Why we invested in Aegir — Insights to accelerate offshore wind deployment
March 18, 2024
Despite recent challenges, offshore wind continues to possess immense potential. The market is growing and auctions are booming with over 50 GW planned for kick-off, marking 2024 as the busiest year ever. Aegir will help realize that potential, facilitating faster and more robust transactions.
Offshore wind power is among the fastest growing clean energy segments. In Europe, countries such as Germany, Denmark, and the UK have taken the lead, especially following the phase-out of subsidies and the AR6 CfD auction. Meanwhile, in the US, states like New York and New Jersey are ramping up Power Purchase Agreement (PPA) auctions in response to recent challenges. Additionally, Colombia is poised to host Latin America’s inaugural seabed auction this December. Across the Asia Pacific region, South Korea’s oversubscribed 1.5 GW offtake auction and Taiwan’s forthcoming 3.2 GW rounds underscore the sustained momentum in offshore wind development.
Offshore developers and investors should be doing well, but recent headlines paint a different picture.
For instance, Ørsted, a prominent leader in renewable energy, has faced setbacks with two significant U.S. offshore wind projects, Ocean Wind 1 and 2, which have been put on hold. Additionally, Vattenfall’s Norfolk Boreas project, a crucial component of the UK’s offshore wind expansion plans, has been put on hold. Notably, the recent UK auction failing to secure any offshore wind farms has been widely criticized as the ‘Biggest clean energy disaster in years’. These developments serve as clear reminders of the challenges and hurdles within the offshore wind ecosystem, highlighting the complexities and uncertainties that industry players must navigate.
What are the inefficiencies preventing offshore wind projects from materializing?
While escalating costs and supply chain limitations have undeniably impeded progress, they represent external factors beyond any single party’s control. However, a critical challenge plaguing the industry stems from the absence of a centralized “source of truth” — a comprehensive dataset containing climatic, economic, and financial details of offshore wind projects, crucial for all stakeholders.
Market and site identification, along with their development requirements, demand considerable time and resources. Often, this entails deploying numerous personnel and software tools, translating into significant financial investments, particularly in environments lacking comprehensive data. Decision-making during the bidding process and project deployment involves navigating numerous uncertainties, forcing governments, investors, and project developers to balance thorough due diligence with economic efficiency.
Due to the disparity in available information among stakeholders, the bidding process frequently yields bids that fail to materialize into viable energy projects. This inefficiency in resource allocation negatively impacts all participating stakeholders in the process.
Scott and Rikke launched Aegir to make the discovery process smart and time efficient
After decades of working with the biggest Offshore wind developers like Ørsted and Vattenfall, CEO Scott Urquhart and CCO Rikke Nørgaard recognized the urgent need for a comprehensive platform to assist governments, renewables investors, and developers in making more informed decisions within shorter timeframes.
Aegir’s intelligence and software solutions are designed to be highly responsive, using a combination of machine learning models and pre-processing of large datasets, meaning the end user can carry out instant screening and scenario analysis, which otherwise would have taken weeks or months to carry out. Aegir offers the following benefits:
Time-saving: Aegir streamlines the process of identifying markets, sites, and their development, potentially reducing the time from market selection to commercial operations by up to 2 years (30% on average).
Enhanced bid certainty: By leveraging Aegir’s data and solutions, customers gain the ability to quantify uncertainty more accurately. This increases the likelihood of selecting the best markets and projects and securing winning bids, leading to a substantially higher return on capital employed (ROCE).
Cost efficiency: Aegir can potentially save up to €5m per year for a customer through greatly shortened time for project and market development, fewer internal and external resources employed, and lower internal software development.
These capabilities enable Aegir to facilitate the connection between sellers and buyers at optimal prices while expediting project launches. Had Aegir been available earlier, it could have mitigated some of the current challenges in ecosystems, such as project cancellations and auction failures.
Aegir on its way to become a gold standard — capable of nurturing the ecosystem back to health and supporting its growth
Let’s revisit the start of this blog, where we discussed how 2024 is set to be the busiest year on record for offshore wind auctions. Aegir would serve as an indispensable tool for governments to announce successful auctions and for investors to navigate project selection complexities. It enables developers to provide precise quotes by leveraging comprehensive historical auction databases and conducting economic assessments of projects.
Aegir stands out in a market saturated with solutions that are either overly generic or too niche. Indeed, major players such as BP, Shell, Orsted, Vattenfall, and others have already leveraged Aegir Insights to their advantage, staying ahead of the game in offshore wind. However, Aegir’s impact extends beyond offshore wind. In the context of governments and climate tech investors allocating trillions of dollars to combat climate change across diverse clean energy sectors, such as power-to-X (including hydrogen, synthetic fuels etc.) Aegir emerges as a pivotal catalyst.
Aegir has a potent blend of a capable team, high scalability, strong initial market traction, and perfect market timing. The €8.5M invested in Series A will enable the team to execute its roadmap: developing tools for simulating price-competitive auctions, streamlining project and portfolio analysis, and expanding expert client support. We wholeheartedly agree with our co-investors Seaya when they say “Aegir Insights will become the ‘gold standard’ solution for offshore wind decision-making.”
