As governments around the world are reducing subsidies for renewable energy-based generation, renewables are expected to start competing more with fossil fuel-based energy sources and reach grid parity. To make the energy transition economically visible, energy companies need to identify solutions for cost reductions in order to remain competitive within bid processes – and we believe digitalization can play a major role here.
In the Nordics, we now see that several companies are busy building their renewable energy portfolio within the offshore wind sector, transferring the knowledge gained from decades of experience within the offshore oil and gas industry. In the past decade, offshore wind capacity has been growing rapidly: from 178 GW in 2010 to 594 GW in 2019 and is expected to triple in the next five years, according to the International Renewable Energy Agency.
Complex construction, harsh environment
What are the main challenges that offshore wind developers face? Based on our experience, the main challenge is about achieving significant cost reductions across the value chain to remain competitive within the bidding process, offering the lowest LCOE (levelized cost of energy) while keeping sustainable margins.
Undoubtedly, offshore wind structures, especially floating ones, could be considered as highly complex solutions designed to operate in harsh environments. According to renewables industry specialists BVGAssociates, the cost for a typical offshore wind farm arises within three main areas:
Digitalization to reduce costs
Cognizant’s view is that digitalization should be considered as one of the key enablers for cost reductions across the offshore wind value chain, having the quickest time to market with a high ROI.
However, our research reveals that energy organizations lag behind other industries in 12 of 13 key measures of digital maturity.
Future success and competitiveness will be highly dependent on embracing digitally enabled processes, applications and modernized IT infrastructure and data architectures. Cognizant operates as a trusted global partner to electric, gas and water utility and energy providers, helping them accelerate business performance and drive growth through the power of digital. We have a proven track record in digital transformation, delivering value in everything from the development phase to plant balance as well as operations and installation. Below are some examples from energy projects across the offshore wind related value chain:
Services from A to Z
We are committed to contributing to solving the world’s hardest challenges such as meeting climate change. We thus support leading energy companies in their transition and acceleration within the renewable energy space, like within offshore wind, to deliver more energy options, reduce cost and provide higher customer satisfaction. We also help energy companies increase their competitiveness across the value chain.
Our key value proposition is that our domain expertise, market experience and technical capabilities support companies from A to Z; from digital strategy development to agile implementation and further value realization. Reach out to our consulting team to learn more.
Read more in this research report conducted by Cognizant and ESI ThoughtLab.