As the world continues to scramble for renewable energy, floating offshore wind has emerged as a key capacity enabler in the coming decades. With no major commercial scale projects currently in operations, the segment is largely based on governments and developers ambitious project plans for the future. Nonetheless, this market segment can offer vast opportunities to the world of offshore support vessels in both near- and long-term prospects.
In this piece, we will discuss the key opportunities and challenges related to offshore floating wind, in addition to the potential implications for offshore vessel owners. Rystad Energy expects a global installed base of 13 GW in 2030, growing to 70 GW in 2035, and both governments and developers seem to agree on the fact that floating wind can deliver green energy at scale in the future.
This translates to developer commitments of roughly 4,000 turbines installed by 2035 in Europe, while Asia will contribute with 850 turbines. An interesting theme is multiple countries leap-frogging straight to the floating space, as opposed to developing an installed base of bottom-fixed capacity initially. Examples of such countries include South Korea, Portugal, Italy, and Spain, which have all announced major projects to be commissioned towards the end of the decade, with no current fixed capacity operational.
The leading developers within the space include oil and gas majors such as Shell and Equinor, pure-play floating developers such as Simply Blue Group, renewable energy majors such as Iberdrola and renewable investment firms such as Copenhagen Infrastructure Partners. We believe developers with existing maritime industry experience will have an advantage in commissioning projects according to announced timelines, while oil majors current excessive cash flows also contribute positively towards their ability to finance major floating projects.
There are currently hundreds of designs available in the market, where the concepts can be divided into main categories of SPAR, tension-leg platforms, and semi-sub solutions. Looking at the capacity towards 2030, the majority is still un-decided, and we observe a degree of technological risk as a result. SPAR solutions require deepwater port infrastructure and are therefore unlikely to be applied outside of Norway in the near future, while semi-subs are leading in terms of awarded concepts despite being the most material-intensive.
There are still risks of project delays, as developers are prone to input cost increases and higher cost of capital in today’s market, risking squeezed margins. Additionally, with the lack of consensus on the concept designs, there is still uncertainty when it comes to fabrication of the sub-structures, as these are expected to require immense production capacity from yards that are already seeing strong orderbooks from traditional shipping and offshore wind.
Today, we can only count a handful of operational projects globally, which have served as critical case studies to understand the potential OSV demand for the planned capacity additions going forward. Hywind Scotland was commissioned in 2017 with five turbines, followed by Kincardine Scotland at five turbines in 2021, and lastly Hywind Tampen offshore Norway at eleven turbines.
The former Scottish projects are fully operational, while the latter still has four turbines scheduled to be commissioned in the current summer season. Looking at the AHTS requirements from these projects, we can quite confidently conclude that floating offshore wind is more than likely to become the savior for the high-end AHTS fleet after eight years of challenging market conditions.
As floating turbines utilize mooring lines and large anchors to secure the turbine substructure to the seabed in order to create stability, AHTS are utilized for large parts of the installation scope including towing, pre-laying of anchors, tensioning and hook-up. The current method of installation requires substantial tensioning power, while the towing can be performed with less advanced tonnage. When studying the aforementioned floating windparks we found that the vessel days per turbine installed ranged from 25 to 35. This not only serves as a good indicator for what vessel demand to expect in the near future, but also illustrates the need for finding increasingly efficient methods of installation.
However, far from all AHTS are set to benefit from this market development. Based on current and future workscopes, we believe the relevant AHTS fleet towards the floating space will need to have capacity exceeding 220t bollard pull. This part of the AHTS fleet consists of roughly 110 units today compared to the total fleet of more than 1,700 units globally. Segmenting further by reducing the vessels operating in closed markets such as China, Brazil and the US Gulf of Mexico, we count a fleet of around 90 vessels fitting the bill.
The vessel spread involved in the mentioned projects have all been advanced, with the hook-up and anchor installation utilizing especially high-end vessels such as Olympic Zeus, Havila Venus, Skandi Iceman, and Skandi Hera, all with bollard pull exceeding 285t. With the ever-increasing turbine sizes and location of floating projects trending towards deeper waters, it’s likely that similar vessels will be relevant for the installation going forward unless we see major technological advances in the immediate future.
When setting a threshold at 300 bollard pull and excluding Chinese and US assets, we count less than 25 vessels today. Newbuilding activity is non-existent due to vessel owners’ excessive debt, high newbuilding costs, and lack of available financing, leading to a somewhat fixed supply at least towards 2026. With an expected 350 turbines entering the construction phase in the coming three years and 800 from 2027 to 2029, we find it more than likely that the coming years may very well see sold out AHTS market for the high-end units.
In addition to the installation phase, the operations and maintenance phase is also expected to drive AHTS demand. Some industry averages suggest that one in every hundred mooring lines will need replacement annually, which will add up to considerable vessel needs when the installed base reaches commercial scale.
Finally, it is pertinent to note that the capacity coming from 2025 onwards is likely to be built in a market where oil and gas enter a new super-cycle, leading to fierce competition for the same tonnage. In conclusion we find both floating offshore wind and especially the high-end AHTS vessel segments to be key growth markets with very exciting prospects going forward.
Moreover, as most of the world’s technical offshore wind capacity is found in water depths exceeding 50 meters, it is only a matter of time before the market transitions towards floating offshore wind as the main market. According to IEA for example, around 80% of the global offshore wind capacity potential comes from floating wind parks, which was confirmed by the latest ScotWind auctioning round last year where more than half of the total 27.6 GW awarded was won by floating projects.
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