Offshore Wind

Heavylift shortage predicted as offshore wind sector gathers pace

The world may not have enough heavylift vessels to service the offshore wind industry post-2025, according to a new report from Oslo-based Rystad Energy.

Offshore wind is booming, and as turbine and project sizes grow, demand for specialised installation vessels will soar. The market for vessels capable of installing large offshore wind components is quickly being outpaced by growing demand from the global development pipeline, new Rystad Energy analysis shows. The global fleet will be insufficient to meet demand after 2025, opening room for more specialised vessel orders and other oil and gas heavylift vessel conversions.

When translating the volume of offshore wind projects into vessel years for installation scopes, Rystad estimates that the demand for foundation and turbine installations in 2020 is approximately eight and 13 years respectively. On the supply side of the equation, there are currently 32 active turbine installation vessels with another five on order while there are 14 dedicated foundation installation vessels in operation today with another five on order.

For the past few years, this has effectively resulted in a relatively oversupplied market, especially in Europe. However, the scale is expected to tip towards an undersupply of installation vessels by the mid-2020s. With more offshore wind projects down the line, Rystad expects installation vessel demand will be four to five times higher than today’s figure by 2030.

For the purposes of this analysis China and intertidal wind farms, mainly in Vietnam, were excluded. China is predominantly making use of its local value chain, with little participation from foreign suppliers. Intertidal farms drive limited vessel demand.

The Rystad study shows there are currently only four vessels capable of handling the next generation of turbines, such as GE’s Haliade-X 12-MW, which is expected to be commercial in 2021. As technology advances and future-generation wind turbines will get even bigger, the existing fleet of vessels is not likely to have enough capacity to install them.

“We identify the heavylift vessel segment as the key bottleneck for offshore wind development from the middle of this decade, and the need for next generation vessels may slow the cost reductions expected in offshore wind,” commented Alexander Fløtre, Rystad’s product manager for offshore wind.

In 2005, the average offshore turbine had a capacity of 3 megawatts (MW); projects expected to start up in 2022 now have an average turbine size of 6.1 MW. Moreover, as the cost efficiencies gained from using larger turbines are becoming an increasingly important driver of commerciality, Rystad expects new projects will favour larger turbines over the smaller equipment seen in most offshore wind farms to date.

Many of the existing vessels have astonishing lifting capacities, inherited from their original purpose; installing and decommissioning large oil and gas platforms. These large lifting capacities are definitely a key strength to be leveraged but will have little significance if efficiencies – meaning vessel days per installed component – are not able to stay competitive. Most offshore wind projects require the transit and accurate positioning of installation vessels at least 100 to 300 times in quick succession.

After turbine and foundation manufacturing, the installation phase is the most capital-intensive development process, consuming about 20% to 30% of total capital expenditures. For a 1 GW project comprised of 100 turbines, this could add up to $800m to $1bn, from which about 15-20% and 8-10% is earmarked for foundation and turbine installation costs, respectively.

Across the global fleet of installation vessels that Rystad tracks, the company has observed an average installation speed of 3-4 days per vessel per monopile. In contrast, the duration of turbine installation varies more widely at anywhere between 2-5 days, mainly due to the expected weather implications when lifting blades and hub components above significant heights in windy areas.

When it comes to hoisting heavy equipment over 100 m from the water line, installation vessels must be able to carry out the job in a safe and precise manner. Offshore crane capacity, lifting height, and ample deck space are just some of the main competitive factors these units offer, and continue to evolve.

Between 2000-2010, the offshore wind market’s slow growth and relatively light equipment (2-4 MW turbines) posed no real challenge to the existing fleet. Yet in 2014-2015 turbine sizes began to increase substantially, especially in Europe, and with them the need for larger crane capacities and lifting height. Early players in the vessel market were able to anticipate this shift and optimise fleets to serve these larger projects. Nevertheless, it is evident that competitive features that were considered high-spec only three years ago are already outdated.

“Looking ahead, vessels will have to serve the initial construction phase of projects, in addition to maintaining and periodically replacing the active base of equipment. The segment that will succeed in serving the future needs of the offshore wind industry will be able to offer this valuable synergy to support a healthy fleet utilisation,” Fløtre concluded.

Huge offshore wind projects are being discussed around the world, with the European Union earmarking nearly $1trn for the sector through to 2050 and the UK claiming recently that every British household will be powered by offshore wind within just 10 years.

Speaking with Splash earlier this month, Emanuele Lauro discussed the urgent need for a new range of larger wind turbine installation vessels (WTIVs). Lauro’s firm, Scorpio Bulkers, has recently tasked Daewoo Shipbuilding & Marine Engineering (DSME) with building a WTIV with more planned as the company exits dry bulk.

“We focused on the installation side because that is the only real segment in the business that is for sure going to experience a shortfall in supply come 2024 because the ships today cannot install the turbines being built for tomorrow,” Lauro said.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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