Sailing Into Uncertainty - Business Model Evaluation for Wind-Assisted Ship Propulsion

Abstract

This thesis identifies and evaluates business model alternatives for Oceanbird’s Wing
560 rigid sail, a wind-assisted ship propulsion technology approaching broader commercialisation. The shipping industry’s complex ownership structures create split-incentive
problems that complicate investment in fuel-saving technologies, making the choice of
business model a strategic decision. Furthermore, the potential customers operate in
an uncertain investment environment, where the product itself introduces even more
uncertainties.
Four business model alternatives: CAPEX, Leasing, Guaranteed savings, and Shared savings, are identified, partly through a literature review of energy efficiency contracting in
the housing sector, and evaluated using Monte Carlo simulation. The model captures uncertainty in fuel prices, product performance, CO2 legislation, and critical failure events,
producing distributions of the net present value of the investment, for all stakeholders.
The results show that no single business model is universally optimal. On the Voyage
charter market, CAPEX is the best-performing model. On the Time and Bareboat charter
markets, the identified EPC-based models consistently outperform CAPEX and Leasing
by resolving the split-incentive problem, with Guaranteed savings performing better
than Shared savings. the weighted average cost of capital and product performance are
identified as the most impactful parameters on overall viability, where conclusions are
especially sensitive to changes in weighted average cost of capital. The overall robustness
is however, deemed sufficient for the scope of the thesis.
The best performing business model is not entirely explained by the results of the Monte
Carlo simulation model. It is also a strategic decision shaped by Oceanbird’s strategy:
their willingness to undertake the engineering development required to address green
water limitations on the Voyage charter market, and their capacity to develop the performance monitoring infrastructure necessary to implement EPC-based models such as
Guaranteed savings. Furthermore, the discussion also highlights the model’s limitations
and exposure to epistemic risk, which provide grounds for future research.

Popular Abstract

Imagine crossing the Atlantic powered by wind. Not on a 16th-century wooden ship, but on a
modern cargo vessel using a 40-metre tall rigid sail. That is exactly what Swedish company
Oceanbird is working to make a reality, and this thesis explores how they can best bring their
Wing 560 sail to market.
Shipping is the backbone of global trade, carrying around 80% of everything we buy and sell
across the world's oceans. It is also responsible for a big share of global carbon emissions,
and the industry faces mounting pressure to reduce its carbon footprint. Wind-assisted
propulsion is one promising solution, but getting ship operators to actually invest in new
technology is harder than it sounds.
Here is the problem: in the shipping industry, the company that owns a vessel is often not the
same company that pays for its fuel. This means the owner has little financial incentive to
invest in fuel-saving technology, since the savings go to someone else entirely. This is called
a split-incentive problem, and it is one of the central challenges this thesis tackles.
To find a way around it, we looked at a perhaps surprising source of inspiration: the housing
sector. Landlords and tenants face a strikingly similar dilemma: landlords pay for
renovations, tenants benefit from lower energy bills. Energy companies in that sector have
developed clever contracts, called Energy Performance Contracts, to share costs and savings
fairly between all parties. We adapted two of these: Guaranteed Savings and Shared Savings
for the shipping industry.
Using a Monte Carlo simulation model, we tested four different business models across
thousands of possible futures, accounting for uncertain fuel prices, unpredictable winds,
potential CO2
legislation, and the risk of equipment failure. The model calculated whether the
investment would be financially worthwhile for all parties involved: Oceanbird, the ship
owner, and the vessel charterer.
The results show that no single business model wins in every situation. For ship owners who
pay their own fuel costs, a straightforward purchase model works best. But for the other cases
where fuel costs are paid by the charterer, the Guaranteed Savings model consistently
outperforms the other alternatives by resolving the split-incentive problem, just as it does in
housing. The two parameters that matter most are the cost of capital and the sail's real-world
performance, both of which significantly affect whether the investment makes financial
sense.
Ultimately, choosing the right business model is not just a financial calculation; it is a
strategic decision for Oceanbird about which markets to enter and what technical capabilities
to develop first.

• author: Sadarangani, Victor and Fredriksson, Viktor
• supervisor: Danja Sonntag
• organization: Department of Industrial and Mechanical Sciences; Production Management
• course: MIOM05 20261
• year: 2026
• type: H2 - Master's Degree (Two Years)
• subject: Technology and Engineering
• keywords: Business models, Wind Assisted Ship Propulsion, WASP, Monte Carlo Simulation, energy performance contracting, EPC, Shipping industry
• other publication id: 26/5347
• language: English
• id: 9232675
• date added to LUP: 2026-06-10 09:38:05
• date last changed: 2026-06-10 09:38:05