Archives for category: renewable energy

There are distinct signs that the offshore wind sector is emerging from a period of relative quiet. For the first time in several years, the number of final investment decisions (FIDs) is on the rise, while technological advances and ongoing research are making progress in improving the cost efficiency of offshore wind generated power. So, how does this potential translate into the offshore vessel sector?

Wind-ing Up Investment

Over the last few years, interest in the offshore wind industry has been on the rise, mainly due to a number of high-profile FIDs and an increase in investment levels. This theme has so far extended into 2016, which is shaping up to be the most successful year for the industry yet. At €14bn, the investment value of new FIDs reached for European projects during 1H 2016 was already greater than full year 2015 levels. The majority (74%) of this investment has stemmed from the UK, consolidating its place as the industry leader. For example, DONG reached an FID for the first gigawatt scale wind farm, Hornsea Project 1 in February 2016. DONG also gained development approval for Hornsea Project 2 later in the year. More broadly (as shown by the Graph of the Month), other countries have also made headway. A total of 3.5GW of capacity has started-up offshore Germany, Netherlands, Belgium and China since end-2014, 2.4GW of which was off Germany.

Owners Get Wind Of Demand

Increased investment levels in the offshore wind industry are likely to spur demand for related vessel types. Initial interest earlier in the 2000s focussed on turbine installation jack-ups, but more recently the focus has been on accommodation solutions, particularly those equipped with a motion-compensated gangway to allow “walk-to-work” access. At the start of October, there were over 25 traditional accommodation vessels with a known track record of working within the renewable sector. A class of vessels specifically tailored for the offshore wind industry has also been gaining interest. These so-called Service Operation Vessels (SOVs) are designed to offer accommodation, maintenance and manoeuvrability in one ship-shaped unit. At the start of October 2016, there were 12 such vessels in service and an additional 11 units on order.

Blowin’ In The Wind

Despite a slowdown in newbuild investment in Wind Turbine Installation Vessels (WTIVs) following a peak of 13 units contracted in 2010, future demand could be generated by turbine upsizing and a move to deeper waters, driving a requirement for larger vessels. Since the start of 2005, the average turbine rotor diameter has increased by 39% to 110m, while the average water depth of wind farms under construction (45m) is 66% greater than the water depth of active farms (27m) as of start October 2016. There has already been one WTIV newbuild order placed in 2016 for China, plus one for Japan.

To some degree, the perception of greater offshore wind activity is only relative to the challenging backdrop in the offshore oil and gas market, and risks do still exist. However, there is no denying that investment in the wind sector is on the increase. This will ultimately result in a rise in total installed capacity and is already encouraging investment in specialist vessels to support the offshore wind industry.

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The offshore industry is heavily dependent on the well-being of the oil and gas sector, and with oil prices remaining below $50/bbl, the offshore market is largely full of doom and gloom. However, there is one sector for which headlines in November have been positive: offshore wind. Could this renewable energy source provide some owners with an alternative market and an opportunity for specialisation?

Something In The Wind

As the Graph of the Month illustrates, historically offshore wind farms have been located close to shore in shallow waters of less than 50m. Today, the industry appears to offer potential for the offshore market as both approved and proposed projects are getting increasingly deeper and further from shore. Following a slowdown in investment due to regulatory instability in key markets such as UK and Germany, future final investment decisions (FIDs) have been looking less certain. Indeed, in 2014 the number of turbine installations in the UK fell by 35% during the first six months of the year in comparison to 2013. Yet, November’s headlines might indicate a wind of change. Statoil has reached a FID for a pilot floating wind farm, Hywind, moored to the sea floor offshore Scotland. The departure from traditional fixed turbines opens up the opportunity for more ambitious, deepwater projects. DONG also made a FID regarding the Walney Extension in the Irish Sea, which will become the largest fixed offshore wind farm yet.

Vessel Requirements

The installation of offshore wind farms requires the use of number of construction vessels, particularly cablelay and heavylift units. Estimates suggest that around 100km of cabling is required per wind farm. However, self-elevating designs currently dominate the installation phase due to their stability. Although most existing self-elevating platforms can be used, an increasing number of units are specifically designed for operation within the wind sector: the wind turbine installation (WTI) fleet grew at a CAGR of 11% over 2005-2014. A peak in WTI vessel orders in 2010 following a third licensing round in the UK resulted in a record number of 10 units entering the fleet in 2012. As of November 2015, 31 WTI vessels were active globally. As wind farms move further from shore into rougher waters, requirement for larger WTI vessels is likely to increase.

An Alternative Market?

On the other hand, the maintenance phase of offshore wind farms has the ability to absorb more traditional vessels in the North Sea. A handful of PSVs and MSVs have been converted into accommodation vessels for maintenance personnel. However, in reality the main demand is for small crew transfer vessels, usually with a LOA of <25m. The crew transfer fleet has grown substantially from approximately 40 units in 2010 to over 200 in 2015.

For now, offshore wind remains a niche market rather than a viable alternative for the mainstream fleet. Future growth is largely dependent on how attitudes of governments and private companies will evolve. However, technological advances, such as Statoil’s floating wind farm, at least push the industry in a helpful direction for offshore as a whole.

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