The offshore wind industry is growing quickly, but OSV owners targeting it need tailored solutions, newbuilds, green ships and deep pockets
In February 2021, Solstad Offshore chief executive Lars Peder Solstad said the company is planning to increase its presence in the renewable energy market. In an introduction to the company’s fourth quarter 2020 results, Mr Solstad reflected on the poor state of the market for offshore oil and gas vessels, in which the company has long been a leading player. He said he sees some early signs of recovery in that market, but said unsustainable rates are “making life hard”. Even if activity picks up, he explained, oversupply remains an issue.
In contrast, said Mr Solstad, activity levels in the offshore wind market continue to increase. To ensure that Solstad Offshore – and the support vessel industry – remain relevant, said Mr Solstad, the company needs to play a greater role in the energy transition, increasing its presence in renewable energy in general and in offshore wind in particular.
Mr Solstad is not the first OSV owner to express that sentiment. Offshore wind is the fastest growing part of the energy industry, the fastest growing part of the offshore industry and one of the fastest growing parts of the shipping industry.
The Global Wind Energy Council (GWEC) forecasts that through 2030, more than 205 GW of new offshore wind capacity will be added globally, including at least 6.2 GW of floating offshore wind. To put that in perspective, global installed capacity is currently about 30 GW. The 205 GW estimate is a 15 GW increase from the forecast in GWEC Market Intelligence’s pre-Covid-19 forecast, demonstrating the resilience of the sector. If GWEC’s latest projections hold good, global offshore wind capacity will reach around 235 GW by 2030. In fact, the global offshore wind industry had its second-best year ever in 2020, installing more than 6 GW of new capacity, keeping growth on track despite the adverse effects of the Covid-19 pandemic.
When GWEC launched its 2020 Market Intelligence report in February 2021, head of market intelligence and strategy Feng Zhao said: “Continued growth of the offshore wind industry globally throughout the pandemic is testament to the resilience of this booming industry. Although China was hit first by the Covid-19 crisis, the impacts on the offshore wind sector were minimal, with business as usual as early as March 2020. While Europe remains the largest offshore wind market globally, the Asia Pacific will play an increasingly important role, driving industry growth as major economies such as Japan and South Korea have recently established ambitious offshore wind targets. The US will also become an increasingly important market for offshore wind, as the new administration has made it clear they are working to accelerate growth of this crucial industry.”
GWEC global offshore wind taskforce chair Alastair Dutton said offshore wind was “cementing its role” as a “crucial technology to decarbonise our energy system and achieve net zero.” He said we are “only seeing the tip of the iceberg when it comes to its massive potential.”
Transitioning to offshore wind
This fast pace of growth will create opportunities for vessel owners already in the offshore wind sector and those outside it that have only dipped a toe in the water. But how should owners go about entering it? One way of doing so would be to acquire a specialised provider of services to the offshore wind market; another would be to scrap older OSVs and invest in new offshore wind ships. That is not as unlikely as it sounds: consider Scorpio Bulkers’ move into turbine installation vessels. Now renamed Eneti, it is steadily selling off bulkers as it transitions. The number of new vessels of certain types needed in the next decade, such as service operation vessels (SOVs), construction support vessels (CSVs) and crew transfer vessels (CTVs) will be considerable. More foundation and turbine installation vessels will also be required, but they come with a hefty price tag.
Costing in excess of US$250M, more wind turbine installation vessels are definitely needed, but hard-pressed OSV owners are unlikely to be able to fund that kind of investment on their own balance sheets. An answer may lie in the approach taken by Norway-based Havfram (formerly known as Ocean Installer).
“Compared to offshore oil and gas, offshore wind is a more demanding environment”
Well-known as a an EPCI contractor, Havfram is in discussion with a number of entities regarding the construction of a novel semi-submersible turbine installation vessel for the US Jones act market. Established a little over a decade ago, Havfram is best known in the subsea umbilical, risers and flowlines market, and for mooring, inspection, maintenance and repair, but based on its experience as an EPCI contract it has already pre-qualified for several large offshore wind projects.
For Solstad Offshore, its fleet profile – based mainly as it is on CSVs and subsea vessels, anchor-handling tug supply (AHTS) vessels and platform supply vessels (PSVs) – suggests very strongly that it will be the first two vessel types that win it work in offshore wind. There is very little demand for PSVs, but at some point in the future, AHTS vessels will be in demand. In fact, the floating wind market is set to drive demand for under-utilised AHTS vessels in future, but demand will only seriously begin to pick up in 2024/25 when commercial-scale floating wind projects get going, as experts at Riviera’s webinar Floating windfarms: the new driver of the AHTS market explained.
Following in the footsteps of OSV owners such as Esvagt and Østensjø, which have already transitioned into the SOV and CSV market, other OSV owners are investing in offshore wind-specific newbuilds. It is newbuilds, not upgraded or converted vessels, that the offshore wind industry is primarily seeking because of its preference for purpose-designed, environmentally-friendly units.
As Seacor Marine vice president of engineering Tim Clerc told another Riviera webinar: “Conversion is a tough road. One of the biggest issues is getting the level of functionality you need. Compared to offshore oil and gas, offshore wind is a more demanding environment. You cannot do a lot with a PSV or an AHTS vessel. I would counsel extreme caution and research before embarking on a conversion. A PSV is designed around non-human payload. SOVs are all about designing a vessel around a team of workers. You need a technician-centric vessel.”
Mr Clerc and Shell global category manager marine Bo Jardine agreed that it is unlikely a charterer in the offshore wind industry planning to take a vessel on a long-term charter – potentially for 10-15 years – would want to start out with a converted SOV that was already five years old.
There are clearly opportunities for newbuilds, however. In October 2020, Edison Chouest Offshore (ECO), Ørsted and Eversource agreed a long-term charter for the provision of the first US-flagged, Jones Act-compliant SOV. Then, in December 2020, Rem Offshore in Norway signed a contract with Green Yard Kleven in Ulsteinvik to build its first purpose-built unit for the offshore wind industry. The vessel is a CSV and will be based on a Havyard 833 CSV design.
Whichever segment of the market OSV owners choose to address and however they go about entering it, it has become particularly important to offer the offshore wind market green ships for what is, after all, a ‘green’ industry. OSV owners entering offshore wind will need to chart a course to decarbonisation, whether that be vessels that are designed and built for the installation of fuel cells, or ships with hybrid power systems with batteries.