Douglas-Westwood (DW) released the fifth edition of the World Offshore Wind Market publication where it forecast offshore wind installations averaging 3.2 GW per year over the next 10 years. Capital expenditure is expected to hit a peak of $24b in 2016. The market will remain highly concentrated in the Northern European region, particularly in U.K. and German waters. The Chinese market will also grow quickly in the forecast period.
Energy is Blowing in the (Offshore) Wind
Due to low carbon targets and a need to secure new energy supplies, offshore wind has become an important component in the future electricity generation mix for a number of countries, mainly in the European region. Offshore wind developments are potentially attractive to project developers due to a number of factors including:
• The large, untapped offshore resource allows build at utility-scale with installed capacities of 100s of Megawatts (MWs)
• In comparison to onshore sites, average wind speeds are both higher and sustained over longer periods and wind flow is less turbulent, leading to better energy yields
• When implemented as part of a balanced energy strategy, offshore wind increases diversity of supply and reduces fuel imports
• When sited far from shore, the theory is that there will be shorter planning timelines in comparison to other forms of renewable energy such as onshore wind.
Offshore Wind Projects
The offshore wind project lifecycle can be split into three main phases, these being the initial phase of capital expenditure (Capex), followed by a lengthy period of expenditure to maintain the offshore wind farm (Opex) and then finally a second Capex phase required to decommission the wind farm.
The initial build phase encompasses all investments and activities related to planning, development, procurement and installation processes, resulting in a fully commissioned, electricity generating offshore wind farm. The duration of this phase can be highly variable, but timelines of 10 years are not unheard of.
The Opex phase of an offshore wind farm can last 20 years or longer, at the end of which the operator may decide to ‘repower’ or decommission the project.
To date, no large-scale offshore wind farms have been decommissioned.
Increasing project scale has been a major underlying trend in the industry. Early offshore wind farms were located in water depths of 10m or less and were typically less than five km from shore. Capacity, water depth and distance from shore have all been increasing since these early projects.
The chart below shows how this trend is set to continue over the next 10 years. For example, the majority of U.K. Round 3 projects are over 30km from the shore and over 1,000 MW in size. In total, the nine designated Round 3 zones represent over 30 Gigawatts (GW) of potential capacity and would require capital expenditure levels of more than $124.8b.
Offshore Wind Costs
High cost levels are one of the major areas of concern in this emerging industry. At present, the cost of energy from offshore wind is significantly higher than for conventional thermal power plants (gas and coal) and even onshore wind.
Due to high cost levels, offshore wind requires financial support, often referred to as subsidies. As a consequence, any uncertainty in this area can cause a slowdown in activity, as is being experienced in the U.K. market due to the ongoing Electricity Market Reform (EMR) process being undertaken by the current government.
Evidence of cost reduction is limited, although an analysis of upcoming projects indicates that Capex rates may be starting to plateau. Opex rates are more difficult to assess as sustained operational experience is limited and results are opaquely reported.
From a financing perspective the high cost levels and the risks associated with offshore construction, new wind turbine technology and offshore operations, have made it difficult for project developers to tap into new sources of capital. The current reliance on the public sector to provide financial support, both directly and indirectly and on global utilities to self-fund projects looks to be unsustainable in the long-run.
Offshore Wind Turbines
The wind turbine represents the largest share of project Capex and is therefore a focus area for technology development. In the early years, turbines were variations of onshore machines, whereas the latest models are increasingly designed around the specific requirements of the offshore environment. Examples of an offshore-specific approach can include building redundancy into the system and adding air treatment systems to filter the corrosive marine atmosphere.
Building further from shore also allows wind turbine units to be larger than their onshore counterparts. The average power rating for offshore wind turbines is currently approaching 4 MW and this trend is expected to continue in the future, as over 75% of the new offshore wind turbine models announced up to 2012 had a rated capacity of over 5 MW. Although the underlying trend is clear, commercialisation of larger wind turbines has tended to be slower than expected.
As power capacity increases the dimensions and weights of the major components also increase creating a unique set of challenges for foundation designers, installation contractors and maintenance crews. In the medium term, wind turbine blade diameters will increase from 90m to more than 150m and the weight of the nacelle (hub unit / generator) will increase from 100 tons to more than 300 tons.
Offshore Wind Installation Vessels
In order to install offshore wind turbines and their associated support structures, installation contractors and even energy companies have been building a fleet of purpose-designed vessels. At the mid-point of 2011 there were almost a dozen wind turbine installation vessels under construction around the world. Consequently, a large number of highly specialized vessels have come to market in recent times in expectation of future growth.
This present phase of intense construction activity is coming to an end, and new vessel orders have slowed down with at least one major installation contractor stating that it has put a hold on its newbuild plans due to potential oversupply in the future.
While the most recently completed vessels are similar in concept there does appear to be a smaller subset at the very high end of the market, which have been “future-proofed” to carry out installation of very large wind turbines with capacities of 7.5MW or more. These vessels include the HGO Innovation and Swire’s sister ships the Pacific Orca and Pacific Osprey. Project developers believe that these vessels will be the most highly utilized as the market develops.
Due to the uncertainties in the industry and the slow growth experienced historically, Douglas-Westwood take a conservative view when undertaking its market modeling, with particular sensitivity placed on the more speculative projects. However, there is a positive upward trend, with significant expenditure expected, which has attracted many of the largest industrial players from those that are already involved in the onshore wind industry to new entrants.
Several highlights from the report are picked out below:
• The market is anticipated to grow steadily from 2013 to 2022, adding on average 3.2 GW each year
• Total cumulative capacity is expected to increase more than five-fold in the next 10 years
• From 2013 to 2022 the U.K., Germany and China will account for 64% of all offshore wind installations
• Assuming that a solution is finalized with regards recent grid connection issues, Germany is anticipated to become the largest offshore wind market by 2022
• New emerging markets including France and Sweden are expected to overtake established offshore wind markets such as Belgium and Denmark
• Based on the database of projects DW forecast that annual Capex levels will exceed $24b by 2016
• Beyond 2016, the forecast Capex falls due to lower levels of visibility on projects post-2020 However, we believe that due to the strong long-term drivers for new sources of power generation, Capex will be maintained at or exceeding 2016 levels.
The future growth of offshore wind is highly linked to achieving meaningful cost reduction, which would in turn unlock investment from both project financiers and the supply chain. Unfortunately, there is no single answer to cost reduction and it will only be achieved through a combination of approaches including increased competition in the supply chain, higher reliability levels, new maintenance strategies and optimized wind turbine designs.
There is evidence of new approaches in areas such as contracting strategy and risk sharing between project developers. Several major industrial players including Samsung and Areva are also in varying stages of development of new offshore wind turbines.
This development should bring increased competition to an area currently dominated by a single player. Leveraging experience from the established offshore oil and gas sector is another promising development especially in areas such as offshore construction and maintenance activities.
About the Author
Dmitry Dovgan has a background in strategic management and business analysis, with a wide experience in the energy industry. Before joining Douglas-Westwood he worked for a major oil & gas service provider and also applied his skills and experience at Scottish Enterprise, Scotland’s main economic development agency, where he worked on economic evaluation of opportunities for inward investments and delivered industry analysis in both renewables and the oil & gas sector. Prior to these Dmitry pursued a management career with a telecom software vendor, leading business analysis and strategy functions. Dmitry studied economics in Russia and Germany, and has an MBA from Aberdeen Business School.
Offshore Wind Market Forecast 2013-2022
The report provides detailed market forecasts through to 2022 and is essential reading for companies working within the offshore wind sector.
Report details: www.douglas-westwood.com/shop/shop-infopage.php?longref=1158
(As published in the September 2013 edition of Marine Technologies - www.seadiscovery.com)
Offshore Wind A/S, a MHI, Vestas JV gets Underway In early May operations got underway at MHI Vestas Offshore Wind A/S, a new company dedicated to offshore wind turbine business jointly established by Mitsubishi Heavy Industries, Ltd. (MHI) and Vestas Wind Systems A/S (Vestas) of Denmark. The new joint-ventu
As technologies mature and dramatic cost-cutting continues, the future is looking bright for offshore wind. Below are five trends to keep an eye on.Follow the LeaderOffshore wind’s established leader, Europe, will continue to show the way forward and build capacity. At the end of 2016, nearly 88 percent of
As technologies mature and dramatic cost-cutting continues, the future is looking bright for offshore wind. Below are five trends to keep an eye on.1. Follow the LeaderOffshore wind’s established leader, Europe, will continue to show the way forward and build capacity. At the end of 2016, nearly 88 percent
Douglas-Westwood (DW) has released the fifth edition of the World Offshore Wind Market publication where we forecast offshore wind installations averaging 3.2 GW per year over the next 10 years. Capital expenditure is expected to hit a peak of €18B in 2016. The market will remain highly concentrated in the
Offshore wind power continues to gain momentum in the United States. How will the Jones Act affect the development, operation and maintenance of offshore wind farms? After years of planning and some unsuccessful attempts, offshore wind power developers finally have their first success in the United
huge gains in recent years, especially in Europe, but the ocean remains, for the most part, a vast untapped resource. This is, starting to change as offshore wind, tidal and wave technologies are in various stages of development and poised to soon become factors in the effort to reduce carbon emissions. But
Offshore wind is hot, with the potential to be a significant area of growth for the global maritime, subsea and energy markets for years to come. Eric Haun does a deep dive on eight companies leading the way.GE Renewable EnergyAs offshore wind projects across the globe look to incorporate the latest innovatio
The offshore energy boom: more than wind. Domestic offshore wind also promises to generate demand for new, efficiently propelled support vessels. The U.S. offshore wind farm industry, now in its infancy, is on the verge of a massive growth surge, and the boom will be felt throughout the American maritime
Offshore wind is hot, a burgeoning market with myriad opportunities above and below the water. In step with our Annual Planner, MTR’s energy reporter in Oslo, William Stoichevski, puts on his red, white and blue game face to report on the largest untapped market for offshore wind power in the world. Bloc
As the domestic offshore wind industry comes to life, U.S. flag vessels will necessarily be part of that expanding equation.A potential sea change came with the recent announcement from Aeolus Energy Partners that the renewable installation and operation company was investing in a fleet of Jones Act-compliant
, these choices are evolutionary, enabled by decisions made, and work started, years ago.In the spirit of looking back, here’s a brief review of offshore wind and how its development has tracked concurrent to Maritime Reporter’s 80 years of success. Comparably, offshore wind is a newbie (okay, not counting
studies and other analyses, in 1997, ship rescue salvage and towing situa- the U.S. Coast Guard began hosting public workshops tions for time-critical offshore salvage in “to address issues related to salvage and marine ? re? ght- general.” The report recognized that any ing response capabilities, including
P PRODUCTS MARINE ELECTRONICS NEW MT 603 Series Radio Holland: Water-Activated GPS EPIRB NavCom Package for The MT603FG Two Cutter Suction Dredgers water-activated, Radio Holland Netherlands (Rotterdam) recent- GPS-equipped ly booked an order to deliver a NavCom pack- Emergency Position age to two
P PRODUCTS MARINE ELECTRONICS Ship IoT Tech: Enabling Proactive Approach to Navigation Safety The airline industry has long employed ? ight data to monitor navigational and operational practices for evaluation and feedback to pilots using a system called Flight Operations Quality Assurance (FOQA).
T TECH REPORT MARINE FUELS “The feasibility report showed that it could be done, but we wanted to prove it. When looking at the business side [of the com- pany], we saw a really big demand for hydrogen fuel cell vessels” Dr. Joseph Pratt, CEO & CTO of Golden Gate Zero Emission Ma- rine (GGZM), a
recent years a number of geopolitical events vessel operators, METIs and seafarers on the the pace and prospects of autono- and a prolonged slump in the offshore energy sector my. To ? nd out, the MarTID 2019 asked several key questions on autonomy: have magni? ed the downturn. At the same time, as the
exceeding 80,000 cbm), and ers Management (MTM) manages the Leasing, owner of 300+ vessels, is said encompass a swath of companies across BW Offshore, have listed shares. In tanker business, and Anangel Maritime to be China’s largest ? nancial lessors of the ferry, offshore drilling and tanker
2019 TOP SHIPOWNERS: IS BIGGER BETTER? Like any other business, some shipping companies are bigger than others. This article looks at some of the larger participants in the various sectors. “Big” can be de? ned in multiple ways. Here, contributing editor Barry Parker takes a deep dive into the data
world yearbook OFFSHORE © boscorelli/Adobe Stock www.marinelink.com 39 MR #6 (34-41).indd 39 6/3/2019 12:18:37 PM
2019 BY ROBERT DAY, HEAD OF OFFSHORE, VESSELS VALUE NEWBUILD moved into full swing and we saw the THE RIG MARKET DEMOLITION Unsurprisingly, across the offshore market ? ooded with distressed ton- In the rig sector, Borr Drilling has Tidewater continues to set the stan- sectors, newbuild orders have
VALUE NEWBUILD Norwegian companies Hunter with 500 sales con? rmed over the last DEMOLITION Since the beginning of the year, 100 Group and Knutsen NYK Offshore 12 months averaging over 40 sales a The demolition market for tankers newbuild orders have been placed buy few but spend a lot. Combined, month
of the Subchapter Tugboat 2,462 128 243 139 185 84 1,683 M towboat rules should accelerate that pace. Time will Passenger 881 27 31 54 87 102 580 tell. Offshore Supply 1,774 191 215 172 246 84 866 Read the AWO/USCG report by visting: www.ameri- Barge (Total) 33,128 6,044 6,140 3,549 5,926 3,797 7,613 canwaterways
work and could be retired. But there are real factors preventing a reduction in the overall supply “eligible mitigation actions,” such as upgrading tug- OFFSHORE ENERGY WORKBOATS of vessels. The sector is fragmented, with the largest boat or ferry engines, to reduce the excess emissions By autumn of 2018
F FUEL: LOGISTICS Benchmarking IMO 2020 By Barry Parker “One of the biggest shake-ups in the and are current prices for future dates.” duced essentially anywhere. Tightening pliant VLSFO in Asia – Singapore, Thai- product markets is right around the cor- These wind currents will depend on ac- the standard
. The technology essentially allows worked at Stevens Institute of Technol- ci? cally required to bring wave energy tions to SurfWEC have been “you’re offshore waves to be converted to surg- ogy, the renowned engineering school, conversion to the utility level,” said Raf- probably just like those other systems
, as a num- damping units co-located with existing HYDAC, ISCO Pipe, Wire Co./Lank- could be considered the ber of engineering advances or future offshore wind farms. horst Ropes, and others – is working to Rand government subsidies develop WECs using patented features Rodney Danger? eld of have conspired
up, the ? rst com- tion tax credit of 1.5 cents per kilowatt portance of DOE’s economic analyses posites Center. Dagher explained that mercial offshore wind project in the US. hour of wind-power-generated electric- pertaining to offshore wind and how it Maine has been buffeted by high energy It’s
for the past two years. He has extensive experience working on legislative and public policy issues, both at the state and federal levels. Offshore Wind: A Brief History th appy 80 birthday Maritime Reporter & Engineering News! Eighty years is a sig- Hni? cant publishing and busi- ness accomplishment
Island, the ? rst aboard OSW support vessels. (This will cases of Maryland and Massachusetts. For the most part, we have found the commercial offshore wind farm in the be addressed in the next issue of Mari- (See for example in Maryland: https:// Jones Act is not an impediment to the United States
practice on marine transportation, environmental, regulatory, renewable energy, and legislative issues. She currently serves as Chair of the Virginia Offshore Wind Development Authority (VOWDA), an appointment by Virginia Governors Terry McAuliffe and Ralph Northam, where she promotes offshore wind and renewable
Frank Covella firstname.lastname@example.org +1 561 732 1659 exhibition, and all like it, were about the equipment, the heavy machinery, the “stuff” title, Offshore Engineer. Mitch Engel email@example.com that went into the design, build, out? t and lifecycle maintenance of ships and boats. While I physically
THE TANKER MARKET 10 INSIGHTS Government Update 32 THE CONTAINRESHIP MARKET 14 INSIGHTS Cyber Risk Management 34 THE BULKER MARKET 16 INSIGHTS Offshore Wind 36 THE GAS SHIP MARKET 20 TECH Offshore Wave Energy 38 THE OFFSHORE MARKET 24 FUEL Benchmarking IMO 2020 40 THE PORT MARKET Member 46 TRAINING
alexmlx/Adobe Stock 14 Cyber Security “101” What shipowners need to know now before IMO 2021 deadline By Captain Andrew Kinsey © pickup/Adobe Stock 16 Offshore Wind Offshore wind should pump up the U.S. maritime market By Joan Bondareff © Peterjohn Chisholm/AdobeStock 42 Top 10 Shipowners Is bigger better in
NEWS SINCE 1939 The 2019 YearBook IMO2020 Cyber Security Workboats • Bulkers Tankers • Gas Ships Containerships Offshore Energy + MarTID 2019: The 2nd Annual Report on Global Maritime Training & Education Trends COV1 MR JUNE 2019.indd 1 6/3/2019 1:41:32 P
2019 Media Kit EDITORIAL CALENDAR 2019 Market Feature ProfileTechnical FeatureProduct Feature Ad Close: Dec 21Ad Close: Jan 22 Ad Close: Feb 21 JAN/FEBFEBRUARYMARCH Underwater Vehicle Annual Oceanographic Instrumentation: Measurement, Process & Analysis Subsea Defense Ocean Business 2019 Technology