Healthy competition: demand grows for specialised offshore vessels17 August 2012
Demand for operation and maintenance vessels is set to surge as the global offshore wind, and oil and gas industries compete for specialised resources. GlobalData reports.
In 2011, the global cumulative installed capacity of the offshore wind market stood at 3.7GW. Europe dominated this promising industry, accounting for more than 3.0GW of capacity. Based on current planned and under-construction projects, the offshore wind industry is expected to witness massive growth in the future.
Offshore wind power capacity grew from 96MW in 2001 to 3,707MW in 2011, and is expected to reach 52,349MW in 2020 at a compound annual growth rate (CAGR) of 34% (see Figure 1). The UK Government has set a target of 33GW by the end of 2020, while China plans to achieve 30GW of energy generation through offshore wind. Apart from the UK, China and Germany will be the most active countries in terms of wind installations during the forecast period.
In 2011, the global offshore wind power market was dominated by two countries. The UK accounted for an annual installed capacity of 183.60MW in 2011, followed by Germany, China and Denmark with 108.3MW, 99.3MW and 3.6MW, respectively. Three experimental floating turbines were installed in Portugal, Sweden and Norway.
Strong offshore growth creates demand for vessels
The offshore wind market is currently facing bottlenecks in terms of efficient installation, and operation and maintenance vessels. This is mainly because of the lack of availability of specialised vessels for the wind market. The offshore wind industry needs to make use of technological expertise from the oil and gas sector, and the logistical skills of offshore service providers and transmission system operators.
Offshore wind projects are more expensive than onshore ones, mainly because of the huge foundations required, subsea cables and high installation costs. Offshore turbines (including the tower) form about 40-45% of the capital cost of an offshore wind farm. Foundation and subsea cables account for 35-40% of the total cost of the wind farm's construction. Foundation costs vary according to sea depth, while the cost of sub-sea cables varies depending on the distance to shore.
Installation costs amount to 18-22% of the total cost of an offshore wind farm and can increase depending on how far from shore they are. Logistics costs are dominated by installation vessels for foundation and wind turbine erection.
The development of any offshore wind farm is generally carried out in four different stages:
- pre-installation survey
- operation and maintenance
To carry out all these different tasks, the industry requires large ports and adapted vessels (see Table 1). In Europe, despite the large
numbers of projects currently planned or under construction, there are a very limited number of vessels currently operating at sea. In 2005, there were only two installation vessels catering to the offshore wind industry - Resolution and Sea Jack. To date, ten cable installation vessels, and five turbine and foundation installation vessels are commercially available in the market.
Different survey vessels are used to conduct pre-installation activities such as geographical and climatic surveys. Depending on the depth of the sea and the distance from shore, different vessels are used for the development of offshore wind farms.
Unavailability of vessels causes delays in construction of offshore wind farms. Listed below are a few examples of offshore wind farms that were delayed because of unavailability of vessels:
- The Alpha Ventus offshore wind farm was due to be commissioned in 2008, but the lack of availability of installation vessels meant that this was delayed until 2009, and a vessel 20 times larger than originally planned was required.
- During the construction of North Hoyle offshore wind farm, developers faced two serious problems. The first was a delay in building the dedicated turbine installation vessel MPI Resolution. The second problem involved a delay in making the grid connection, which is normally required before the turbines are commissioned. The developer was forced to use construction vessels to meet deadlines. The project was scheduled to be delivered by the end of 2003, but because of delays was only delivered in July 2004.
- London Array, one of the largest offshore projects, also faced this problem when the main installation vessel was delayed by three months and an additional vessel had to be hired in order to meet deadlines.
Supply of vessels centred around UK and the Netherlands
The industry is expecting to witness an increase in offshore wind farms with higher capacity turbines and heavier foundations in deeper water. This will increase the share of installation vessel suppliers in the offshore wind industry. Thereafter, companies with prior experience in the oil and gas sectors will have an added advantage, as these installation vessels have long been used for offshore oil and gas platforms.
The major turbine and foundation installation vessel suppliers are A2sea, MPI Offshore, Scaldis Salvage, Seajacks International, Jack-Up Barge, Ballast Nedam, BARD, GeoSea, International Marine Construction and Seaway Heavy Lifting. Most of the companies are headquartered in either the UK or the Netherlands.
The major subsea cable installers are Global Marine Systems, MPI Offshore, Nexans, NKT, Prysmian, Mika, Offshore Marine Management, Peter Madsen Rederi, P&O Maritime Services, Technip (Subocean), Visser & Smit Marine Contracting (VSMC) and Stemat. Companies such as Van Oord and JD-Contractor are also involved in the installation of array cables. Bonn & Mees Drijvende Bokken is a major player in the field of offshore substation installation.
Oil and gas industry competes with the offshore wind market
The oil and gas industry is a well-developed industry and there are a large number of specially designed vessels currently catering to it. The vessel requirements of the offshore wind industry and the oil and gas industry are very similar when it comes to foundation installation. Until now, most of the vessels used for the installation of wind farms were chartered from the oil and gas industry.
This scenario may result in a scarcity of vessels available to the offshore wind industry from 2015-20, which is when installation in this industry will peak along with the development of new oil and gas fields, and the decommissioning and redevelopment of existing oil and gas fields. This competition for equipment is going to be the biggest obstacle for the offshore wind industry and could challenge its ability to meet its 2020 targets.
When oil prices are low, operators drill less and marine vessels are generally available. But when the oil prices are high, operators drill more and more, which results in the non-availability of vessels for the offshore wind industry. Vessels chartered from the oil and gas industry are not reliable sources for the offshore wind industry, as they may not be available during times of high demand.
Demand for offshore vessels will outpace supply
As a large number of offshore wind farms are under construction or in the planning stage, high demand for installation, operation and maintenance vessels is expected for the 2014-17 period. After an initial surge in installation activities, operation and maintenance vessels will be in higher demand. Currently, five installation vessels are available that are specially designed for the offshore wind market and 13 more are expected to be added to the offshore wind industry by the end of 2013.
However, even these fleet additions are not expected to be able to meet offshore wind market demand after 2017 as the growth rate of annual installation capacity is higher than the growth rate of vessel supply. A minimum of three years is required to construct one installation vessel and one vessel can install 75 turbines and foundations a year. To date, most of the vessels used for development of offshore wind farms are chartered from the oil and gas sector. As many fields in this sector are scheduled to be redeveloped during the 2015-20 period, those vessels will not be available for the offshore wind industry. Figure 2 (on page 91) and Table 2 (right) indicate the gap between the supply of and demand for offshore wind installation vessels.
Operation and maintenance vessels play a key role in wind farm construction and different kinds of service vessels are used for activities ranging from crew transfer to maintenance work. On average, one maintenance vessel is sufficient to service 400 turbines a year, and one technician is able to service two turbines. GlobalData expects a demand of around 73 crew transfer vessels and four maintenance vessels to service the offshore wind capacity in 2012.
Future vessel requirements
The time needed to install a turbine varies depending on its size. Future installation vessels will allow developers to shorten installation time by increasing vessel crane capacity and providing more deck space.
The introduction of competition in market is likely to reduce the charter rate of vessels for the offshore wind industry. Vessels of the future should have more operating days, be able to perform different tasks at offshore sites, be larger and faster, possess large crane capacity, more deck space, high crane height and more leg length.
Environmental conditions also impact upon offshore work. Therefore, new vessels need to work efficiently in deeper water and in hostile climatic conditions, including high waves.
This article was first published in our sister publication World Expro.