Periodic Reporting for period 1 - SeagateSail (20% fuel saving for commercial vessels through a hybrid wind plus motor cruise mode.)
Okres sprawozdawczy: 2014-10-01 do 2015-03-31
Shipping is the backbone of international trade, some 90% of which is carried by sea. European ship-owners control 40% of the world’s merchant fleet and operate shipping services all over the world.
Throughout the last century, the shipping industry has seen a general trend of increases in total trade volume. World seaborne trade figures have increased considerably since the ‘70s, and in 2008 reached 8.2 billion tons of goods loaded. As with all industrial sectors, however, shipping was not immune to economic downturns, and 2009 witnessed the sharpest decline in the volume of global merchandise trade; international seaborne trade volumes contracted by 4.5%, and then bounced back in 2010 growing by 7%.
Projections for this market indicate the volume of seaborne trade is expected to double from 9 billion tons per year to around 19 billion tons by 2030. Recent studies revealed the overall contribution of the European shipping industry to the EU’s GDP at the end of 2012 was around 145 billion €, proving a very wide and fast evolving sector.
The precipitous drop in oil prices is among the most significant—and unexpected—forces in the global economy today, the vital transportation sector being a beneficiary of lower oil prices. As in the case of other modes of transport, fuel is in fact a major operating expense for ship operators. So in the short term, ocean shipping companies stand to benefit from lower operating costs and higher margins. However, there remains great uncertainty about the sustainability of these prices, and recent projections show a scenario in which oil prices constantly rise to reach about 1.000 USD/ton by 2035.
The global merchant fleet currently consumes approximately 330 million tons of fuel annually, 80-85% of which is residual fuel with high sulphur content, and the remaining are distillate fuels complying with stricter regulations. SOx, NOx and PM are all emissions resulting from the combustion of marine fuels, both having severe ecosystem impacts and negative health effects on exposed populations.
Emissions from the global shipping industry amount to around 1 billion tons a year, accounting for 3% of the world's total greenhouse gas emissions and 4% of the EU's total emissions. Without action, these emissions are expected to more than double by 2050. This is not compatible with the internationally agreed goal of keeping global warming below 2°C, which requires worldwide emissions to be at least halved from 1990 levels by 2050. Summarizing, the main problems of the commercial marine market are related to:
1. Fuel prices – the major expense for ship-owners is due to fuel use (can reach even the 70% of the whole operating expenditure);
2. Regulations – more and more stringent restrictions aiming at lowering emissions produced by commercial ships are being drafted, and strong adaptation efforts will be required to ship-owners to reach compliance with such limits in the next future.
The main objective of the project is that of building and validating the collapsible delta wing sail on a real commercial ship (bulk carrier/tanker/ro-ro), thus proving its performance, retrofittable features and full automation and preparing the product’s introduction in the reference market with the support of key industrial players and renowned actors in the maritime sector. The Seagate Sail solution aims at addressing the environmental challenges of air pollution by reducing commercial ship fuel consumption by around 20%, thus cutting costs and polluting emissions by 20%, as well. Seagate Sail and cruise control will therefore provide a reliable and beneficial solution for commercial vessels owners to reduce their fuel bills and cut emissions, going in the direction of the societal and environmental challenges posed by the emerging regulations in the maritime sector.
Throughout the last century, the shipping industry has seen a general trend of increases in total trade volume. World seaborne trade figures have increased considerably since the ‘70s, and in 2008 reached 8.2 billion tons of goods loaded. As with all industrial sectors, however, shipping was not immune to economic downturns, and 2009 witnessed the sharpest decline in the volume of global merchandise trade; international seaborne trade volumes contracted by 4.5%, and then bounced back in 2010 growing by 7%.
Projections for this market indicate the volume of seaborne trade is expected to double from 9 billion tons per year to around 19 billion tons by 2030. Recent studies revealed the overall contribution of the European shipping industry to the EU’s GDP at the end of 2012 was around 145 billion €, proving a very wide and fast evolving sector.
The precipitous drop in oil prices is among the most significant—and unexpected—forces in the global economy today, the vital transportation sector being a beneficiary of lower oil prices. As in the case of other modes of transport, fuel is in fact a major operating expense for ship operators. So in the short term, ocean shipping companies stand to benefit from lower operating costs and higher margins. However, there remains great uncertainty about the sustainability of these prices, and recent projections show a scenario in which oil prices constantly rise to reach about 1.000 USD/ton by 2035.
The global merchant fleet currently consumes approximately 330 million tons of fuel annually, 80-85% of which is residual fuel with high sulphur content, and the remaining are distillate fuels complying with stricter regulations. SOx, NOx and PM are all emissions resulting from the combustion of marine fuels, both having severe ecosystem impacts and negative health effects on exposed populations.
Emissions from the global shipping industry amount to around 1 billion tons a year, accounting for 3% of the world's total greenhouse gas emissions and 4% of the EU's total emissions. Without action, these emissions are expected to more than double by 2050. This is not compatible with the internationally agreed goal of keeping global warming below 2°C, which requires worldwide emissions to be at least halved from 1990 levels by 2050. Summarizing, the main problems of the commercial marine market are related to:
1. Fuel prices – the major expense for ship-owners is due to fuel use (can reach even the 70% of the whole operating expenditure);
2. Regulations – more and more stringent restrictions aiming at lowering emissions produced by commercial ships are being drafted, and strong adaptation efforts will be required to ship-owners to reach compliance with such limits in the next future.
The main objective of the project is that of building and validating the collapsible delta wing sail on a real commercial ship (bulk carrier/tanker/ro-ro), thus proving its performance, retrofittable features and full automation and preparing the product’s introduction in the reference market with the support of key industrial players and renowned actors in the maritime sector. The Seagate Sail solution aims at addressing the environmental challenges of air pollution by reducing commercial ship fuel consumption by around 20%, thus cutting costs and polluting emissions by 20%, as well. Seagate Sail and cruise control will therefore provide a reliable and beneficial solution for commercial vessels owners to reduce their fuel bills and cut emissions, going in the direction of the societal and environmental challenges posed by the emerging regulations in the maritime sector.
The application to a Phase 1 project allowing us to focus on the creation of a sound business plan and of an accurate feasibility study. In the course of the action, the following activities have been performed:
1. The creation of D1.1 implemented through the active contribution of the project members – technical feasibility for the application of the sail to 2 existing ships was performed;
2. The verification of the possibility to apply the Seagate Sail technology, simulated, tested and validated on a 7m demonstrator, to a full-scale application onto a commercial marine vessel, to be performed during a Phase 2 project for SMEs;
3. The evaluation of the project’s contribution to societal and environmental objectives setup at a European level, and the identification of the standardization/ certification path that will have to be followed to comply with regulations and EU guidelines on environmental protection;
4. The description of the currently validated technology and of the improvements in the design that prove necessary to provide the shipping industry with a new, reliable and highly beneficial solution;
5. The overview of the competitive advantage provided by the use of the Seagate Sail in terms of fuel use reduction (and thus reduced dependency on oil) and of costs savings;
6. The drafting of a financial plan forecasting revenues and sales volumes for the Seagate Sail introduction in the market and future commercialization;
7. The analysis of the IP framework suggesting a proper exploitation strategy and a protection path for the intellectual property generated during the project;
8. The selection of an appropriate framework and funding scheme supporting the product engineering and validation phase, identified in a Phase 2 Project of the H2020 Programme.
The main results achieved in the project mostly relate to the creation of the Deliverable which reports:
o The identification of the target market for the Seagate Sail product (commercial maritime sector) and of the customers and stakeholders groups,
o The description of the regulative framework for the project, and an analysis of the main barriers to entry of the target market (with the strategies to possibly overcome them),
o An overview of the main contribution of the project to standards and to both societal and environmental objectives,
o An analysis of the main competing products/companies in the reference sector and the creation of a strategy to reach the market (revenue model identification),
o A study showing the value proposition of the project, the current state of development and the technical feasibility of the proposed collapsible sail, the description of the minimum viable product expected at the end of the project and the possible upgrades and improvements to be performed to the sail after market introduction, the re-design of the Seagate rig concept and of the sail performed by SmAz for the commercial application,
o The creation of an executive plan, of Phase 2 project Consortium structure and of the estimated project budget; financial projections have been made for the Seagate sail product sales confirming the beneficial aspects of the project and its economic feasibility for the proposers,
o The description of IP-related issues and of how the knowledge generated in the project will be dealt with and protected, together with a draft of the agreed exploitation strategy within the Consortium,
o Marketing activities carried out by the partners: initialization and support to the relationship with RINA performed by SmAz, support by this partner at the first meeting of SeaG with the association, research for potential boom producers and requests for quotations upon delivery of the complete set of specifications by SmAz, research for potential sail producers and requests for the associated manufacturing costs quotation upon delivery of the complete production details. The Project Coordinator SeaG met with the most relevant associations and companies operating in the maritime sector (IWSA, RINA, BARTUCCI, Ben Ainslie Racing, Carbon War Room, Persico, Magma Structures and several ship-owners).
1. The creation of D1.1 implemented through the active contribution of the project members – technical feasibility for the application of the sail to 2 existing ships was performed;
2. The verification of the possibility to apply the Seagate Sail technology, simulated, tested and validated on a 7m demonstrator, to a full-scale application onto a commercial marine vessel, to be performed during a Phase 2 project for SMEs;
3. The evaluation of the project’s contribution to societal and environmental objectives setup at a European level, and the identification of the standardization/ certification path that will have to be followed to comply with regulations and EU guidelines on environmental protection;
4. The description of the currently validated technology and of the improvements in the design that prove necessary to provide the shipping industry with a new, reliable and highly beneficial solution;
5. The overview of the competitive advantage provided by the use of the Seagate Sail in terms of fuel use reduction (and thus reduced dependency on oil) and of costs savings;
6. The drafting of a financial plan forecasting revenues and sales volumes for the Seagate Sail introduction in the market and future commercialization;
7. The analysis of the IP framework suggesting a proper exploitation strategy and a protection path for the intellectual property generated during the project;
8. The selection of an appropriate framework and funding scheme supporting the product engineering and validation phase, identified in a Phase 2 Project of the H2020 Programme.
The main results achieved in the project mostly relate to the creation of the Deliverable which reports:
o The identification of the target market for the Seagate Sail product (commercial maritime sector) and of the customers and stakeholders groups,
o The description of the regulative framework for the project, and an analysis of the main barriers to entry of the target market (with the strategies to possibly overcome them),
o An overview of the main contribution of the project to standards and to both societal and environmental objectives,
o An analysis of the main competing products/companies in the reference sector and the creation of a strategy to reach the market (revenue model identification),
o A study showing the value proposition of the project, the current state of development and the technical feasibility of the proposed collapsible sail, the description of the minimum viable product expected at the end of the project and the possible upgrades and improvements to be performed to the sail after market introduction, the re-design of the Seagate rig concept and of the sail performed by SmAz for the commercial application,
o The creation of an executive plan, of Phase 2 project Consortium structure and of the estimated project budget; financial projections have been made for the Seagate sail product sales confirming the beneficial aspects of the project and its economic feasibility for the proposers,
o The description of IP-related issues and of how the knowledge generated in the project will be dealt with and protected, together with a draft of the agreed exploitation strategy within the Consortium,
o Marketing activities carried out by the partners: initialization and support to the relationship with RINA performed by SmAz, support by this partner at the first meeting of SeaG with the association, research for potential boom producers and requests for quotations upon delivery of the complete set of specifications by SmAz, research for potential sail producers and requests for the associated manufacturing costs quotation upon delivery of the complete production details. The Project Coordinator SeaG met with the most relevant associations and companies operating in the maritime sector (IWSA, RINA, BARTUCCI, Ben Ainslie Racing, Carbon War Room, Persico, Magma Structures and several ship-owners).
The main quantitative targets of the project, representing the competitive advantage of the Seagate collapsible delta wing sail, are set to:
1. 20% fuel savings, this being translated into 20% less fuel usage;
2. The expected costs savings for the customers is estimated in 1M$ per vessel per year, this meaning around 14M$ total savings per year considering the yearly sail-related saving per vessel (bulk carriers, tankers and ro-ro vessels as initial target);
3. Total number of potential retrofittable vessels is estimated around: 7.500 dry bulk carriers, 4.500 tankers and 500 Ro-Ro vessels;
4. Lowering the need for fuel oil, emissions of pollutants will be cut by 20% as well, contributing to the objective of reducing the impact of the shipping sector on the environment and on climate change as a consequence;
5. Times for installation or retrofit reduced to the minimum (2-3 weeks) not to impact upon vessels and freight operations.
The effects of the sail use for different types of vessels, depending on their average cruising speed and of their yearly fuel use were estimated, and savings produced by the Seagate Sail are estimated to be much greater at lower speeds (ranges between 8% - 20% for an average speed of 20 – 12 knots, respectively). The potential savings per year amount to around 24M$, considering all types of commercial vessels, 14M$ if we consider the initial target ships only (bulk carriers/tankers/ro-ro). The target price of a single sail module is estimated to be 650k$, which means around 740k€.
The total expected market share for the bulk carriers and tankers market 3 years after the introduction of the Seagate Sail is calculated by the total number of modules sold, summing up to 145, starting from the initial 15 (in 2018), going to 40 (in 2019) and reaching 90 modules in 2020. As can be seen from the prospect below, such market share estimation is realistic, stated all the risks of entering such a conservative industrial sector mentioned in our study.
Vessel Category: Bulk carrier (vessel fleet 7.500) – Reachable no. vessels by 2020= 85 – Market Share 1.13%,
Vessel Category: Tanker (vessel fleet 4.500) – Reachable no. vessels by 2020= 45 – Market Share 1.0%,
Vessel Category: Ro-Ro (vessel fleet 500) – Reachable no. of vessels by 2020=15 – Market Share 3.0%
Contribution to economic objectives: The expected reduction in fuel consumption resulting by the use of the Seagate Sail and cruise control system is likely to have relevant impact on operating costs for vessel owners/ operators, additionally reducing revenues for oil companies due to decreased sales volumes and thus reducing dependency on oil availability. Lower operating costs for vessel owner/ operators may translate to lower overall shipping costs for goods provided that vessel owners/ operators share these benefits with freight customers (which is very difficult to predict), and this may be passed on to consumers in the form of lower prices for goods. Finally, in the EU, companies exporting their goods to other markets could benefit from reduced shipping costs.
Contribution to environmental and health objectives - The project goes in the direction of GHG emissions reduction induced by the required compliance with the current regulations on SOx and NOx values. Reduced fuel consumption in fact results in reduced CO2 and black carbon emissions, this lowering the shipping industry’s contribution to climate change and having a positive impact on the quality of air.
The European Parliament’s Environment Committee has stated that maritime emissions are estimated to cause 50.000 premature deaths each year in Europe and that they expect the enforcement of a 0.1% sulphur limit in the SECAs to avoid more than 17.000 premature deaths per year by 2020. Therefore, the Seagate Sail project indirectly contributes to respiratory health by having as main objective that of reducing the hazardous substances emitted by the commercial shipping industry causing health problems.
Transnational approach - The collaboration of the partners identified in the Consortium structure, reflecting the complementarity of roles in the Seagate Sail supply chain, and the cooperation with selected, highly professional service providers is of key importance as it allows for an exploration of markets that are outside the borders of a single nation and grants a deeper understanding of the exploitation potential.
The European level of the problem and of the solution proposed is also clear to the proposers; due the high level of professional contributions covering interdisciplinary aspects of the product development, the project is well balanced as for competencies and roles, this granting the possibility to reach the European and global markets and to extend its benefits to customers in the commercial shipping segment globally.
1. 20% fuel savings, this being translated into 20% less fuel usage;
2. The expected costs savings for the customers is estimated in 1M$ per vessel per year, this meaning around 14M$ total savings per year considering the yearly sail-related saving per vessel (bulk carriers, tankers and ro-ro vessels as initial target);
3. Total number of potential retrofittable vessels is estimated around: 7.500 dry bulk carriers, 4.500 tankers and 500 Ro-Ro vessels;
4. Lowering the need for fuel oil, emissions of pollutants will be cut by 20% as well, contributing to the objective of reducing the impact of the shipping sector on the environment and on climate change as a consequence;
5. Times for installation or retrofit reduced to the minimum (2-3 weeks) not to impact upon vessels and freight operations.
The effects of the sail use for different types of vessels, depending on their average cruising speed and of their yearly fuel use were estimated, and savings produced by the Seagate Sail are estimated to be much greater at lower speeds (ranges between 8% - 20% for an average speed of 20 – 12 knots, respectively). The potential savings per year amount to around 24M$, considering all types of commercial vessels, 14M$ if we consider the initial target ships only (bulk carriers/tankers/ro-ro). The target price of a single sail module is estimated to be 650k$, which means around 740k€.
The total expected market share for the bulk carriers and tankers market 3 years after the introduction of the Seagate Sail is calculated by the total number of modules sold, summing up to 145, starting from the initial 15 (in 2018), going to 40 (in 2019) and reaching 90 modules in 2020. As can be seen from the prospect below, such market share estimation is realistic, stated all the risks of entering such a conservative industrial sector mentioned in our study.
Vessel Category: Bulk carrier (vessel fleet 7.500) – Reachable no. vessels by 2020= 85 – Market Share 1.13%,
Vessel Category: Tanker (vessel fleet 4.500) – Reachable no. vessels by 2020= 45 – Market Share 1.0%,
Vessel Category: Ro-Ro (vessel fleet 500) – Reachable no. of vessels by 2020=15 – Market Share 3.0%
Contribution to economic objectives: The expected reduction in fuel consumption resulting by the use of the Seagate Sail and cruise control system is likely to have relevant impact on operating costs for vessel owners/ operators, additionally reducing revenues for oil companies due to decreased sales volumes and thus reducing dependency on oil availability. Lower operating costs for vessel owner/ operators may translate to lower overall shipping costs for goods provided that vessel owners/ operators share these benefits with freight customers (which is very difficult to predict), and this may be passed on to consumers in the form of lower prices for goods. Finally, in the EU, companies exporting their goods to other markets could benefit from reduced shipping costs.
Contribution to environmental and health objectives - The project goes in the direction of GHG emissions reduction induced by the required compliance with the current regulations on SOx and NOx values. Reduced fuel consumption in fact results in reduced CO2 and black carbon emissions, this lowering the shipping industry’s contribution to climate change and having a positive impact on the quality of air.
The European Parliament’s Environment Committee has stated that maritime emissions are estimated to cause 50.000 premature deaths each year in Europe and that they expect the enforcement of a 0.1% sulphur limit in the SECAs to avoid more than 17.000 premature deaths per year by 2020. Therefore, the Seagate Sail project indirectly contributes to respiratory health by having as main objective that of reducing the hazardous substances emitted by the commercial shipping industry causing health problems.
Transnational approach - The collaboration of the partners identified in the Consortium structure, reflecting the complementarity of roles in the Seagate Sail supply chain, and the cooperation with selected, highly professional service providers is of key importance as it allows for an exploration of markets that are outside the borders of a single nation and grants a deeper understanding of the exploitation potential.
The European level of the problem and of the solution proposed is also clear to the proposers; due the high level of professional contributions covering interdisciplinary aspects of the product development, the project is well balanced as for competencies and roles, this granting the possibility to reach the European and global markets and to extend its benefits to customers in the commercial shipping segment globally.