Interview with Silverstream CEO: Increasing ship efficiency a matter of business survival

Ship owners will have to make their vessels more efficient regardless of the pathway they choose to meet the upcoming regulatory requirements on greenhouse gas (GHG) emissions in 2030 and ultimately 2050.

Making vessels more efficient will be vital in ensuring owners remain competitive in the business and avoid the risk of having an obsolete fleet, Noah Silberschmidt, CEO of air lubrication technology manufacturer Silverstream Technologies, said in an exclusive interview with Offshore Energy – Green Marine.

Noah Silberschmidt, CEO of Silverstream Technologies

“The main reason that we use fossil fuels is that they are already the most efficient fuels. Unfortunately, burning fossil fuels results in considerable CO2 emissions. However, by switching to another fuel type, the industry will get a less efficient fuel in the sense that it will take up more space per energy. That means that whatever the new fuel the industry ends up using, if you want to go at the same speed and have the same potential duration of a voyage, then your fuel tanks will take up more space,” he explained.

 “Yes, you will have less emissions. But the only way that you can keep the same flexibility will be to make the vessel more energy efficient.”

Silverstream Technologies started working on their air lubrication technology in 2010, creating a lot of patents before conducting its first test in 2014 with Shell as the company’s main sponsor.

The Silverstream® System, which uses air lubrication to reduce frictional resistance between a vessel’s hull and the water, can deliver fuel savings of 5-10% depending on the vessel and its operating profile, according to its developer.

The system pumps tiny bubbles through air release units on the hull to reduce friction between the vessel and the water, helping it glide through the ocean.

Air Release Unit; Image credit Silverstream Technologies

“In the earlier days of Silverstream, we were targeting the key players or the opinion leaders in the market – charterers, owners, shipyards, class societies, and regulators- because it was not enough that we just approach owners and tell them about our technology,” Noah said.

“They needed to have confidence that the technology is reliable and that it has been tested. They needed to know that the yards are happy to install it, be it a newbuild or a retrofit.”

The company is targeting each segment in the shipping industry from wet bulk, dry bulk, cruise, liner traffic, to RORO operations.

It has already sealed deals with industry majors Grimaldi Group, Carnival, Shell International Trading and Shipping Company, and a very large dry bulk participant, which is not yet public.

Over the last couple of years, the company has been mainly focusing on strengthening its delivery, and its supply chain service, as well as its team of engineers.

“Last year we increased headcount from 13 to 34 and we are still on that growth trajectory because we have an appetite for taking on more projects and more big deals,” he pointed out.

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As disclosed, now the company has 35 vessels contracted.

“The order intake is quite significant at the moment. I don’t think there’s any other technology that we generally talk about that has an order book as we have,” he continues.

Noah believes this technology should go on all vessels and “we are working very hard on making it a standard application.”

Furthermore, the air lubrication system seems to have an additional benefit when it comes to prevention of bio fouling.

Silverstream said it was working with major hull coatings manufacturers to further explore and prove this link.

Close up of micro bubbles; Image credit: Silverstream Technologies

Vessels with air lubrication systems installed are showing even less slime and barnacle growth than vessels with a sophisticated paint not fitted with the technology, Noah explains.

“The reason is that microbubbles might be disturbing the microorganisms when they sit on the vessel, thinking: it’s a little too busy around here and we would rather be somewhere else – and then they go on a coral or wherever they want to go,” he added jokingly.

Efficiency gains and return on investment

From an installation point of view and resource planning it is a bit easier to deal with a newbuild, our interviewee explains.

“From the day you sign the contract to the vessel delivery, you have around 24 months, so that means that there’s more time to engage in the design and to prepare yourself. With newbuilds, quite often you do series, so you do the technical supervision and design once for 5 or 15 vessels in the series,” Noah pointed out.

“With retrofits, it is a much shorter process and a bit more stressful. Typically, from contract to full deployment of the technology it can be around six months and we can retrofit during the normal drydockings in 10 – 12 days, or sometimes down even to 6 days. However, that requires a very well organized yard and everything being prepared well beforehand.”

One of the typical conundrums when talking to clients is deciding on who is paying for the technology because often it boils down to who is paying the fuel bill; the owner, or the charterer of the ship. Therefore, it’s less complex to have an owner that is also operating their own ship because then there’s no split incentive.

In terms of efficiency gains, for cruise ships that are more elegantly designed Silverstream is seeing 5 to 6% net performance increase in all weather conditions.

For a very large, flat-bottom vessel, like a bulk carrier or a tanker the fuel efficiency can be boosted to around 10%, or even 12% in ballast conditions.

“When we discuss with a client, we look at the whole operational profile of a vessel, taking into account how much time the ship spends in ballast, and how much in fully-loaded condition, which basically determines the level of fuel savings they will have. The bigger the fuel consumption, the greater the monetary benefit and the reduction of greenhouse gases,” he notes.

With regard to return on investment, Noah said the company combines the price of the technology with the yard installation cost and the servicing of the system throughout the life cycle, which depending on the client can range between 15 to 25 years.

“If you give me an ideal vessel, I can give you a two-year payback, but if you’re telling me that a vessel is only steaming one day a year, obviously the payback is not going to be good. So, it’s better for us to work on a vessel with active operational profile covering between 280 and 310 days a year, like LNG carriers and container ships,” he continued, adding that for cruise ships the payback time is around three to three and a half years.

CHEK project

Silverstream Technologies has joined industry partners in the CHEK project which aims to demonstrate a combination of innovative ship design and technologies operating in symbiosis on real vessel concept designs.

These technologies will include wind power, hydrogen propulsion, waste heat recovery, battery electric power, hull air lubrication, innovative anti-fouling technology, and digital operational improvements.

The combination of these technologies is targeting to reduce greenhouse gas emissions by 99%, achieve at least 50% energy savings, and reduce black carbon emissions by over 95%.

“The decarbonization pathway for shipping will take many forms, especially in terms of the combination of fuels that will represent the future. However, in all scenarios, efficiency remains a key enabler with the adoption of efficiency technologies as an essential element in meeting IMO’s goals,” Silverstream’s CEO said.

“In joining the team, Silverstream aims to demonstrate how our system can be deployed as an integral part of the solution. Taking a holistic perspective, we want to see how it works with all other technologies.”

The kick-off of the EU-funded project is planned in 2-3 months, with a lot of groundwork already covered in the last 12-18 months. It is expected to last between 18 to 24 months.

According to Wärtsilä, which is also taking part in the project, the company hopes to start as soon as possible, but no later than June. However, the project start will depend on the speed of the EU on getting the contract in place.

“Some technologies will be demoed at sea already during the project and I think the most challenging aspect is finding the overall lowest cost path towards decarbonization for vessel owners and operators. To find this path, we need to capitalize on technology synergies, which is what we plan to do in CHEK,” the company said in a statement to Offshore Energy-Green Marine.

Image courtesy Wärtsilä

“For our technology, we’re going to use real installation performances. We will use hull types that’ll be identical or similar to the Kamsarmax bulker and a cruise ship vessel, thereby showing how the technology is performing now in the real world,” Noah pointed out.

The key to success for such a project, involving so many different parties and technologies, would be to project manage it well throughout with a focus on transparency, open-mindedness, and the solutions it has set out to deliver, Noah believes.

As explained, a lot of companies that have embarked on the endeavour are already very familiar with each other’s work and he is confident they will be able to deliver on the ambitious targets.

The EU-funded project also offers an opportunity for the companies engaged to prove they can work together which has not been the case in the past due to often fierce competition in the sector.

On the other hand, by uniting the technologies in a single solution or a package of technologies, projects like CHEK could boost the uptake of energy efficiency solutions already available on the market among owners instead of opting to merely slow down their vessels to meet the EEXI targets. These targets will require the existing world fleet to meet a certain level of efficiency progressively over the next decade.

“I think that the shipping industry in the past has been offered a lot of potential solutions which have not necessarily worked out very well for ship owners. Hence, I think, first of all, the industry needs to have better tools in figuring out if the technology is working, where proper data analysis comes in,” Noah said.

“We are happy to work with owners on packages of solutions. Because to think that Silverstream, or any other technology company, is one silver bullet is also wrong. I would say that often with great problems in this world we have to collaborate and find the solution together.”

Moving ahead

Commenting on the state of the shipping industry and the introduction of new technologies, our interviewee thinks that there aren’t a lot of new companies in the shipping technology sector.

“It’s not like the shipping industry has a wealth of new propositions and companies that are actually trying to test them and work commercially. That is a problem for the industry.”

What is more, financing has been very difficult to come upon as the shipping sector has been lacking investments into new methods, technologies, and designs. Hence, a regulatory push from an organization like the IMO or the EU could provide the necessary drive for change in the industry.

Commenting on the potential IMO-based R&D fund to expedite the development of new technologies in the industry, Noah said it would be great if the industry were to get incentivized to make the right decisions by making financing more readily available for technologies and fuel types that benefit the climate and reduce costs.

Touching upon the risk of technologies getting stranded in the process, Noah stressed his belief that if the technology is working it does get picked up.

“If a technology gets stranded it could be because it hasn’t worked properly on a vessel or could not be trusted, or if it didn’t get enough funding for development and no one ever bought it,” he noted.

However, sometimes technologies are stranded because their developers tend to misrepresent their true performance.

He admits that entering the industry as a new player is a tremendous endeavour on so many levels from thinking up a concept to getting the technology to be used.

When asked about the way forward for the industry to decarbonize, especially in the context of the ‘wait and see’ approach many companies seem to be taking, Noah concluded:

“Well, it’s very easy to sit on the fence and just wait and see what happens, but there are also some great leaders. I believe that if you are a first mover, willing to investigate new technologies and solutions, you will also reap the benefits. We are together in this; we have to find solutions and the CHEK initiative is a great way of getting us there.

“Eventually, some people that are just sitting on the fence will be lost and have a fleet that will either not be allowed to operate or will be able to do so very slowly because they have done nothing on the EEXI front.

“I encourage people to be a little bit bolder, work together and focus on proven technologies and make sure that they meet the regulations.”