Scorpio Bulkers has signed a letter of intent to construct a wind turbine installation vessel, a deal that includes options for a trio of additional vessels
The company – which has until now specialised in transporting dry bulk cargo such as coal – is the second to announce an order for a wind turbine installation vessel in less than a week, with OHT having entered the turbine installation segment with a binding heads of agreement with China Merchants Heavy Industry (CMHI) in Jiangsu, China for the construction of two vessels with options for two more.
Industry sources believe other new entrants could also enter the market including, potentially, shipping giant Maersk, whose business unit Maersk Supply Service hired Lars Blicher as director for offshore wind in late 2018. Prior to joining the offshore service company, Mr Blicher founded Swire Blue Ocean, where he was chief executive, whose core business is wind turbine installation.
Responding to Scorpio Bulkers’ announcement, Clarksons Platou Securities head of research Turner Holm told OWJ, “some of the incumbents in the turbine installation market have been slow to move on newbuilds, which are badly needed for the market to grow as expected, and this is opening the door for new players.”
Scorpio Bulkers chairman and chief executive Emanuele Lauro said, “Scorpio Bulkers is embarking on a new and exciting journey. The world urgently needs to reduce emissions and offshore wind will make a pivotal contribution.
“We appreciate the encouragement and assistance of multiple partners – including suppliers, customers, and shipbuilders – as we take a significant first step in transitioning the company towards a sustainable future.
“This strategic direction aligns with our future customers, investors, finance providers and the growing momentum in global public policy. The board of directors carefully considered this project and believes that this transition will result in higher and more predictable shareholder returns in a structural growth market. Our transition has begun.”
He went on to say, “Scorpio has a history of executing complex maritime projects and of building teams and expertise to enter new markets. We are fully committed to this new direction as an area of significant value creation for our shareholders and alignment with our multiple stakeholders. “
The first vessel will be built by Daewoo Shipbuilding and Marine Engineering for delivery in 2023. The vessel is an NG-16000X design from GustoMSC and will have a 1,500-tonne leg encircling crane from Huisman Equipment.
In keeping with industry demand for green ships for a green industry, the vessel will also have strong green credentials with hybrid battery power and will be fuel cell ready. The vessel will be 148 m in length with a breadth of 56 m and will have accommodation for 130 people. it will be capable of working in a water depth of 65-70 m.
The total project cost is expected to be approximately US$265-$290M, subject to final design modifications. The contract is expected to be signed in early Q4 2020 and will include options to construct up to an additional three units having similar specifications.
Scorpio said the vessel “will be one of the most sophisticated dedicated turbine installation vessels in the world.” It will have the capacity to install onto pre-prepared foundations the largest wind turbines currently designed, at a height of over 185 m above sea level and in water depth in excess of 65 m. The vessel incorporates various features and green innovations that significantly improve the operating window and efficiency and accelerate all-important ‘time to first power’ for customers.
“Offshore wind is a proven technology and represents a significant opportunity for the world to respond to the challenge of emissions reduction. It is expected to grow at a compound annual growth rate of over 15% for the next decade,” said Scorpio.
“There is a growing shortage of vessels that can install and maintain next-generation turbines core to this growth. The increasing maritime complexity and innovation of the offshore wind sector plays to Scorpio’s strengths and the board of directors believes the company is in a good position to build an industry-leading presence.”
Scorpio also highlighted a shortage of turbine installation vessels capable of installing larger turbines in deeper waters. It said an additional 10 vessels will be required to meet 2024 demand. It put current contract rates at US$220,000 day which, it said, implies attractive cash flow and return on capital. The company also believes rates for turbine installation vessels will increase as the market tightens over the next 3-4 years. It said potential rates could be higher for larger vessels.
As highlighted above, Scorpio Bulkers is primarily a provider of marine transportation of dry bulk commodities, and has a fleet of 55 vessels consisting of 49 wholly owned or finance leased dry bulk vessels (including 16 Kamsarmax vessels and 33 Ultramax vessels), and six time chartered-in vessels (including five Kamsarmax vessels and one Ultramax vessel).
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