Because Why Not? Floating and Airborne Wind

our full disclaimer at the end of today's show. This week, our podcast is going to focus on topics in two separate areas and two separate research notes that we wrote, one on floating wind and another on airborne wind. So they're titled Floating Wind Drifts Towards Viability and Airborne Wind Energy Waiting for Takeoff. They're available for BENNF clients on BNF dot Com or at b NF go on the terminal.

My inner geek really loves to hear about new technologies in the spaces that we cover, and today is no exception. We're gonna be joined today by Tom Harry's senior associate and member of our wind analyst team, who has a particular emphasis on offshore wind. Hi Tom, thank you for joining us. Hey Dana, nice to be here. So today we're going to talk about floating wind and airborne wind.

Of these two, let's get started more with the floating wind side of things, um, since I guess that's the more established of the two technologies, and I'd love for you to paint a picture in my mind of what

that really looks like. Sure, it's basically a wind turbine at sea, sitting on a boat like structure in most cases, so there are a few different designs, but in essence you've got a wind turbine which is exactly like a winter one on land and like other offshore two ones, but in the floating case it's sat on either a wide, shallow structure or slim, long, thin structure. Um. And there's

a few different designs in between the two. Who was basically a choices and these ones are much further off shore than the wind turbines that were used to seeing off shore today. Correct, absolutely, while the demos they're close, but in future, yes, they should be further from shore. And the idea here is essentially floating wind operates in water depths beyond fifty deep and to get the fifty ms you've got to go far from shore. Now. I've seen some of these at the Closet coast of Kent

and they are huge. Are the floating ones bigger smaller? They won't be smaller. Bigger is better, and offshore they're going to stay big and they're probably gonna get much bigger. I think we've actually run out of comparison buildings for offshore turb ones anyway. No, Look, they're gonna get bigger. They're going to be at the same scale as normal offshore wind turbines. But in reality, if they tap these deeper waters, then you probably won't see them from shore.

After about fifty kilometers from shore, you shouldn't be able to see an offshore wind turbine. And they're probably going to beyond fifts. So will we lose a lot of electricity and the transmission distribution bring it back? No, not much, very little actually, And there's already offshore wind farms operating at those distances in some countries like Germany, even even up to a hundred kilometers even beyond that now, so the distance isn't a new thing, it's the depth doesn't

new Okay, So pivoting over to airborne wind. Can you tell me a bit about what these look like and how far along some of this technology actually is. Yeah, this stuff is pretty cool. Um, and they look there's two different well totally different designs. So one looks like an airplane with lots of little rotors on it, and the other looks like a kite serving kite. Ultimately, so one looks like a soft material like structure and the other one is a rigid structure. Okay, so these things

go up into the sky. How do we get them up into the sky to begin with? Some need help, so some need to essentially be lifted high up. That could be maybe drones in future. Brothers can basically operate themselves upwards and then once they're high enough they start generating. So literally one so one technology type generates electricity in the ear, so the wind comes in, it spins a rotor which generates electricity and they send it to the ground.

The other one doesn't generate electricity in the ear. It pulls a cable which generates electricity on the ground. So if you're the one that can generate on board, you have the ability to act like a motor when you're on the land. Lifting yourself up and then once you're high enough, you switch to generating and you start generating power. The other one gradually comes down to earth and then needs help get them back up again, and then it

gradually comes down to earth and then back again. So how do we keep these from falling out of sky and squishing people? Um, don't ask me no. Look there in the process of sorting this out, there's demonstrations, there's prototypes, it's all R and D work, and this is one

of the issues they have to solve. You have to solve the safety issue because I mean, logically, you're looking at these things, and then again they're they're flying devices, so they're probably going to be under the regulations similar to airplanes. They need to be safe. Eventually, they're meant to operate autonomously, so that they need to prove that that they can operate day in day out without human intervention. Um, and I guess they're going to have to prove that

their systems have got redundancies. If one cable snaps, is there another cable to help it come back down to ground. So definitely issues to be solved. So you're mentioning they look like airplanes what about airplanes? Are they going to get in the way? Are they not quite that high up? Most they're not trying to get that high up. We're talking hundreds of meters in height, maybe a hundred to

four hundred in most cases. Some are looking in a thousand meters and beyond mark, which again would be low enough to not impact aeroplanes and so on. But look, potentially these devices might be in areas where they're out of flight paths. For example, some are looking at nuclear plant facilities where they typically have a no fly zone, so maybe that opens up a market for them. And again others are looking at maybe off grade there is

more mountainous areas. Because if you think about these devices, unlike wind turbines, they're actually thinking of tapping the smaller scale market. So disaster relief for example. So there's been a natural disaster somewhere, could be anything hurricane, mud slides, whatever, and they're off grid. Power has been cut off. Now you can turn up with a lorry with a trailer one of these things in the back, or two of these things, or five of these things, and you can

unload it and deploy it pretty quickly. I mean these things used ten of the material of a wind turbine, and therefore you can get quick power on which makes them also theoretically cheaper to manufacturer. Correct in principle, yes, but they will use more expensive and complex materials. So winterbines lots of steel, lots of very easily accessible, fairly cheap material. These are going to operate a bit like aeroplanes, so they're going to have light ware. They're gonna need lightweight.

In hence you can imagine some crossover with the supply chain of the aerospace industry. So the people are doing the R and D for these airborne wind energy systems. Are they largely also a material scientists? Are they looking more at the engineering part of it? Yeah, a good question. I mean they're probably are anautical engineers. These are not winterbine engineers crossing over to the dark side. This is this,

This is gonna be a whole new set of engineers. Actually, a lot of the ideas have come from existing technologies, maybe from sailing boats for example, or really high up antenna and so on and so forth. There's some crossovers with other industries. So yeah, you'd say it's a whole new batch of engineers and designers and R and E people. Okay, but so you can set them up in reasonably small amounts of space. Am I going to be able to

get one of these from my house someday? Probably not. Um. I can't imagine them being on households, and even if they are, that's probably further afield. Again. Um, Like as a household, you want something probably a bit simpler and with less moving parts because you're not going to maintain that. You don't want to become a specialist in fixing wind turbines and kites and so on. But like a disaster relief even maybe utility scale, you know, mega wat's worth

of power, that could be the future. But we think you're probably looking at five years minimum, more like ten before we see any of these emerging any significant scale. Okay, so five to ten years for this. How far in the future is floating wind today? It's now. I mean people are already building floating winter one. Where can I see one? So you could travel north, you could go to Scotland. You could see five floating turbines there. Floating winter tourism. I'm ready for it. Ask a local fishermen

to take you on. There's a floating turbine of France. It was one of Portugal Japan A looking at it and look into the future. France are looking pretty big on floating wind. If you go to the Mediterranean side, very deep waters, and also nobody wants to be closer short you don't want to see winter wines when you're somewhere there on the beach, so generally they're looking further from shore, deeper waters opened the door floating wind, and

then further afield. There's some interesting crossovers. So if you look at somewhere like Japan very deep waters, or someone like Career where they have lots of ship building expertise, and you've got to think about floating wind as more like ships than conventional foundations. So there's lots of skill crossovers there. Now, floating wind the use cases offshore, but you can also have some of this airborne wind off shore.

So should the floating wind manufacturers be worried that the airborne manufacturers are going to come and eat their lunch or they largely different use cases. That's a good one. There's probably enough lunch to go around. But I would say look as early doors for airborne wind, they're not competitors. Yet there's probably a use case for both and everyone's happy. But right now, actually, when it comes to the offshore side of airborne wind, there's more of a discussion around

repowering decommission sites. So if you think about the early offshore wind farms, those turbines now look like toy turbines. I mean, compared to the scale of today, the minuscule. So let's say you chop off the turbine, you're left with a platform. Let's see, it's way too small to put on today's big turbines. So incomes air born wind, smaller, lighter kites. They could potentially reuse these platforms and basically repower old offshore wind farms. So it's a good use

case there. So these are these are pretty cool technologies we're talking about because they're really emerging. And I think for a while, you know, we're talking about wind turbines and it was just like, oh, they'll get bigger and they'll generate more. But now we're completely rethinking what this

stuff looks like. Are there other technologies aside from these two that maybe we're not ready to write a research note about, but you feel are definitely bubbling under the surface in this kind of R and D sort of world. So floating wind and kites, air kites and okay, okay, fine, I don't know. I don't think so. I mean, look, normal wind it's getting very cheap, right, So you've got to think about the incentive of trying to find a new technology you for generating from. But wind, and there's

not that many use cases. Float Airborne wind works really well in places that have low wind speeds close to ground. So if you got higher and higher and higher, you could tap stronger and more stable wind speeds. So it's really good for markets where wind speeds close to the ground too low to make wind economic. Floating wind opens up a use case where waters are too deep for bottom fixed let's say turbines fixed the sea then, and what's left in between where the market I don't know.

I think for now, that's enough home floating home wind. There we go. That's that's what it is. Maybe we'll get there someday. Um, So who's that skin in the game on these sorts of technologies and who's developing them? Sure? I mean, let's start with the wind kites, right, So they started off and are still largely dominated by R and D people, technology developers, entrepreneurs and so on and so forth. But we've recently seen the utilities in the

oil and gas sector get involved. So shall have invested in the Google owned McConney technology Now that looks like an airplane. They've got a six water I think device currently being tested. Then you've got Eon. Eon have invested in Ampics and again they're looking at potentially repowering their offshore wind farms. And then you've got Saipem, an Italian oil company. They've invested in kai Chen. So there's a real mixtair of huge players and these local, smaller R

and D players trying to make the market work. And so you'd think the nimbleness of the small companies, combined with the balance sheet and the understanding of the big old and gas companies, could accelerate the sector. Now, is it the same sorts of companies that are looking at offshore wind? Is it? Is it oil and gas also looking at that? Yeah? Yeah, absolutely, I mean well off

shore floating wind. Sorry I've got to specify specified, Okay, yeah, I mean three years ago, people thinking that floating wind was a totally separate sector to normal offshore wind, normal offshore wind being the stuff fixed the seabed in reality, is the same players wanting to do both. Okay, because what floating wind does is offers more growth opperto unities to normal offshowing developers. Everyone's interested in terms of who's

sort of been leading the floating market. Then you've got Echono, big Norwegian player. They installed the first ever float in turbine and they've installed a floating demonstration park. Are they're looking at new markets to open up for floating wind. You've got a number of small technology players, but even the French utilities. If France becomes a big floating market like we believe, and these guys on their doorstep, they've

got huge potential. So they're looking to get expertise and I guess build up their knowledge and move up the learning curve of floating wind. Let's talk a little bit about the costs here, because I think that's you know, you've talked a little bit about the companies that are actually interested in investing in this technology, and there definitely

is that market opportunity. But having read both of these research notes back to back, what I'm seeing is floating wind super expensive and airborne wind fairly cost competitive as soon as they get the technology going in the next couple of years. Although I guess we're talking about a bit of a kind of a mythical creature here since it's not fully fully developed technology. Um, what are your views on the big hurdles for kind of both of

these industries and becoming cost competitive. Yeah, I mean everything starts expensive, right. So these projects and these these technologies are all at the demonstration stage. You're building small projects. You've got no economies of scale, you've got no price in power, et cetera. Now we're probably thinking everyone wind minimum five years more like ten years away. Anything utility

scale floating wind is very close. We've already got operating demonstration projects and markets and governments already looking at supporting floating wind at some serious scale, you know, three hundred five hundred megawatson beyond what government? So which which locales? France, Okay, Japan, potentially Korea, the US off the west coast, maybe the UK and all these markets either because they don't have enough shallow waters for normal offshore wind, or because they're

looking to diversify, or because it's industrial strategy. Maybe they want to ex bought some of the skills they have frof shore deep water expertise safe in Norway, for example, with all the oil and gas platform expertise, there's a direct cross over the floating wind. Most floating wind technologies have all come from oil and gas. There's online gas

platforms already sitting on floating platforms. So it all sounds really new and glamorous, but in reality it's tried and tested tech, so so that the game for floating wind here is not to make sure the turbines don't fall over. That's not the concern here. The concern is trying to get costa and right now, bigger turbines is better. The bigger the better frofshore wind every time, bigger the better. Okay, now, what are some of the maybe people were thinking these

aren't going to necessarily be possible. What are the barriers? I mean, we've talked about cost being definitely something is going to have to come down do this at scale. But we've seen this story over and over again in the renewable industry, and you know, it's it's sort of kind of the tread and true barrier that somebody has to cross. What are some of the technical puzzles that maybe they haven't yet solved. It's funny, actually it is

a physical muzzle. So these things are massive. The floating platforms are huge. They could be thirty in dimensions, they can be up to a hundred meters deep. And essentially building lots of these things close to shore where you can drag them out to your wind farm is tricky and untested. So there needs to be production lines that are bigger, because even though conventional offshore wind is massive,

these floating platforms are bigger. So new production lines, a new supply chain, and the ability to build lots and lots of these things. And then once you've got them out there, for example at the wind farm operating, how do you maintain them? So for example a blade breaks or a gear box blows up, whatever it is normally in bottom fixed offshore wind, take out one of these

huge vessels. They stick their legs into the ground, they raise off the sea floor and they can then change the gear box, change a blade from a fixed stationary platform. You can't do that in deep orders and by definition floating winners and deep worters, So there are challenges on maintenance. Do you drag them back to shore to change your blade. Sounds good and logical, that's tricky. You've got to unplug stuff,

plug stuff back in. Doing things offshore is always difficult. Um, so those things need to be ironed out, and really those things will be solved or hopefully solved in the next few iterations of projects. So look, we're expecting a few more demos off France, a decent sized project in Norway, maybe a few other smaller demos, and these should iron

out the problems. So you've said that bigger is better in the wind space, Are we going to see the end of regular onshore wind because these offshore things are definitely either offshore grounded or offshore floating are a lot bigger, right, Yeah, Look, we're still going to see a mix of both, and obviously there are some countries of our coastline, so there you go. And even the ones with coastlines, onshore wind is generally quite cheap in most places around the world,

so we'll see a mix. And maybe you've got a lack of land in some places, particularly some Asian markets, were actually they're looking at the sea because there's more space there. But generally it will still see a mix, but I expect to see a larger share of floating and all show in the future. Thank you very much for joining us today and talking about airborne wind energy, waiting for takeoff and floating wind drifts towards viability. It's

really good having you here today. Yeah, thanks to ask b an e F is a service provided by Bloomberg Finance LP and its affiliates. The recording does not constitute, nor should it be construed, as investment and vice investment recommendations, or a recommendation as to an investment or other strategy. Bloomberg and f should not be considered as information sufficient

upon which to base an investment decision. Neither Bloomberg Finance LP nor its affiliates makes any representation or warranty as to the accuracy or competentness of the information contained in this recording, and any liability as a result of this recording is expressly disclaimed. Two