Analysis lends weight to concerns about installation vessel shortfall

The market for vessels capable of installing large offshore wind turbines and components such as foundations is quickly being outpaced by growing demand from the global development pipeline, analysis by Rystad Energy shows.

Rystad asserts that the global fleet will be insufficient to meet demand from 2025 onwards, opening room for more specialised vessel orders and, possibly, conversions. Its analysis of the market echoes that of leading broker Clarksons Platou Securities.

Translating the volume of offshore wind projects into vessel years for installation scopes, Rystad estimates that demand for foundation and turbine installation vessels in 2020 is approximately eight and 13 years, respectively.

There are currently 32 active turbine installation vessels. Five have been ordered. According to Rystad there are currently 14 dedicated foundation installation vessels. Rystad states that another five of these vessels have also been ordered.

“For the past few years, this has effectively resulted in a relatively oversupplied market, especially in Europe,” said the market analyst. “However, the scales will tip towards undersupply of installation vessels by the mid-2020s.”

With many large offshore wind projects coming down the line, Rystad Energy expects installation vessel demand will be four to five times higher than today’s figure by 2030.

Moreover, it states, there are currently only four vessels capable of handling the next generation of turbines, such as GE’s Haliade-X 12-MW (13-MW in boost mode), which is expected to be commercially available in 2021.

“As technology advances and turbines get even bigger, the existing fleet of vessels is not likely to have enough capacity to install them,” the analyst says.

Rystad energy project manager offshore wind Alexander Fløtre said, “We have identified the heavy-lift vessel segment as the key bottleneck for offshore wind development from the middle of this decade.”

Such is the size of the potential bottleneck, Rystad asserts, that a dearth of suitable next-generation vessels could slow down cost reduction in the offshore wind sector.

In 2005, the average offshore wind turbine had a capacity of 3 MW. Projects expected to start in 2022 now have an average turbine size of 6.1 MW, according to Rystad’s analysis. Turbines selected for future projects in Europe and the US are much larger.

As the cost efficiencies obtained from using larger turbines become an increasingly important driver of commercial success, Rystad Energy expects that more new projects will favour larger turbines over the smaller ones seen in most offshore windfarms to date.

“Many existing vessels have huge lifting capacity inherited from their original purpose, installing and decommissioning large oil and gas platforms,” said Rystad.

“This lifting capacity is a strength to be leveraged but will be of little significance if efficiencies – that is, vessel days per installed component – do not remain competitive. This is especially significant given that most offshore wind projects require installation vessels to reposition themselves many times in quick succession in order to install large numbers of turbines.”

After turbine and foundation manufacturing, the installation phase is the most capital-intensive part of the development process, consuming about 20-30% of capital expenditure. For a 1-GW project with 100 turbines, this could equate to US$800M to US$1Bn, Rystad says, of which approximately 15-20% and 8-10% is accounted for by foundation and turbine installation costs, respectively.

“Across the global fleet of installation vessels Rystad Energy tracks, we have observed an average installation rate of three to four days per vessel per monopile,” the company said. “In contrast, the duration of turbine installation varies more widely at anywhere between two and five days, mainly due to the effect of weather when lifting blades and components.

“When it comes to hoisting heavy equipment 100 m above the waterline, installation vessels must be able to carry out the job in a safe and efficient manner. Offshore crane capacity, lifting height, and ample deck space are just some of the competitive factors these units need to have.

“Between 2000 and 2010, the offshore wind market’s relatively slow growth and the relatively small size and weight of equipment (2-4 MW turbines) posed no real challenge to the existing fleet.

“But in 2014-2015 turbine sizes began to increase significantly, especially in Europe, and with that came the need for larger crane capacities and greater lifting heights.

“Early players in the vessel market were able to anticipate this shift and optimize fleets to serve larger projects. Nevertheless, it is evident that competitive features that were considered ‘high-spec’ only three years ago are already outdated.”

by David Foxwell

Source: Riviera, 2020/11/26