Establishing floating wind power for a greener future

In an era where the transition to renewable energy is not just necessary but urgent, Hexicon, a Swedish company specialising in floating wind power technology, has embarked on an ambitious journey to expand into the UK market. Founded on a commitment to harness wind energy to drive sustainability, Hexicon’s vision is clear: to become a key player in the global renewable energy sector by offering innovative solutions for deep-water wind farms. Their journey in the UK is a testament to both their technical expertise and the strategic decisions that have guided them to this point.

Hexicon has positioned itself as a forward-thinking leader in the renewable energy landscape, with a focus on floating offshore wind farms, a technology that allows wind turbines to be deployed in deeper waters where traditional fixed-bottom turbines are not feasible. This technology is seen as crucial for countries looking to expand their renewable energy sources and meet carbon reduction targets.

"We went public in Sweden in 2021, with a clear urge to prove our technology," notes Henrik Baltscheffsky, Business Development Manager at Hexicon. The company recognised early on that innovation would be essential not only in the development of wind power technology but also in adapting to the unique challenges of different markets.

Establishing a Foothold in the UK Market

The UK was a natural choice for Hexicon’s expansion. As the world’s leading market for offshore wind power outside of China, the UK offers not only a substantial market for renewable energy technologies but also a well-established regulatory framework that encourages innovation and investment in the sector.

“So, there is no other country that has come as far, both in terms of regulation and sheer volume. If you succeed in the UK, you have a reference point for any other market entry,” Henrik explains.

Hexicon’s UK journey began with a strategic acquisition in Cornwall. In 2021, they purchased an old wave test centre situated at the foot of the Celtic Sea. This region had already been earmarked by UK policymakers as a prime location for large-scale deep-water wind farms, a key part of the country’s future energy infrastructure. For Hexicon, the acquisition provided a foothold in one of the most promising areas for offshore wind development in Europe.

The company’s success in securing a 15-year contract for difference (CfD) through a competitive auction process marked a significant milestone. “We were the only one of the applicant companies with a base on the southwest coast, and we won that auction,” Henrik recalls. This victory paved the way for Hexicon to begin planning the development of a 32-megawatt wind farm. Although it means a substantial investment for the company - over £200 million - the project’s importance can’t be understated. It not only demonstrates Hexicon’s ability to compete in a highly capital-intensive industry but also strengthens their presence in the UK’s renewable energy sector.

Navigating the UK’s Regulatory Environment

While the UK presents plenty of opportunities, it is also a market with its own complexities. Hexicon worked closely with the UK Department for Business and Trade (DBT) throughout their market entry, particularly during the CfD auction process. “The department has an active consultation period when they set the budget for each auction and the strike price. During this period, they have a close dialog with the industry. We spent a lot of time giving them our view on what can be achieved,” says Henrik and continue “the UK may be similar to Sweden, but it is still a new regulatory environment.”

DBT’s engagement was crucial in helping Hexicon navigate the regulatory landscape. They found the department’s consultative approach helpful in understanding how to qualify for and participate in the auction. “It was very helpful, and they also talked with us after the auction, preparing for next year’s decisions,” Henrik adds.

For Hexicon, being a first mover in this legal framework has had its challenges, but it has also opened doors for future growth and collaboration - especially as the UK government continues to refine its policies to support the offshore wind industry.

Lessons Learned and Future Prospects

Reflecting on their journey, Henrik acknowledges that their UK expansion has been a learning experience. He notes the importance of being well-capitalised when entering a capital-intensive market like offshore wind, even for a company that was financially sound before entering. “You can never be capitalised enough,” he observes, highlighting the financial challenges inherent in large-scale renewable energy projects. Despite these challenges, Hexicon’s success in the UK has bolstered its credibility, attracting further investment from a London-based asset manager.

For other Swedish companies eyeing expansion into the UK, Henrik offers clear advice: “Number one is that you have to do your homework. Language is critical - everyone is willing to speak English, but if you really want to be taken seriously, you cannot take shortcuts in managing your English-speaking skills.”

Hexicon’s journey underscores the importance of preparation, adaptability, and a deep understanding of the market. Their success in the UK is an example of how Swedish companies can not only enter but thrive in this competitive and fast-evolving sector.