Why the time is now for offshore wind

Buoyant predictions for the offshore wind market in the year ahead were shared with a packed auditorium at February’s Offshore Wind Journal Conference in London. European, American and Taiwanese markets were focuses of attention, as well as the ‘need to be green’. There was also new thinking on remedying the European sector’s three year boom-and-bust cycle.

BloombergNEF wind energy analyst Imogen Brown spoke approvingly of market opportunities in offshore wind in southern Europe and downplayed the risk of Brexit wreaking major disruption on the UK market.

“The Northern European markets have seen a lot of activity so now developers are looking for new European opportunities and we expect Southern Europe to really come into the frame,” Ms Brown told delegates.

“There’s significant resource potential available in Southern Europe and a lot of high renewable energy electricity targets. If Southern European nations are going to meet those targets they’ve got to fill their generation gap with something. I think we see offshore wind holding key potential to [support] decarbonisation and reaching renewables’ targets,” she added.

Narrowing the focus Ms Brown said the deep waters off the coast of northern Spain were an interesting market for floating wind “but we also see floating wind as an opportunity for some Spanish island systems. For example, the Canary Islands has set a target 300 MW of offshore wind by 2025. We expect [that target] to be met with some floating wind.”

Turning to Brexit’s likely impact on UK supply chains, Ms Brown said the UK is “fairly strongly positioned” when it comes to offshore wind post Brexit. She noted: “As far as we’re concerned, some turbines are imported from continental Europe, but some are manufactured in the UK. If we look towards a hard Brexit deal than perhaps some import tariffs might have to be put on those turbines. But we don’t expect that to be significant. [Tariffs of] 2.7% has been touted around. A hard Brexit deal may [result in] slightly higher [tariffs] for some of the interconnectors. But broadly speaking we don’t expect those tariffs to be a significant threat in the offshore wind sector in the UK.”

Casting a critical eye over the offshore wind market on the other side of the pond, partner at law firm Winston & Strawn Charlie Papavizas acknowledged that US permitting had slowed, and said some speculated that this was in response to pressure from the domestic fishing industry. That said, “people are queuing up to invest and pretty much every large offshore wind developer is in the US market one way or another and ready to construct large products,” he said. Responding to a question around market access for international firms he said: “The Jones Act is misconceived. It’s actually a very simple law [that] in permutations winds up being pretty complicated.”

Seacat Services has been involved with the newbuilds, training and building of an integrated

management system for the only CTV supplier [at the time of the conference] in the US that has a vessel on contract: Atlantic Wind Transfers.

“Joint ventures are mainly going to emerge from places where the local law safeguards local content, local employment,” Seacat Services managing director Ian Baylis told the gathering. He cited Taiwan as a key example alongside the US.

One of the differentials Mr Baylis sees between the more mature and emergent markets, such as Taiwan, is the prominence given to green issues at the application stage.

“In emergent markets the customers have to secure vessels. [By contrast] in our European

market we see tenders coming out and on the pricing sheets there are sections that require a detailing of the wider green initiatives the applicant is involved in. In newer markets the emphasis is on building confidence and getting the boats in before they can apply some of the factors that are coming into play in a more mature market.”

When it comes to green issues Mr Balylis urged the industry not to wait passively for new regulations and new technologies coming to the market to reduce fuel consumption. “Fuel consumption is absolutely our biggest environmental impact,” he said, adding the industry needs to embrace voyage planning strategies and fuel monitoring technologies now.

The main thrust of Mr Baylis’ comments were however centred on markets closer to home: “The European CTV market is an interesting animal,” he told more than 100 delegates. “It’s been historically subject to a kind of enforced boom and bust. This comes from developers being issued licenses – for example by the Crown Estate in the UK – to build rounds of windfarms and everybody scrambling to build their windfarms all at the same time in big phases. This results in a big three-year blast and then a lull.

“We’re coming out the other end of that now and as we enter 2021 we’re going to see a more sustained growth in the market, certainly the next 10 to 15 years look very well mapped out.

“But the problem that we have in our industry is that the confidence hasn’t necessarily been there for financiers to finance new vessels. Also, as technology has moved on, both competency and performance has moved on. We’ve lost quite a few boats out of the bottom of the market which have been superseded by what can be seen as larger, more competent vessels, which have been sold into alternative markets.

“We are also now starting to see some of our current market boats being picked up, put on ships and taken down to emerging markets, such as Taiwan. So I think from 2021 there is going to be a challenge to actually have a fleet of competent CTV’s to service the newbuild and O&M requirements of the offshore wind industry. We are going to have to work together closely with developers and build more long-term sustainable relationships, to give the confidence for essentially the banks and financiers to reopen their wallets so everybody can start moving forward.

“As well as a newbuild pipeline we’ve also got to be conscious of using and upcycling the vessels that we have. Let’s continue to refit and be innovative with these vessels and at the same time move forward with new designs.”

Riviera will host a series of 45-minute webinars on subjects ranging from maritime propulsion to vessel optimisation, ballast water management, maritime air pollution and maritime leaders among many others commencing 5 May 2020. Find a list of the webinars and register your interest now