The Dane who Harnessed the Wind - Ep139: Henrik Stiesdal

Transcript

Michael Liebreich

Hello, I'm Michael Liebreich and this is Cleaning Up. My guest today is one of the real pioneers of the wind industry. Henrik Stiesdal is the Danish inventor behind many of the sector's most important innovations. He's responsible for around 175 inventions, and is named in over 1000 patents. Today, Henrik runs a startup bearing his own name, Stiesdal, which continues to innovate in floating offshore turbine foundations, thermal power storage, and hydrogen. Please welcome Henrik Stiesdal to Cleaning Up. Before we start, if you're enjoying Cleaning Up, please make sure that you like subscribe and leave a review. That really helps other people to find us. To make sure you never miss an episode, subscribe to us on YouTube or your favourite podcast platform. And follow us on Twitter, LinkedIn, or Instagram to participate in the discussion. Also, you can visit cleaningup.live to access over 160 hours of conversations with extraordinary climate leaders, and you can subscribe to our free newsletter: that's cleaningup.live. Cleaning Up is brought to you by our lead supporter, Capricorn Investment Group, the Liebreich Foundation, and the Gilardini Foundation. So Henrik, thank you so much for joining us here on Cleaning Up.

Henrik Stiesdal

Thank you for having me.

So, in my intro, as you will have heard, I've given you this big build up as one of the extraordinary pioneers responsible for pretty much everything important in the development of the wind sector. I'd love to start if we might- we'll get back to what you're doing today, but I want to start with that extraordinary history that goes back to building the first what they now called Danish Model wind turbine with three upwind blades in 1978 and installing it in your parents' farm. Why?

Yeah, that's actually a good question. The proper answer is, of course, the oil crisis that we had in 1973, when we first had the oil embargo on countries that supported Israel in the Yom Kippur War we had at the time. But when things had settled down again after the sort of immediate crisis, we had a factor of three increase in energy prices. And I lived with my parents on a farm that was 100 years old, and had poor insulation, and suddenly energy had a price - before that it hadn't really mattered, now it mattered seriously. And that was, you can say, the fundamental motivation. But what then further- yeah go ahead?

I was going to say, where did the idea come from? And how big was that? How many kilowatts was that machine?

What happened was that I had been taking a sabbatical after what corresponds to high school. And when I came back, and we spoke about the energy and prices, my father said, 'let's go up and look at a place called Tvind in Denmark, they are building the world's largest wind turbine.' So we went up near the end of '76, and saw this place where a lot of young people who are building a gigantic wind turbine. And they were also building a small turbine, something that was sort of farm-size, nine metres diameter. And they were all young people like me, basically, shall we say, starting from the bottom-up and just doing it. And seeing them, I thought, well, if they can do it, I can do it. So what actually happened was that we went back home and then we cut out of a piece of board a rotor, there was little over one metre diameter. And after a little bit of testing, we could actually get that to run pretty impressively, you just held it in your hand, the shaft was a three eighths water pipe, and you held it in your hand out in the wind, and it will start slowly, and suddenly, it would just go mad, and it would spin at many 100 RPM this far from your nose. It was super exciting, and it kind of got alive because it could feel all the small vortices in the air. And that's the thing about it getting alive I think is actually what drove a lot of what I've been doing because it was such an exhilarating experience. I then built a three-metre turbine that I mounted not on a tower but on the farm wagon so that I could didn't have to worry about building a tower and making big installations but I just put it out in the field with a tractor when we had a windy day and tested out there. There I found a great design that actually worked quite well. And then I basically got going in building a turbine that was large enough to supply energy to the farm. That means 10 metres diameter, 15 kilowatts. And you can say that the thing about wind power at that time, and at that size, was that it was, of course, somewhat difficult - I had to figure out how to build a steel tower and how to make the blades and how to get the transmission system arranged, and so on. But it was not more difficult than what somebody with a bit of technical flair and a lot of energy could end up mastering. If somebody had said, 'Oh, yes, should we do some thin film solar, or something like that?' it would have been utterly impossible. This was, with a bit of effort, teaching myself how to weld, teaching myself how to use a lace, to turn the shaft and so on, ended up being doable. And I got that installed in '78.

So there's this book about a Kenyan boy - it's called The Boy Who Harnessed the Wind. But, of course, you basically did it probably 50 years - was it 50? No, no, no, no, not quite, 40 years before.

40 years, maybe?

Yeah, but where did the idea come from for the three blade upwind design? At what point did - is that what they were already? Did you kind of see that where they were building those pilots? Or was that your innovation?

No, that was not mine. There were many others who were looking at three blades. And the thing is that at that time - of course, I then studied and even travelled to the US to see what people were doing on wind. At that time, many projects were with two-bladed machines. But it turns out that a two-bladed design is not what we call dynamically stable. So the rotor has a certain inertia when it's horizontal and another inertia when it's vertical. And that means for a bumpy ride, when you have a two-bladed design. If you have three or more, your rotor is dynamically stable. So three is the minimum number you can do that doesn't give you a rough ride. And that was known already in the 20s. There was a famous turbine done in the US by an American pioneer, Marcellus Jacobs, who made turbines in the size of four kilowatts or there about to do electrification of farms. He did not do what I did, which was being connected to the grid. He delivered turbines where there was no grid. And he found out the hard way that two blades gave broken shafts and three blades meant a smooth ride and his turbines got famous for their long life. So no no, though the inspiration was not mine, it was from somebody else. You can say that what I had the good luck to be involved in was to find a set of parameters that ended up being what we did in the wind industry for the first couple of decades. So, a three-bladed rotor (not my idea) mounted on the upwind side of the turbine - the Jacobs turbine from the 1920s - was the same yard by an electric motor that was not so common, having a two-speed drive. So you could run at a lower speed, and low wind speeds and a higher speed at high wind speeds, and some other technical details. And we were fortunate enough, me and my partner, to get that going in a sort of package that ended up being what ultimately everybody else was doing.

And I'm struck by- at those times, you could just sort of start and just do things as you say you have a level of technical capability, you could get started. But you are building then on lots of existing knowledge. So you're building on some heritage within the industry, and particularly within Denmark, you went to 15 kilowatts. You know, obviously, now the biggest wind turbine is 16 megawatts. There's a couple of manufacturers that are 14, 15 and 16, which is 1000 times more powerful than the one that you built. Did you have any inkling that it could get that big?

No. It's clear that- no, no, I actually have a terrible track record in predicting sizes. Once I got involved in commercial wind, I made a mistake in 1985 at a conference stating very firmly that they would never be economical above 250 kilowatts, which was at that time getting sort of within reach. And I think it's okay to make a mistake, but what I then did was at the 90- I repeated it by saying 'Oh, yes, I'd been a bit conservative, but now we knew for sure that bigger than 500 kilowatts would never be commercially viable. And now they are like 30 times bigger. So the sort of aspect of it is, of course, that the motivations changed. When you were a pioneer, and there were actually quite a few, maybe 20, 30 early pioneers in Denmark who built wind turbines, more or less successfully for their dwellings typically in the countryside, that was all from quite egoistical reasons to save money on the energy bill. And then after a while, when we sort of got together in the pioneering community, it dawned on us maybe, at some point in time, it could actually matter in the energy supply on a national basis. In those days, early 80s, late 70s, the dream was maybe one day we could get to 10% of electricity supply. And we of course passed that, you know, decades ago. Later on, when I got involved commercially, the motivation was always, once you get involved with a company, your motivation gets to be the benefit of your employees, your colleagues, how do you grow the company and so on? And then from about 1990 for me, it dawned on me this topic of global warming, as we called it at the time- I hadn't really been aware of it until maybe '88, '89, when I started reading some articles and it kind of dawned on me, uh-oh this is really serious, this is something we need to do something about. And there the motivation had moved from, 'what about our farm?' to, 'could you do something in Denmark?' to, 'we need to do something on a global scale.'

And you, along that pathway, very early you licensed that first design to a manufacturer of farm wagons, truck cranes and ship coolers (this is according to Wikipedia, you can tell) and it was this Danish manufacturing company called Vestas. But you didn't work very long with Vestas. You then joined another company called Bonus, which became Siemens, correct? Or which was bought by Siemens?

Yeah, the story is actually a little bit longer. I built this turbine for my parents farm, that was- I had no money, and they had very little money. So I built one that was largely home-built, and I made the blades, I made the tower and so on. And then I found the equipment- I couldn't do myself like the gearbox and the generator in the junkyard or somewhere else, always secondhand. During that process, I got in touch with a local blacksmith who was also interested in wind. And he could do some things with machining I couldn't do myself. So we ended up making a deal whereby I would design a turbine for him that he would build from new parts, because he had in mind to do a commercial turbine, and then he would do some machining for me. So I did that, it worked well. As always, we did a bigger one- the first one came up at his facility, then we built two more that had- his turbine was 22 kilowatts, we built two 30 kilowatts. And then he wanted to build a company. Now we needed to get to be real manufacturers. And at that time in 1979, I was 22, I had no clue about money, I needed to go to university, it was just impossible. So I persuaded him to find a licensee. And we knew somehow that maybe investors could be interested. And we were not that far geographically from investors, maybe 50 kilometres. So we simply gave them a call and said, 'would you want to take a look at what we are doing?' And out of that came this licence agreement. And then I actually worked with them, first as an unpaid consultant, and later on as a paid employee part-time while I was still studying, until '86. So that was actually seven years of cohabitation or fun life with business. Ultimately, they got into some troubles over the California boom and bust, and I decided maybe I should finish my studies. So I quit, and it took about one week. Then I craved the wind industry, like, I don't know what. So I just wrote a letter to the only competitor that seemed to be weathering the storm in California, Bonus in Denmark, and said, 'should we have talk?' So I started working for them early '87 and then I stayed there, through the acquisition by Siemens in 2004, and until I retired in 2014.

And of course, you know, there's a bit of a subtext here, which is that's the same Siemens which has just had this enormous write-down, that's had to write off a billion-or-two euros, but nevertheless is one of the major players. So Siemens then bought Gamesa, became Gamesa-Siemens, then just became Siemens. But you've still got Vestas. So you actually were instrumental in building two of the five or six leading wind technology providers in the world. I mean, there's GE in the US, and then there's a number of Chinese companies but in Europe, you created the European wind industry, I mean, do you accept that criticism or praise?

No, I don't! No there were many, many people involved. And I just had a lot of good luck. And I also had to, you know, part of the very good luck was to get engaged with people who were also sort of motivated and wanted things to happen. Investors, they made a big stride when they decided to make- they had these three business legs, you spoke about, they decided to make a fourth. And that was fantastic. When it came to Bonus, I had the very good luck to get in with the CEO, Mr Nørgaard, who was a very conservative, commonsense businessman, and was a fantastic strategic player. And in all of that was luck in landing with the right people. So no, I don't accept the premise. But I praise my luck of having been involved in such a development. When I came to Bonus in '87, there were 80 people. When we sold the company to Siemens we were 801. And when I retired 10 years later, we were 14,000. So that in itself, besides all the technical development, and all the pleasure of being involved in in doing things that really mattered, that in itself was of course a fantastic experience.

You know, look, I'm hyping up your background, and you're being very modest. And of course, no single person creates, you know, something like the Danish wind industry. But there are some key people and you're most definitely one of them. One interesting thing, while we're on the topic of the Danish wind industry is, you know, there was this solar boom, in Europe around the time when I was creating New Energy Finance, which was 2004, and then I sold it to Bloomberg in 2009. And of course, there was this enormous boom in solar, with companies- REC in Norway and Qcells and all sorts, and there was a lot of money flowing in, which has ended up with almost no ownership of the solar value chain in Europe. Almost all of it went to Asia. And the wind industry has been different. Of course, there are big Chinese producers, and they're, you know, they're quite aggressive on the international markets as well. But nevertheless, you have got Siemens and Vestas and the whole big supply chain surrounding them in Europe. What was the difference? Why was one- was it brilliant policy? Or was it just inherent to the engineering of wind that you couldn't, you know, import everything and step out of manufacturing?

I think that it's a combination of things. One thing is that, in solar, I think they got complacent. And now- I apologise to any solar players who might feel this unfair, but I think that in a way, the solar manufacturers got complacent due to too lucrative subsidy regimes. I think it is a little bit the same story as the sad story of the shipyards who did not innovate to the same speed as the Koreans. Now it's not only Korea, it's also other countries, but the European shipyard industry decline was to a large part due to a higher degree of innovation in Korea. And the way they got away with it for a while was through subsidies. If you were a Danish or German or whatever, would always give this data call and say, 'we have a problem, we need to we need to find a way whereby we can compete.' And that goes on for a while, it doesn't go on forever. And the second thing is more of a technological nature. Solar panels are- the technology as such is, so to speak, well known: crystalline silicon. The first solar panels I saw in 1978 at Sandia National Laboratories had the same fundamental physics as what is being built now. And actually, they did not look very different from what is being built now. In 1983, there was a significant improvement on technology by the so-called PERC technology that was invented by Martin, in Australia-

Green? Professor Green?

Professor Green, sorry not- yeah Professor Green. And there was this improvement in efficiency, but the fundamental physics and kind of the way to do things is the same. But the Chinese were much faster than anybody else in automating the manufacturing. If we look at wind, the wind turbine manufacturer is essentially an assembly factory. They might have one component that they insource, like the blade, that the thing is very important. But other than that, you are assembling components from different suppliers. And there you can actually live with having Chinese gearboxes or Chinese generators or main bearings, as long as they are good enough. And then European component suppliers have actually been very good at maintaining a technical lead, sometimes through having the same manufacturers do the equipment in China, where it was cheaper, but they have still maintained that, and there the wind industry has got a helping hand, so to speak, by what you refer to - the supply chain. But of course, in the long run, the race is on, and we'll see how it ends. And shipbuilding is unlikely to get back to Europe, we hope that wind doesn't go the way of ships.

And one question would be, do you have any view or any advice for the battery manufacturers, because it feels to me like we're at the point where either Europe becomes fully competitive, or we actually don't become competitive, and either ultimately, that manufacturing all disappears, or we have a kind of systematic, long term cost disadvantage, we insist on using European batteries, they're not as good, they're not as cheap, and we end up with a disadvantage. Do you get a sense of which way it's going to go, and any advice to anybody in that field?

I think it's a little different than with solar, because I think the Europeans have essentially the same cuts on the hand as the Chinese or the Eastern companies. I think that, with automation, you can really, you basically almost eliminate the disadvantage of higher rates for your workers. If you look at wind- let's get back to wind, as it is at the moment as you and I sit here and talk, Chinese turbines have very high quality. They are actually not yet at the aerodynamic performance and low noise of European machines. So one of the advantages the European manufacturers still retain is on efficiency and noise - in other words, a technological advantage that they have been able to maintain. I think that the battery manufacturers should have the same capability of having a technological lead. And there can say, 'how can you do that? If India educates 1 million engineers a year and China, probably as many or more how would you compete?' But there I do think that there's a certain advantage to the innovative spirit of big parts of European industry that could still come out. I think it is that innovative spirit that has been at the root of the aerodynamic advantages we still have in wind. And we might be able to employ that to the same tune in batteries.

We have to hope so as Europeans because, of course, the other people who are not sitting around is the US. Very innovative, very, very good at pushing the technological boundary- I mean in a way in solar at one point, it was a fight between China pushing silicon, the standard model if you like, and then the US was innovating in all sorts of ways, thin film and different types of semiconductors and so on, none of which really worked and therefore they lost. But on batteries, there is this three-way competition: Asia, Europe, the US, which is going to be very fascinating to watch and I do hope a piece of it at least stays in in Europe.

Yes.

Now, somewhere along the way, you were involved in the first offshore wind farms, correct?

Yes.

So how did that come about? And how far offshore you know-how adventurous was that first offshore wind farm?

Yeah. There's actually an interesting story to that. And that is that, if you're looking at the early years of not even the wind industry, but the early years of realising that when power could maybe be one of the vehicles or vectors by which we could get out of the oil OPEC grip on our energy supply, we had one or two annual conferences in the world, including one that was done in Britain actually helped by the British Hydraulic Association or something like that, before there even were wind associations. There were those old conference proceedings, a very large part of the articles about offshore wind. So it was very early a concept. But nobody just did anything. And when we had the California boom, everything focused on midsize turbines and onshore ones. But in the late 80s, the Danish government realised that we would end up having a saturation with turbines, onshore in Denmark, and that something needed to be done. So in '89, they simply issued an instruction to the two utility associations we had at that time here in Denmark, one in western Denmark one in eastern Denmark, to each build a 5 megawatt demonstration project. And in the eastern utility association, there was a technical manager, Mr. Frank Olsen, who had already been very interested in also in any practice opportunity, and set in motion that they should build the first in the world. We had 20 locations pointed out in the beginning - of course, even in those days, there were conflicting interests, we ended up having two left, and I had the good luck of being involved in the turbine design and supply for the first one that came up in '91. It was, on average, about five kilometres from the shore, eleven 450 kilowatt turbines, three to eight metres water depth. On the 13th of July this year, we had the 32 year anniversary of the very first electricity from any offshore turbine in the world. And it was both not very complicated and yet still it was- not very complicated, essentially was based on a strategic approach we had, which was that we would not want to put out a newly designed turbine out there; the risk would be too big. So we took our largest turbine and modified it. So part of the design was already done. But it was of course not easy for us to find - when you do a mathematical proof called the necessary-and-sufficient level, what did it need, what could you get away with? As little as possible, but as much as needed. And, and what it ended up being was a version of the turbine that was fitted with coolers in a way that meant that you could keep the inside of the machine completely isolated from the outside environment. And what we then did was to place some dehumidifiers in the tower and in the nacelle on top of the tower that kept all the internals dry at all times. That simple remedy was the most important: just keep the salty air away from all the machinery. And that worked, and that' still how it's done. And then we had a number of other smaller modifications, of course we needed a better painting system for corrosion protection on the outside. That original system, actually, interestingly, is still what is being used today on on offshore wind turbines. And there were a few other main modifications. But the main thing was to say, 'this is a hostile environment, okay, protect everything that faces the environment as much as you can. Things that can be kept away from the environment, keep them away, keep them isolated from the outside.' And that worked. And, of course, then there were all kinds of free challenges: how do you actually install them? How to go about that? And in the end, we chose a really sort of down-to-earth way in that we took our best crane driver - he was not ours, he was from the crane company we always used, a guy called Leif, and then we told Leif 'tomorrow we're going to drive your crane onto onto a barge out to sea, but once you're out there, you just pretend that all the blue stuff is green, like any other field you normally work in, and then you do what you always do.' So Leif went out and did what he always did, and then we could install the turbines, having the big upside compared to the projects of today, that we were in relatively sheltered waters in Denmark, and therefore it was not so difficult. And then of course, we had to learn- in a way, I'm a little bit ashamed that there were things that now seem so obvious, that were not so obvious at the time, including that access to offshore wind is much, much more difficult than you imagined. And one of them, what we didn't realise in advance was that you operate with a so called weather window. So not only do you need the wind and the waves to be below a certain threshold when you go out there, but your people are in the turbine for a certain number of hours - you need to be sure that the whole period until they're back onshore, again, is safe. That's much more difficult than saying, 'now we have a safe period, now we can get out there.' So that really limits the time you can be out there. So offshore wind turbines nowadays, they are, I think, first of all, they are sort of the biggest industrial machines produced anywhere in the world. But secondly, they must be among the most reliable because they have to operate without human interference for months and months and months. Nobody goes there. They're just on their own. They have to be self-lubricating, self-maintaining, self-monitoring. And that is one of the challenges that exist offshore and it's a challenge that as time has passed, the industry has come to master really, really well.

And the same questions as I asked about onshore, did you, when you did that first offshore wind farm, have any sense of the scale, that we were going to be talking gigawatts, Dogger or some of these huge wind farms, they're into a gigawatt scale, multiple gigawatts?

The simple answer: no. I've been asking myself why, but it was out of reach of our imagination at the time, as it is now - as you know, and as many people probably know, the European Union expects that by 2050, 50% of all electricity should be delivered by offshore wind. If anybody had suggested that at the time, I'm sure our response would have been, 'yeah, that would be nice but, I mean, come on!' So no, we had no clue. We had a very simple approach in the company, and it went as follows: we had two legs to stand on at that time; we had individual turbines for farmers, or clusters of two or three turbines was for villages, and we have what we call windfarms, so big projects. We looked at the market in Denmark, and to some extent already in Germany, and said, 'at some point, the single turbines might not be there anymore.' It created a good footing for the company, maybe they could decline. And the wind farms or big projects, they had a character of white elephants: now there was one, then there could be a period where there was none. That was not a very satisfactory or comforting future that the sort of steady flow of the small turbines might go away, and you're left with these erratic peaks. So we looked at offshore, and we said it loud, in 10 years, could become the third leg. So we could live with one or the others not really performing so well anymore. As it went, it took nine years before we installed the next offshore project so we were not so far off. And as it went, the single turbines did go away. So it was actually correct.

But it was not entirely straightforward, I mean, when I started New Energy Finance, 2004, it was really expensive. There were a few offshore wind farms and as late as 2013, there was - I can't remember his name, the CEO of Enicon was saying, 'we will never do offshore wind, because it's never going to be something- there were reports saying it's going to be much too expensive.' And, you know, the cost expectations were 120 euros per megawatt hour was kind of what people thought, they thought, 'maybe it will come down to 100 euros per megawatt hour.' And that was as recently as 2012, 2013, 2014. So what changed? What was the step-change due to?

Yeah before we get to that, there was actually around '12 and '13 a big debate in the wind community among the big developers and the big turbine suppliers, 'what could we promise politicians would be the cost level at 2020?' And it was about 50/50, maybe a little overweight of the more conservative - I was myself of the more optimistic, my sort of statement was that we needed to be below 100 because we couldn't live with a three-digit number. 99.9 is much better than 100.1 if you look at it from a political point of view. And there was quite a lot of opposition. Ultimately, we prevailed, and we came out and said, 'the industry expects that by 2020, a project that has investment decision in '20, will come out with an energy price below 100. As it went, projects that had FID - final investment decision - in '20, typically were in this 50ish range. And there were two things that made it happen. And then there was some circumstances that were favourable. If you take the last first, the interest rate was low. Steel was moderate in price, it was not the cheapest, ever, but it was still quite moderate. But what really made it happen was a push, and then an enabler. The push was that most countries went from fixed feed-in tariffs, to options. So the good old capitalist mechanism of competition was the fundamental driver.

So Henrik, I'm smiling, because I pushed for that very hard. I'm not really an activist, but I really believe in the price signal. And there was something about these kind of state-pricing renewables in these feed-in tariffs that I found really unacceptable. And it seemed to me, we had to get to price-discovery, and I pushed very hard, I was very vocal about that. So I'm delighted that you say that that was a big factor.

The single most important factor was competition. But then, of course, the enabler has to be there, because you can have all the competition you want, and you have people going out with low bids. But when they get to actually building it, can it be supplied at the price that they assumed when they gave their price. And the lever there was industrialization, same thing as on solar. How did solar get so cheap? When I saw it in New Mexico back in 1978, it was $100 per watt. And I though,'come on, that will never ever make any sense in the whole world.' Now it's like 30 cents or something on that order. But same technology. And Professor Green's invention made it more efficient, but still on a per-watt basis, the cost came down fantastically, and the lever for that while industrialization. Also for offshore wind, going from a costly alternative to being something that is, at least in Denmark, competitive with fossils, took a pressure competition and an enabler industrialization. That is what made it happen. And industrialization in this context is more than just the product. It's also the nowadays, the installation processes are really, really, really good. They go out and install - what is it nowadays - more than 1000 tonne machine, out where there are big waves, where there's a lot of wind, and they put it in place and essentially make it workable within 24 hours. That would have been unthinkable when we did the first offshore projects. There was a much more lengthy process, but they got that- not sort of industry in itself because it's about ships and how the way people behave out at sea and so on, they got that into shape also.

I've been working with an advanced geothermal company. And a few weeks ago I was in southern Germany where they're drilling their first - this is closed loop geothermal, no fracking company called Eavor out of Canada. And everybody's so excited because this is huge, and it's a big drilling rig and it's very sophisticated and Chancellor Schultz was there, but I'm thinking about that industrialization process, when it becomes standardised, when you telephone and you can get a rig there the next day and everything is standardised, how much cheaper it's going to become. So I'm very hopeful and I put a lot of faith in this standardisation process.

There's a very good example of that and that is if you do a process plant with a well-known technology - that could be a chemical plant, some factory, the usual rate is that you get your equipment, all your equipment, and then you have to install it, you have to do the balance of plant which means the foundations, the building and so on. Then you can say, 'how much more than the equipment that does the work is the total cost?' And today, in my nderstanding, the total cost is typically 300% of your equipment. So your equipment is 100%, then you add another 200% for the extras. If you take an onshore wind farm in the US, this cost pattern has been very well recorded and tracked over the years by National Renewable Energy Laboratories. And nowadays, if you build a wind farm in the US, and you take your rotor nacelle (that's the machinery on top of the tower), say that's 100%. Then the remainder (the foundation, the cables, the roads, the fences, the substation, the control building, your toilets, your land acquisition, your development cost, your financing cost) all of that does not add 200%, it adds 42%

Wow.

So the cost of an installed, functional wind turbine is the turbine plus 50% more. And that is where we need to go with all these new energy types. And that is what makes the big difference between, 'how can we afford it?' to, 'how can we afford not to?' which is where we need to get.

Ok, but there is a subtext here: we are recording this a couple of days after an auction, a reverse auction, the stuff I like, I pushed for, the stuff that you said made all the difference, reverse auction in the UK. And for offshore wind, it failed. And it failed because there was a minimum price set by the government of 44 pounds per megawatt hour, about 50 euros, and not one organisation was able to bid at that price. Now, does that mean the end of that cost reduction? Interpret that for us if you can?

Yeah. If you look at what we spoke about before, how did the price come down? We had this pressure from the auctions, you had the enabler which was industrialization, and then you had a couple of other things: the low interest rate, the low cost of steel. As it is now, due to the Ukrainian war and inflation, that is not where we are now. Steel is actually quite expensive nowadays, not record price level, but it's completely different than it was five years ago. And the interest rate is much higher. And as I understand it (I must admit I didn't study it in detail) the UK government basically took bid prices from the last auction, which was temperamentally, at least, in pre-Ukrainian war times, and subtracted 5% or so, and this is where we need to be. But that's not how it is.

Not quite, I think that at the last auction the record price was 37 pounds. So they set a minimum which was a bit above that but with the hope that it would be similar. And the margin that they added, well the cushion was insufficient.

Ok, yes. But I think that if you have an investment good that doesn't use fuel - it uses a fuel, the fuel is free, the wind - then the price of your energy to a large extent is driven by your capital investment. And that capital investment, when your machine is like 80% steel, is very much a function of steel prices. And given that you don't have a fuel cost, you do have the amortisation and interest costs. And when they go up, your price does go up. That's just how it is in life. I think that the minimum price that was achievable last [time], I don't think it's achievable today. I don't think you can, so to speak, extrapolate from that and say, 'Oh, now it all ended, this was the end of the decline.' If you look at solar, and if you plot it in a double-log plot, the solar prices came down nicely. And then they had kind of like a bump, and then the Chinese came in. Now we are kind of there. That price, interestingly, was $4.50 per watt. Now the price is like 30 cents. So we've seen such bumps before. And we of course know them with pain from oil prices. If somebody came and said, 'oh, now the oil is like $40,' yes, now we know our future oil is- you'd look at them and say, 'come on, grow up, that's not how the world is.' And it's the same for offshore wind.

So the reduction at some point will resume and overpower these temporary effects?

I'm sure that if conditions were the same, it will continue getting cheaper because everything in the whole world gets cheaper. If conditions like interest rates or steel go up, that might be too much so that it offsets the decline we would otherwise have. But I'm sure it will come down again.

In another episode, I talked to Paddy Padmanathan, who's the great solar project developer, he's broken the world record for solar so many times, and he made the same point. Ge said that solar now, the project that he did at 1.1 cent would now cost 1.7, or 1.8, but it'll come back down. There is another issue going on right now in the wind industry - partly I alluded to Siemens' problems with a big write off, but that was because of a technological problem. But throughout the supply chain, the value chain, companies are really hurting. I mean, even the good years, they have not been making good returns, and their shareholders are not throwing money at them saying 'come on, invest, expand, develop the next generation, expand your production.' I mean, it's an industry under an enormous amount of stress, is it not?

Yes. I think, unfortunately, that the turbine manufacturers, due to one of the bad sides of competition, have been the weaker part in the squeeze to deliver the low costs of offshore wind. I think that many developers have been trying the foundation supplier, the cable supplier, and so on, and of course also the turbine supplier. We've kind of been used to that we always could squeeze it a little, and other parts of the supply chain have been more cool, saying, 'my cable costs what it costs,' and maybe sometimes resting on a more mature technology than turbines, saying 'I know cables, they are kind of like they were in the last 100 years, and they will not come down.' And there I think that the turbine manufacturers have, to some extent, become their own worst enemy. And it's clear that if you are a number of suppliers, and one is particularly hungry, so to speak, you might get this squeeze that can only go one way and never come back. And there I think that circumstances and a wide range of them has created this situation. I think that some of the big players have said, 'enough is enough, my turbines will cost so-and-so, live with it because that's how it is.' And there is of course in this a bigger aspect, which is about why does it always need to be that energy doesn't cost anything? If you made an extrapolation of prices like they were 40 years ago, energy is actually cheaper now, it's good for society. But in a world that needs to fight climate change, who says that you ultimately always need to be able to compete with something that you can pump out of the ground, and use, and spoil the climate? Is there an inherent logic in that? I don't think there is. I think that the prices they are able to deliver at now, 50 or 60 euros per megawatt hour from offshore wind, I think that's still a very attractive energy price compared to how energy has been in the course of human history.

And I suspect what we'll see is a pause at levels around 50, 60, but then I have no doubt, exactly the same- you've said a number of times you've made the mistake of of saying, 'okay, and now progress stops or at some point,' it won't. It's going to keep going. And I think I want to finish by talking about offshore floating. Because, you know, I think what we've established in the conversation so far that you've been involved in effectively all of the big innovations around wind, but you are now spending, I think most of your time around the foundations for floating offshore wind. Why is floating needed? What are you doing? Will it become cheaper than fixed base? What's the story there?

The story is that offshore wind is actually a big success. As I said, we started out with something that was, 'we would like it, we'd like to be green, how can we afford it?' to being now something that, in Denmark at least and in Britain also I think, is cheaper than any fossil or nuclear source we can think of. But it has the big disadvantage that it is somewhat rather unevenly distributed across the globe. So we have areas that have what we have in the North Sea here in Europe, shallow water close to big population centres. We have that in Northwestern Europe, we have that on the east coast of the US, we have that on the coast of China, we have it spotwise across the world. But generally speaking, in a lot of places in the world, you don't need to go any further than the Mediterranean in Europe, you can't build for some fixed offshore wind, because you cannot build foundations at depths larger than 50, 60, maybe 70 metres. Then it simply becomes prohibitively expensive. So floating is about expanding the operating window, so to speak, of offshore wind. And the International Energy Agency calculated back in 2019, that the factor is about 10. So, if we have a certain resource with bottom-fixed, we have 10 times bigger resource with floating. And if you look at our climate challenge- I'm from a Northwestern Europe country: we are basically the old sinners. The US used to be worse than us, they emitted more CO2. As it is now, as you and I sit here and talk, Asia emits 110% of the rest of the world put together. So we need to find climate solutions for Asia, where we can also turn their development - as we have actually turned the development in Europe and in the US, our emissions are too slow, but they are still getting down. Asia is like this. In order to do that, we need to make available non-emitting resources. Also, in places where they have big population density, not really space for solar, not really space for onshore wind, what do we do there? And there, one of the answers obviously, is offshore wind. It doesn't help if they are in places - which is a big part of Asia -where they don't have the joy of having a lot of shallow water close to the big population centres. That is what it's all about: it is making this, shall we say, tremendous or fantastic energy resource of wind power available to countries and people that cannot so easily use onshore wind or solar. And there's also another aspect of it, which is about public acceptance that we need to realise that even though the climate challenge is terrible, in a way, we also have real people thinking about their real ambience and their real normal lives, who don't appreciate seeing that pristine horizon being filled with industrial machines. And there, the way I think of it is that we should be able to make what I call "invisible power", which is power that's supplied by something you can't see. And that effectively means 40 kilometres out, then you can't see the turbines. Most of them will be below the horizon, the slight haze you always have will make it impossible to see the place, then they're out of sight, you just get a cable if for the power, you don't see where it comes from. I think that is a solution that will make renewables digestible for large parts of the world. And that is much easier if you don't have a, 'yeah we could do that but but it gets to be too deep' issue on your hands.

Yeah.

How cheap it will get? That's a good question. If you look at today's prices, it is significantly more expensive. But there we need to lean back and look at what did we learn. We learned about the solar, they went from the $100 in '78 to the 30 cents today. We did learn about offshore wind that used to be, as late as in '14, it was about 145 euros, and now it's like 50, 60. And there the remedy we can apply is the same good old second-hand remedy: industrialization. That is what it takes. That's how we get prices.

You're talking about industrialization, which is the way to go to reduce the cost of floating offshore. I've seen a marvellous video, it's an animation that shows you making these TetraSpar floating foundations in a sort of production line in a shipyard, and just one after the other being made. Is that how we're going to do it?

That's at least my idea, and you said something about these things will get cheaper through industrialization. Everything gets cheaper through industrialization. And what we basically did was simply that we looked at how did offshore wind get to be competitive. And they did that by industrialisation, and part of that was standardisation, modularization. They are kind of like the remedies. And we've also looked around to see is there anybody out there who does really cheap stuff in steel? And the cheapest steel structure you can buy out there in the world is a wind turbine tower, cheaper than any ship or bridge or airport building or any other large steel, because it's made in semi-automated factories. These towers are the biggest things in the world (that are made in something where robots are involved big-time, and where you do this repetitive thing). So what we basically have done is that we have said, 'okay, here's somebody, they've done the learning curve, they already have the industrial system. I know that their everyday is filled up doing towers, couldn't they do braces for floating offshore wind? That might be pretty much the same.' And that is the simple logic: it is simply to apply the logic of what we did on the wind turbines-proper to the floating foundations. And as it is now, as an interesting example, a tower for a wind turbine is always made in sections. You could say, as a customer, 'I don't want tha, I didn't write in my specs that I needed boats that I need to maintain for the next 25 years. I want the tower on one section, please, I don't want those split places where you put them together with holes.' And then the manufacturer will look at them and say, 'you don't want that because it's way too expensive.' And you'll say, 'I want it.' And he'll say, 'Okay, fair enough, then this is your price.' And you will run away screaming, because it can never compete with what came out of a factory. And then you simply live with the effects of having to put them together, it's still the cheapest solution. And that's basically the logic we apply with our floating foundation.

Very good. It's been fascinating talking to you about that. And I if anybody is going to pull off and mentor that industrialization of floating wind through, I think it's going to be you. Before I leave you though, there is one story that I want you to tell, because progress is not always smooth. And you also hold a world record, I believe. It's the world record for the longest distance a broken an actual complete turbine blade has flown in an accident, in the collapse of a wind turbine. So how did that happen? What do we need to learn from that very briefly?

What I told you about the early years was that we kind of mastered building of towers and everything else, even though our formal background was very moderate. I'm not an engineer. But of course, there were things we didn't fully realise. And on the first turbine I did for my friend who later wanted to become a manufacturer and with whom I made the licence deal will Vestas, we had blades without air breaks. And we had a big mechanical break, and if the turbine would ever lose grid-connection so that it couldn't get rid of the power, then it would use the power to accelerate. And then we use the brake to shut it down. What we didn't realise fully in the early years was how fast that would happen, so that a slight delay in applying the brake would mean that it would have reached a speed where the power it produced was so high that the brake could no longer hold it. And that's what happened to us in September '78. So we had an uncontrolled overspeed and one of the blades, actually all three plates, left the hub, and one of them flew 475 metres. I don't know if it's a world record. I'm quite sure it's a Danish record. And that was, of course, a scary moment, in many ways. We had this idea of doing machines that would make us independent, then later on, it had begun to brew. Maybe there could be an industrial application of this. And then suddenly, we discovered the hard way that they were actually dangerous. And out of that came innovation where we solved it, and I was not a key player of that. That was the blade guy, Mr. Erik Grove-Nielsen, who figured out to make the outer part of the blade mounted to the rest of the blade with a spring, so that, under normal circumstances, the blade tip would be held in. But if this centrifugal force came too high, the weight of the blade tip would become so high that it will compress the spring, move a little outwards, and then turn and act like a big air brake, so the turbine couldn't spin away. In that way, Erik and my friend, Mr. Jorgensen very good, made it safe.

Very good. And so, learning-by-doing, which is part of this, and hopefully, we will never again have the same sort of safety issues as in those early days as we commercialise your floating offshore wind.

At the time, it felt very bad. We were very lucky that we had this realisation early on; it would have been a disaster if the industry had kind of got going and then blades started being thrown. So we were very lucky we had it. It didn't feel lucky at the time, but it was a very good development after all.

Henrik, it's an enormous pleasure speaking with you. Thank you so much for joining us here today on Cleaning Up!

Thanks for having me, it has been great fun. Thanks a lot. Thank you.

So that was Henrik Stiesdal, windpower pioneer and inventor. You'll find a link, in the show notes, to the episodes which we mentioned during today's conversation. That's Episode 130 With Paddy Padmanathan, where we discussed the impact of the current inflation spike on the solar sector. Listeners interested in the process of industrialization and modularization that Henrik described may also want to listen to my conversation with another great Dane, Professor Bent Flyvbjerg, author of How Big Things Get Done. That is Episode 128. Also included in the show notes is a link to the book which I mentioned early on in the episode. That's The Boy Who Harnessed the Wind by Bryan Mealer, and William Kamkwamba. If you've enjoyed today's conversation, please remember to like, share, and subscribe to Cleaning Up, or leave us a review on your chosen podcast platform. And if you want more from Cleaning Up, sign up for our free newsletter at cleaningup.live, where you'll find our archive of over 150 hours of conversation with extraordinary Climate Leaders. And why not help someone else learn more about the Net Zero Transition by introducing them to Cleaning Up. Cleaning up is brought to you by our lead supporter, Capricorn Investment Group, the Liebreich Foundation and the Gilardini Foundation.

The Dane who Harnessed the Wind - Ep139: Henrik Stiesdal

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