Korea, we have some activity there, do your stuff”.
Entering a new country can a real challenge for utilities.
Terneaud believes the response would have been far more cautious in the utility sector, where he previously worked for Engie until joining TotalEnergies in late 2019.
“Entering a new country can a real challenge for utilities which tend to have a smaller footprint and are not as global as oil and gas players.”
Terneaud explains that the French giant is now looking to actively engage its global reach to give it an early head start in renewables.
“Today we have launched a global task force of 50 ‘renewable explorers’.
“We want to develop renewables in all these new countries and to be an early mover. The renewable explorer network is a success factor.”