Vessel sharing on the rise amid tightening supply outlook

The offshore wind power industry will see more vessel sharing and joint supply offers to execute larger projects amid predicted vessel shortages, experts told Wind Energy Update.

(Image credit: Jimi Knightley)

As offshore wind power development moves towards larger projects further out to sea, the supply of vessels and the type of technology used will be key to controlling costs both in construction and operations and maintenance (O&M).

“It’s obviously time for the industry to cooperate,” said Ian Baylis, Managing Director of Seacat Services, an offshore wind farm support vessel operator.

Project owners are contracting larger scopes of work to vessel owners, and vessel firms can benefit from joining forces with their competitors for construction and O&M, he said.

Collaboration on vessel supply to large projects could lead to cost benefits for operators, Baylis said.

“We are going to see a degree of consolidation and aggressive commercial offerings,” he said.

Baylis cited the 970 MW Navitus Bay wind farm off Southern England as one project which was looking to tender a package of different vessels for its construction operations. The project was refused planning consent by the UK government in September and project stakeholders Eneco and EDF have since shelved the project.

Operators are also working together to overcome predicted vessel shortages as fleets are adapted for construction operations further offshore, said Yalcin Dalgic, a former University of Strathclyde researcher who has published numerous studies on vessel strategies for offshore wind.

“There are some business models under development, called jack-up clubs, in which wind farm operators join and charter jack-up vessels for longer periods so they can decrease risks [of failing to obtain vessels] and daily rates by chartering the vessel for a longer period,” he said.

“In the jack-up club approach, location collaborations are more important than organizational collaborations. The jack-up vessel wind farms should be located close to each other so vessel travel can be minimized.”

Such associations are driven by the high cost of jack-up vessels, mostly for construction activities but also for heavy-duty O&M.

These are charged out at around €150,000 ($159,000) per day, according to Wind Energy Update’s Offshore Foundations and Supporting Structures 2015 report, so it is not financially attractive for a single wind farm operator to keep the vessel on standby for a long period to mobilize if needed for maintenance.

At the same time, however, the lead time for jack-up vessel commissioning can be anything between three and eight months, so it might make sense for a pool of wind farm operators to contract a ship between them for maintenance, providing security of supply rather than wait for new vessels to enter the market.

Floating solutions

Currently the main alternative to jack-up barges is to use floating foundations that can be towed using smaller vessels and are moored to the sea bed.

The Offshore Foundations and Supporting Structures 2015 report notes that using floating foundation structures could cut vessel day rates from around €150,000 ($159,000) to between €20,000 and €50,000 ($21,000 and $53,000) a day.

However, floating windfarms are still relatively new on the market.

“Principle Power’s WindFloat prototype in Portugal was the first offshore wind turbine to be deployed without the use of any offshore heavy-lift vessels, in the first half of December 2012,” the report said.

Given the current reliance on monopoles, some 44% of offshore wind developers are concerned about vessel availability and/or capability from 2016 onwards, and 39% of suppliers said they were directly affected by vessel availability and/or capability in their business, the report said.


 

Baylis of Seacat Services said rising wind project activity is likely to accelerate demand for vessels from the second quarter of 2016.

According to the European Wind Energy Association, there is a pipeline of 98 GW of offshore projects, compared to an installed base of 8 GW in 2014.

“We cross a line in June 2016 when there is theoretically more contracts than vessels,” Baylis said.

This year-on-year increase in construction vessel demand is not scheduled to level off until around 2020 or 2021, he said. Large projects such as the planned 2.4 GW Dogger Bank wind farm off the England’s northeast coast will hike vessel demand, he said.

To get personnel on site, Bayliss believes larger crew transfer vessels will be needed. But the upper limit is probably around 26 meters in length because beyond that you can't access between wind turbines.

At the same time, some form of offshore accommodation will almost certainly be needed because the increased travel time to projects means it will no longer be feasible to do return trips in a single day.

A number of fixed ‘flotels’ are already in use across the industry, both for construction and O&M.

“Motherships will join the fleets,” said Dalgic, but “the number of designs is extremely limited. Everyone has an idea about motherships but no-one takes responsibility.”

Dalgic predicts a decreasing role for jack-up vessels as construction projects move further offshore, since the ships can only be used for installations in water up to 50 meters deep. “I believe that jack-up vessels will be redundant in the future,” he said.

Instead, Dalgic thinks operators could use self-hoisting cranes similar to those already being developed for onshore wind farms.

Liftra, for instance, has developed a crane, designed for GE 1.5 MW turbines, that can lift itself from a 40-foot container, climb up its own lifting wire and install itself on the top of a nacelle and change components such as the gearbox in winds of up to 18 meters per second.

The company says the crane “reduces mobilization costs significantly,” but does not give detailed figures.

Even if such machines largely do away with the need for jack-up barges offshore, the high cost and low availability of other vessels, such as motherships, could remain a concern.

A balanced view

While industry participants base their vessel supply forecasts on significant growth in offshore wind capacity, there are reasons why investors may be reticent to fund additional shipbuilding. One possibility is that not all the planned wind farms are built due to evolving regulations.

When Navitus Bay was refused a planning consent, for example, independent marine consulting firm 4C Offshore said the move could be “evidence of a change of UK Government attitude.”

In the last year the UK government has cut back subsidies for solar power and onshore wind and most recently it scrapped support funding for a carbon capture project.

At this stage, the current Conservative UK government appears to remain generally supportive of offshore wind power. On November 18, energy secretary Amber Rudd confirmed plans to support 10 GW of new offshore wind capacity by 2020 and said a further 10 GW could be built in the following decade, but she warned funding support will be “strictly conditional on the cost reductions we have seen already accelerating.”

Another argument against a vessel supply crunch is that Asian shipyards could potentially flood the market. Currently Asia Pacific firms operate around 8% of the world’s offshore wind vessels, compared with 86% in Europe, according to the Offshore Foundations and Supporting Structures 2015 report. Asian supply could rise as the Asia offshore wind industry grows.

Finally, a shift towards easy-to-install floating or suction bucket designs technology could lessen the need for installation vessels.

Given these caveats, some observers are not convinced we will see the forecasted bottlenecks in vessels supply.

Developers “seem to be ordering ahead of time,” said Sue Crothers, offshore wind market analyst at 4C Offshore.

Based on 4C Offshore’s consultancy experience to date, Crothers said: “There’s enough variety in the overall fleet that offshore wind farm owners don’t have a problem getting the right vessels.”

By Jason Deign
 

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