DNV plans to launch VTI to help industry’s decarb drive

The Background to the work is arises from the fact that CII is impacted by external factors such as weather conditions, speed instructions, and loading condition, often overshadowing the true technical performance and efficiency of ships. “In its RP DNV proposes a Vessel Technical Index (VTI) as a complementary measure, showcasing a ship’s technical performance relative to its initial state, thereby eliminating the influence of external operational factors,” DNV said in a statement on 31 May, when it launched the project.

The RP also includes a novel approach to assessing the relevant sources of uncertainty, which will enable the users to take informed decisions based on the VTI calculations.

Trond Hodne, Business Director Maritime at DNV, said in a statement that the RP would mainly focus on the technical condition of the ship, as this is the area over which owners have a direct influence. The VTI could be used for four principal purposes:

1) A standardised way of working with performance data and creating a baseline;

2) Facilitating dynamic- and performance-based charter party agreements;

3) Assessing the optimal timing for hull and propeller cleaning and quantifying its impact and

4) Evaluating and quantifying the effect of energy efficiency measures.

Hans Anton Tvete, Head of Maritime Research at DNV, said that the aim of the work is to produce a platform that would incentivise both the owner and the charterer of a ship to work towards the decarbonisation of the industry.

The starting point would be a third party verified performance baseline, which would focus 100% on the technical efficiency of the ship to be hired. “This is in contrast to traditional charter party agreements, where owners could be given conservative figures to avoid a default,” Tvete pointed out to The Motorship.

Charter rate adjusted according to ship’s performance

The actual technical performance of a ship would be measured and monitored over time, and the time charter rate payable to the owner would be adjusted accordingly. The VTI would create a direct link between performance and rates, as underperformance could lead to lower rates and vice versa. 

From the charterer’s point of view, this would mean a higher cost of transport, but would also incentivise improved Scope 3 emission outcomes. In addition, the gains for the charterer would include: a reduced overall fuel bill, which will also lower environmental emission costs (e.g. in connection with the EU’s emission trading system); and the chartering of ships with a broader speed profile, Tvete said. 

The role of DNV would be that of an impartial third party who will make the assessment regarding the performance of the ship. “If the ship’s hull starts to suffer from the growth of barnacles, this will reduce the performance of the vessel, which would encourage the owner to sort the problem out,” Tvete noted. 

In case of CII, operational matters can significantly affect the rating of a ship and as a result, identical sister ships can receive widely different ratings if their operational profile differs markedly from each other. The model DNV is proposing would eliminate this risk and focus on the actual performance of the vessel against a benchmark.

“It has not been so easy to measure these things before,” Tvete continued, adding that the quality, frequency and accuracy of the data required in the proposed model are its backbone. “It is also possible that a project like this can actually accelerate technical development,” he said.

The RP process will run until the end of August, after which all the input would be examined by DNV as the next stage of the work. The following step would be live trials of the system that should include a broad range of stakeholders, including manufacturers of fuel saving technology equipment. “You should also qualify the efficiency of fuel saving devices. Their business case will get better with the more expensive fuels in the future,” Tvete pointed out.

The data currently available regarding the efficiency of these devices may only include experience gained from certain weather and load conditions of the vessel, at certain speeds etc., so it is possible that the data does not cover all operating conditions that a ship can encounter.

After the pilot stage, the VTI would be launched for commercial use. However, it would also evolve over time as more data and experience becomes available.

“Regulations and other stakeholders such as cargo owners and financial institutions will increasingly put pressure on shipping to decarbonize. Reducing emissions and substantiating these efforts will become essential in a commercial setting where improved technical performance is likely to become a precondition for shipowners to gain access to capital and cargo,” Hodne pointed out.