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.