Dawn of a new era
The environmental ambitions of the politicians in Hordaland were very high when it came to cutting emissions from ferry operations. A tender for new ferries, supported by DNV GL, resulted in a record investment of 140 million euros in zero-emission technology.
When ferries pass the stunning scenery of Norway’s Hordaland County today they leave a sizeable pollution and CO2 footprint behind. Hordaland’s 20-vessel ferry fleet has an average age of 29 years and emits as many noxious fumes as all the buses of the county combined. With the current contracts expiring between 2018 and 2020, this seemed to be a good starting point for a review of the entire fleet and the definition of new, low emission targets. And the ambition went high.
The county administration commissioned Skyss, the agency organizing public transport, tasking them with a significant reduction of emissions and energy usage. “We were to cut down emissions at least to levels in line with the global two-degree target,” Karl Inge Nygård from Skyss explains. The complex process of building a successful tender for new contracts with a ten-year term required a sophisticated tendering model. External expertise from the industry was essential for defining appropriate targets and measures. “In relation to both the preparation and the implementation of this procurement project we have been fully dependent on special expertise in environmental technology at sea,” Nygård explains. In a separate tender, DNV GL was selected as the partner to support the process of establishing an environment-friendly ferry business for Hordaland. “We are very pleased with the quality of the assistance we have received from DNV GL,” Nygård says. “From DNV GL’s side, the key challenge was to help the client walk the talk on real change, not just moderate improvements. This has been possible thanks to the combination of highly ambitious industry players and a courageous public procurer,” says project manager Martin Christian Wold from DNV GL.
Ambitious targets, surprising outcome
The tendering model rated environmental performance 30 percent of the total contract value. This was vital to push operators to think about innovative solutions as the competition was in principle technology-neutral, Nygård points out. But since electrification was a preferred political target, the project team had to adopt a new way of thinking. “To enable the use of electric ferries, Skyss drafted new schedules that left a few minutes extra between arrival and departure to allow electrically powered ferries to recharge their batteries,” Nygård explains.
Another challenge was to qualify for financial support mechanisms such as Enova and the NOX fund for environmental investments. With help from DNV GL, Skyss developed a way of integrating Enova support into public tenders for battery-powered ferries – which was not straightforward but paved the way for other counties to follow suit. DNV GL came up with an innovative model that ensures the predictability of Enova financial support for Hordaland, which may vary significantly depending on the solutions offered by the shipowners.
The environmental outcome of the tender was more than satisfying for all parties involved. All of the contracts are for fully-electric ferries, a result that had not been considered realistic in the beginning. “We expected some degree of electrification on most ferry connections but were surprised about the high degree of electrification we ended up with,” Nygård says.
“The 30 percent weighting of CO2 emissions and energy usage in our tender undoubtedly contributed to this,” he continues. “Clearly there was a maturing and growing confidence in battery technology amongst the competitors during the negotiations – the development in the ambition levels from the first to the final offers was very impressive,” Wold adds.
The future is electric
The next step is to follow up with the operators on the contract requirements. After all, this is about the cost-efficiency of a public investment of nearly 900 million euros on ferry services, including new ferries as well as 140 million euros for low-emission technology both on board the vessels and for the charger infrastructure on shore. This sum covers battery systems on board the ships, automatic mooring systems to keep the ferries still and save energy while charging, buffer batteries on land and upgrades to the power grid. Charging and battery technology as well as prices have evolved significantly in recent years, which means that most ferries in Norway will be able to operate electrically in future.
DNV GL expects no new LNG-fuelled vessels to be ordered for Norwegian trade; in fact, some existing LNG ferries will likely be retrofitted for electrical or hybrid propulsion.
The tendering model
There are several ways to achieve good environmental performance in a tender. A technical specification detailing the exact solution has historically been most frequently used in the maritime industry, both for government tenders and in the private sector.
In recent years the national road authorities in Norway, supported by DNV GL, have developed a technology-neutral tendering model based on functional selection criteria. The motivation is to let the industry decide on technology because it has the best understanding of what technical solutions are best suited and most cost-effective. This makes environmental innovation a strong element in the competition and, when applied correctly, stimulates creativity and new ideas across the supply industry.
The tender for the Lavik–Oppedal route in Norway, which was won by the first fully electric ferry in the world, Ampere, gives evidence to this. The maximum score in a competition is 100 points; typically 20 to 30 points are awarded for environmental performance (CO2, energy usage and NOX are usually applied in various combinations depending on the target). In the Hordaland tenders, CO2 emissions and energy consumption were each valued at 15 points, and price was valued at 70 points.
The best offer on each selection criterion is awarded full score, the others receive a proportionately lower rating. Failure to reach the promised environmental performance will result in severe financial sanctions. DNV GL believes this to be a highly efficient tool for achieving the best and most cost-effective eco-friendly solution. At the same time, this approach provides a highly flexible toolbox for any tender.