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  • Writer's pictureMorten N. Pettersen | Principal Consultant

Defining a risk management framework for offshore wind projects

Updated: Jun 12, 2023

risk management framework

The offshore wind industry is experiencing rapid growth globally. On the Norwegian Continental Shelf (NCS), the industry is still in the early phase, but the Utsira Nord and Sørlige Nordsjø II developments could increase momentum for the entire industry. In Norway, the industry has a long tradition of managing offshore assets generally and particularly for the oil and gas sector. As for this sector, it will also be necessary to implement a robust framework for risk management for the offshore wind industry. How is the current situation when it comes to risk management for offshore wind project developments?

In June 2020, the Norwegian Government decided to open Utsira Nord (west of Haugesund) and Sørlige Nordsjø II (close to the Danish border) for offshore wind developments. This could be the starting point for a new era within the Norwegian energy business, creating value for operators, engineering companies, and system suppliers.

In August 2020, Petroleum Safety Authority (PSA) was assigned as the regulatory body for offshore wind developments, equivalent to their responsibility for the offshore oil and gas industry. The PSA has not yet published any new regulations, however, it was indicated that it would be a function-based regulatory framework, similar to what is in place for the oil and gas sector. Further, PSA acknowledges that the offshore wind industry is quickly becoming a mature industry in other locations (e.g., Denmark and Germany), where existing best practices and normative standards will be relevant to incorporate as appropriate.

Risks for Offshore wind Developments

The risks related to offshore wind development can be directly compared with the Defined Situations of Hazard and Accident (DSHA) from the oil and gas sector. The bullet points listed below include some of the critical major accident drivers for a typical offshore wind development, where a substation (for power transmission to shore) is included:

  • Fires on the substation, e.g., from transformers or utility systems;

  • Dropped objects, such as from crane operations;

  • Ship collisions, e.g., related to nearby ship traffic and fishing activities;

  • Accidents during personnel transfer (helicopter, WTW, crew boats, etc.);

  • Risks related to marine installation campaigns;

  • Sabotage and cybersecurity.

Integrating Project Risk in the Framework

An offshore wind farm developer needs to focus on cost-driving or schedule-impacting project risks in addition to the HSE-related and technical risks. With the proposed license regime for offshore wind developments, the project developer must make an early investment decision. Due to rapid technology development, e.g., with turbine size/capacity or floating vs fixed installations, the developer needs to take a specific technology risk at an early stage. In this context, following a holistic approach is paramount for identifying and assessing project risks to reduce both the financial risks and risks related to delays.

Implementing a Framework

It is vital to implement a risk management framework early, outlining an integrated and consistent process from license application throughout the front-end design, detailed design, and operational phases. The upcoming release of regulations (from the PSA) will provide applicable requirements. However, the following aspects should be taken into consideration when planning for a risk management framework:

  • Initiate a process for project risk and regulatory management at an early stage, to ensure proper management of technology and risk management, as well as planning of risk activities throughout project phases, allowing an efficient and integrated risk management process;

  • Barrier management is a fundamental part of oil and gas risk management processes and a key focus area from PSA. All project developers should develop a barrier management philosophy at an early stage, as a fundament for defining performance requirements and controlling barrier functions throughout the project and operational phase;

  • Risk management activities for the substations are comparable with offshore unmanned installations, including activities such as HAZID, HAZOPs, Functional Safety, Quantitative Risk Analysis (QRA), Reliability, Availability, Maintainability (RAM) studies, ENVID, human factors, working environment, and technical safety engineering;

  • Early implementation of a RAM model is essential to confirm that the system design will meet the uptime requirement and the financial targets. A RAM study is also useful for debottlenecking and as input to spare part philosophy during the operational phase;

  • It is recommended to perform an Electrical HAZOP (EHAZOP) at an early stage of the project. The EHAZOP should cover all systems to ensure safe electrical systems as well as high availability;

  • As for the oil and gas sector, an offshore wind project involves multiple stakeholders and organizations. Hence, it is recommended to perform regular Integrated Design Reviews to ensure that the design, across contractual borders, and does not introduce any additional hazards or blind spots.

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