“The time to order offshore installation vessels is now”
Offshore installation vessels may soon be hard to come by. According to Alexander Fløtre, vice president Offshore Wind at Rystad Energy, both offshore wind activity and offshore wind components will continue to grow. Additional vessels are needed by 2025 to prevent a bottleneck and the time to order them is now.
Right now, 31.9 GW of offshore wind capacity has been installed worldwide. Some 80% of which in Europe, which is the most mature part of the industry. In terms of capacity, the UK is the biggest player (33%), followed by Germany at 24% and China close behind at 23%.
Fløtre: “China has been ramping up very substantially over the last couple of years and has now reached a 23% market share. Its annual growth rate from 2010 has been 26%.” In the short to medium term, he expects growth will mostly be driven by China.
Annual growth rate
“Growth rate on a global scale is expected to continue in the offshore wind sector towards 2025 and accelerates a little bit to a 28% annual growth rate”, adds Fløtre. “We expect to hit 109 GW by 2025, and that is more than tripling the current installed capacity.”
When it comes to Europe, Fløtre expects a slower growth rate, “but from a larger installed base”. Which comes down to 30 GW being added between today and 2025. “So it’s a very significant growth from the most established countries: UK, Germany, Netherlands, Denmark and Belgium and new countries joining such as France.”
Fløtre adds that the US has been lagging behind so far, but he expects “significant contributions” from them from 2025 onwards.
Need for installation vessels
It is not just the activity that is a driver of the need for installation vessels, explains Fløtre, it is also the size of the different components. “A 12-MW turbine, for example, measures 260 metres high, with a 220-metre rotor diameter. This puts another requirement to the vessel companies in terms of lifting capabilities and the different sizes of all the different components. Not just on the turbines, but also on the foundations etc, that need to go into these wind farms.”
Fløtre continues: “And what we have seen is tremendous growth in turbine size. The projects are getting larger and larger and the turbines are getting bigger and bigger. It is a very clear trend in Europe that turbine growth is ramping up considerably.”
What this means for installation vessel demand, is that the general wind turbine installation vessels (WTIVs) (current fleet and order book) will be capable of handling the turbines up to 13 MW. However, for the 13+ MW turbines, a next-generation WTIV will be needed. “And that portion is also expected to grow post-2025”, says Fløtre.
“When we compare the vessel years, reaching over forty vessel years by 2025, to the turbine installation fleet, including the order backlog, we still see a need for additional vessels. And that is what is driving us to see a bottleneck in this market”, he explains.
“We see the same bottleneck in the foundation installation vessel segment. Reaching more than 25 vessel years around 2027, compared to a fleet that we have identified as nineteen vessels including the order backlog. And this bottleneck will not solve itself.”
Time of essence
With 2025 approaching fast, the question is if the industry can still ramp up capacity fast enough to resolve the future bottleneck in time.
“We do see the established players in these markets adding new vessels to their order backlogs. And 2020 was kind of a shift in the pace of new orders for newbuilds”, states Fløtre. “We also see a lot of new companies, such as Offshore Heavy Transport, Cadeler etc. going really into these markets and trying to play an active role while there are also a lot of oil and gas companies trying to transition to the offshore wind industry. So definitely a large appetite for being part of a market where there is a clear need for supply.”
However, according to Fløtre, time is of the essence here. “There is still a possibility to place newbuild orders and have them delivered by 2025 and onwards, but the time to move is now. The situation is definitely time-critical.”
As for the years beyond 2025, Rystad anticipates continued growth with some 3,000 turbines to be installed per year by 2030. “The arrows are all pointing upwards, and the growth rate may even increase”, Fløtre concludes.
Fløtre presented his views during the Project Cargo Summit 2021, which took place on 10 and 11 February 2021.