Challenge 2

Sustainable Offshore Aquaculture

“Aquaculture, not the Internet, represents the most promising investment opportunity of the 21st Century.”

Peter Drucker, Management Expert & Economist

Context

Human societies face the enormous challenge of having to supply food and livelihoods to a world population projected to reach 9.8 billion people by 2050, while addressing the impacts of climate change and environmental degradation on the resource base. Food and agriculture are critical to respond to this challenge, but also to achieve the set of UN’s Sustainable Development Goals (SDGs).

 

Many SDGs are directly relevant to marine resources, fisheries and aquaculture, in particular SDG 14 (Conserve and sustainably use the oceans, seas and marine resources for sustainable development) stating that by 2030 economic benefits derived from the sustainable use of marine resources and aquaculture should be observed.

 

Global fish production peaked at about 171 million tons in 2016, with aquaculture representing almost 50% of global fish consumption. The total first sale value of fisheries and aquaculture production in 2016 was estimated at USD 362 billion, of which USD 232 billion was from aquaculture production.

 

With capture fishery production relatively static since the late 1980s, aquaculture has been the basis for the continuing impressive growth in the supply of fish for human consumption (Figure 1).

Figure 1 - World capture fisheries and aquaculture production 1990-2030 (Source: FAO)

Aquaculture is expected to continue to grow through intensification, species diversification, expansion into new areas (including moving further into offshore marine waters) and through the introduction of innovative, more-resource efficient farming technologies.

 

The increasing pressure of intensive exploitation of sheltered areas close to shore (see Figure 2), and the corresponding environmental and social issues as a consequence of this, opens up an opportunity to explore new technologies that will moving aquaculture systems from these areas onto more exposed and dynamic areas (nearshore/offshore). This process is already ongoing and will accelerate in years to come.

Figure 2 – Fish farm in protected area (Norway)

Moving these systems far from the coast eliminates some issues, such as visual impact, space conflict and concentration of environmental impacts. Moreover, the expansion of the offshore aquaculture can mitigate competition with other industries, such as tourism, and can allow for the development of bigger projects and more efficient farms.

 

Offshore aquaculture installations have been drawing increasing attention from researchers, industry and policy makers as a promising opportunity for large-scale expansion of the aquaculture industry.

 

However, the exposed nature of the open ocean adds a number of technical, operational, environmental and economic challenges.

Figure 3 – State of aquaculture industrialization: Capital and risk intensity (Source: The Nature Conservancy and Encourage Capital)

As illustrated in Figure 3 the increasing of finfish production correlates directly with risk and capital raising. However, this does not prevent investors from all continents to allocate significant amounts of money to RD&I projects targeting technology development (e.g. Deep Blue 1 in China and Ocean Farm One in Norway) to produce finfish in open waters.

The Challenge

How to sustainably produce finfish in Atlantic exposed waters?

You are part of a multidisciplinary team of engineers and business managers competing to deliver a technological solution to efficiently produce marine finfish (e.g. salmon) in exposed waters. Your customer is an international company that is strongly motivated to invest in offshore aquaculture seeking for a technological solution that suits the harsh conditions imposed by Atlantic open waters. A variety of inspiring concepts and technologies have been developed to deal with constraints in offshore environments, but there remains a great number of challenges in designing fish farms able to withstand the strong forces of open oceans.

 

Biological and hydrographic assessments performed by the “investor” show that the adequate location (see Figure 3) to set up the production facilities (the fish farm) could be 10 nautical miles offshore the Portuguese coast at a depth of 60 meters. The chosen zone faces heavy storms during winter with waves up to 8m height suggesting that the floating components will be submitted to rough sea and severe forces. Ocean currents will be relevant for the problem but are however, not considered as serious as the wave energy involved.

Figure 4 – Fish farm location; typical winter sea conditions

Production volumes are expected to be quite modest in the first years (in the range of 50 tons of finfish in a year) nonetheless your customer demands a modular solution able to be scaled up to larger production volumes in the coming years.

 

One of the most, if not the most relevant technical requirement imposed by the investor, is directly related to the daily operation of the fish farm which has to be designed to be remotely controlled and operated from shore, hence reducing as much as possible human intervention at the fish farm in order to reduce costs (vessels are very expensive) to assure safety and to reduce the dependency on weather windows.

 

The investor believes that the economic feasibility of the operation depends on new technologies such as persistent/continuous internet (e.g. providing real-time systems monitoring), advanced robotics (e.g. automatic feeding), offshore renewables (e.g. energy supply) and even “IoT”, or interconnectedness among systems, devices and advanced sensors (e.g. cameras, sea water parameters).

 

Given the innovative nature and high technological risk of the project, the investor needs to develop an economic and financial feasibility study of the investment project that allows him to fully understand the overall economic and financial impact and sustainability of the investment, as well as spillover effects in the economy and stakeholders. What are the team’s main concerns on this topic?

 

What would be the team advise to the investor on the main elements and variables of the business model bearing in mind that the investor intends to operate the fish farm and distribute the product on the international market?

Objectives

  • Describe an innovative tech solution (subsea aquaculture concept) that addresses the defined requirements
  • Describe at a high level the lay out/architecture of the concept identifying main functionalities and subsystems (e.g. feeding system, energy, mooring system, etc);
  • Establish the basis for remote operations at sea (e.g monitoring)
  • Establish a roadmap for the implementation of a complete system
  • Identify the main constrains and risks of your proposal
  • Identify the critical elements/variables related to the economic and financial feasibility study
  • Identify the basis of a sustainable business model

Expected Results

The team can do some out-of-the-box creative thinking to tackle some of the above questions, and has freedom to suggest other ways to achieve the same objective. The result of this exercise is to present a 10 minute-pitch of your proposal focusing on:

  • Fish farm concept - including your answers to the given challenges and a clear understanding on how the objectives can be achieved (a schematic representation of the concept will be appreciated).
  • Main elements and variables concerning the economic feasibility and business model of the investment.