Page 60: of Maritime Reporter Magazine (November 2023)

MARKET IN FOCUS: OFFSHORE WIND

The $1 Billion Offshore Wind

Prize for U.S. Shipyards

The growing CTV and SOV market represents a long-term demand for at least 60 to more than 130 vessels.

By Philip Lewis, Research Director, Intelatus Global Partners he U.S. offshore wind market presents a $1 billion the three Jones Act vessels cost between $67-75 million.

long-term opportunity to builders of crew transfer Where the right conditions exist, such as a developer or vessels (CTV) and service operation vessels (SOV) turbine OEM operating a large number of turbines in a rela-

Tthat will support both wind farm construction and tively close geographic proximity, Tier 1 SOVs will be used long-term operations and maintenance. Unlike many of the for turbine commissioning and O&M support. Tier 2 walk-to- construction vessels to be deployed on U.S. wind projects, walk vessels, mainly redeployed from the Gulf of Mexico’s

CTVs and SOVs must be Jones Act compliant, meaning they oil & gas sector, will also be used for turbine commissioning will be built, owned and operated by U.S. companies and per- and some maintenance work from time to time. Vessels fall- sonnel. However, although seen as somewhat commoditized ing into this category include the Paul Candies and one of the vessels, a clear understanding of the commercial technical Hornbeck HOSSOV 300E MPSVs.

drivers in each of the segments is required. These are the ? nd- There remains potential for additional Tier 1 vessels, with ings of our new analysis of the global CTV market. at least three vessels currently identi? ed by developers, for an estimated CAPEX of $450-500 million.

The CTV and SOV opportunity To con? rm the theme of comparatively high costs for lo-

By the end of 2024, the U.S. Tier 1 (purpose built) and Tier cally built vessels, in its Q2-23 ? nancial reporting, Domin- 2 CTV (conversions) ? eet will have grown to 23 vessels, with ion Energy has reported that the construction of the U.S.-built owners holding options to build at least a further 12 vessels. wind turbine installation vessel (WTIV) Charybdis had cost

Long-term, the market has a potential O&M related demand $367 million as of June 30, 2023, and is forecast to rise to for 60-130 CTVs with additional CTVs required for logistics around $625 million by time of delivery at the end of 2024 or during the offshore construction of wind farms. MARAD Title early 2025. To put this in context, WTIVs contracted in Asian

XI loan guarantee documentation indicates U.S. CTV pricing yards with similar speci? cations in the same time period as of around $12 million per vessel. As a result, the net long-term Charybdis, cost around $325 million. The delayed delivery capital requirement for new CTV construction is $440-1,140 means that the vessel will (most likely) not be deployed on million. Construction cycle time is at least 12 months per ves- Ørsted’s Revolution Wind and Sunrise Wind projects.

sel (and as much as 15-20 months) excluding design and ap- provals. Most yards involved in the building of CTVs for the Drivers for CTV and SOV Demand

U.S. market appear to be able to produce between one and Those reading about U.S. offshore wind over the last few four CTVs annually. months will have experienced roller coaster emotions, lurch-

By comparison, leading Southeast Asian yards will sell Eu- ing between optimism and pessimism.

ropean speci? cation CTVs for around $5.5-6 million per ves- Developers have reported projects have become un? nance- sel, with build cycles of 8-10 months and capacity to produce able due to a combination of in? ationary factors, U.S. spe- 10 vessels a year. ci? c tax credits and supply chain challenges. Several of these

We note similar pricing trends in the SOV segment as seen developers have sought to renegotiate or cancel contracts to in the CTV segment. We have reported previously the price sell electricity to states for agreed rates by agreed dates. As a difference in U.S. built SOVs compared to those deployed in result, some projects will see completion dates shift back for

Europe and the three Tier 1 vessels currently being built in the several months to even years.

U.S. are reported to cost between $97 and 162 million each. However, the fundamental drivers for offshore wind remain

SOVs contracted for the European market at a similar time to sound. At the federal level, the current administration is focus- 60 Maritime Reporter & Engineering News • November 2023

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