A rapid capacity build-out of vessels and crew is needed to meet growing demand for offshore wind. Several companies are already stepping up to the plate.

By Emma Clark in London

A shortage in ships is one – of arguably many – hindrances to the UK’s ambitious plans to install 29GW of offshore energy capacity by 2020.

The industry is reliant on specialist vessels for the installation of turbines and foundations, given that equipment used by the North Sea oil and gas industry is not designed for the repetitive installation processes that offshore wind construction requires.

With only a handful of specialist vessels currently available, and with bottlenecks looming, some companies are opting to design and build their own.

Vertical integration

Denmark-based Dong Energy acquired A2SEA, a supplier of installation vessels for offshore wind farms, for approximately DKK 700 million in June last year.

Then in December 2009, RWE Innogy announced its decision to invest in purpose-built vessels for installation of turbines and foundations in order to bypass bottlenecks in the supply chain. 

RWE’s ships, the first likely to be operable by 2012, will be able to transport up to four 6MW turbines, with each vessel costing roughly €100 million.

“By owning the vessel, we have more control and can guarantee better quality, we can control the costs and we can set our own priorities, rather than be governed by the priorities of contractors,” Thierry Aelens, RWE Innogy’s head of projects and operations told WindEnergyUpdate in January.

The ship-building contract signed with Daewoo Shipbuilding & Marine Engineering Co Ltd. includes an option to build a further two identical vessels.

The short-term advantages of securing supply in this way are clear, says Marc Muhlenbach, analyst at Emerging Energy Research.

But there is a risk that these investments could turn undersupply into overcapacity in the long term. “Beyond the peak of the installation period – which could be around 2017-18 – there is a threat of idle installation capacity,” he says.

That said, developers could supply vessels to other parts of the world, such as United States or China in years to come, he adds.

RWE has indicated that its ships are designed primarily for in-house use, but Aelens could not rule out sub-letting vessels in the future.

Specialist providers

Specialist vessel providers including Beluga Hochtief, Master Marine, Seajacks, Advanced Offshore Solutions and MPI are also investing in capacity to meet growing demand.

Up to five new jack-up installation vessels are expected to be operational by 2011, increasing the sector’s installation capacity by over 50%, says European Wind Energy Association. These new vessels will have bigger lifting capacities and could operate in deeper waters.

Advanced Offshore Solutions has designed a vessel capable of transporting 18 turbines and loading them within 24 hours. Kurt Thomsen, CEO told WindEnergyUpdate that he expects the industry to favour this sort of large, self-sustained ships in order to achieve economies of scale.

MPI Offshore's MV Resolution was one of the first purpose-built offshore vessels for installing wind turbines and foundations when it was built in 2003. MPI is investing £550 million in two more slightly bigger ships that are due for delivery in the first and third quarters of 2011.

“The day rates for our vessels seem high, but they can install four or five foundations a week, whereas some can only put in one. Utilities must look at the whole picture,” says Paul Gibson, chief executive officer of MPI Offshore. 

Partnerships

Despite the emerging trend for vertical integration, vessel suppliers will continue to play an important role in the market. But if developers want to ensure security of supply, Muhlenbach expects them to enter into more partnerships with vessel providers.

Mainstream Renewable Power and Siemens joined with Hochtief Construction, which was already in a partnership with Beluga Shipping, in order to bid for (and win) Round 3 projects. By working together, the developers can secure use of the four specialist vessels that Beluga plans to build over the next four years.

As David Hodkinson of Vattenfall Wind Power in the UK points out: “It is less about on who’s balance sheet the vessel sits and more about who is in control of the use of the vessel.”

Vattenfall hasn’t made decisions yet for Round 3, but Hodkinson expects to enter into discussions with suppliers about forming partnerships and working collaboratively on the design of vessels.  

He adds: “Specialist providers have built businesses around operating vessels so may be in a better position to operate them in the future, rather than us starting from scratch”.

Preparation

The supply of vessels need only be an issue if there is no preparation going into Round 3, says Hodkinson. “If we sit back and do nothing for the next three years, it will be a big problem. We need progressive engagement and commitment to sourcing the right vessels for our needs.”

MPI wants developers to be clearer on strategies and to enter into longer-term contracts for seven, eight or even ten years to give them the confidence to build capacity. “If they say they are going to build Round 3 in phases, that is no good,” he says.

Greater stability will also help the industry train the staff required to operate vessels. “The issue is not only with availability of vessels, but also of people,” says Gibson.

2009 was a turning point towards greater activity in terms of vessel construction and contracting, says Muhlenbach. But this is just the beginning: more capacity and vessels are needed.To respond to this article, please write to:

Emma Clarke: emma.jane.clarke@gmail.com

Or write to the editor:

Rikki Stancich: rstancich@gmail.com