Lack of ships impedes political offshore wind ambitions

Political eagerness to install offshore wind turbines and the vessels required to do so do not add up. There is great uncertainty as to what size the turbines will have and therefore uncertainty about what ships to order, according to Seaway 7.
Seaway Ventus, a wind turbine installation vessel set to join the fleet in 2023. | Photo: Seaway 7
Seaway Ventus, a wind turbine installation vessel set to join the fleet in 2023. | Photo: Seaway 7

There are not enough foundation vessels nor wind turbine installation vessels (WTIVs) in the market to realize all announced offshore wind projects. Technological uncertainties are dampening fleet expansion across the board.

So says Tony Millward, managing director for the Wind Turbine Division at Seaway 7, in an interview with ShippingWatch.

”If you look at the market, and you look at all the theoretical projects that are going to happen, the bottleneck for foundation vessels will start around 2024/2025. For WTIVs, that means it will start six months to a year later, in 2025/2026. That’s when you start seeing the number of projects and the number of vessels that have been announced [not adding up, -ed.]. There are more projects than vessels,” Millward explains, adding:

”Not all projects will be installed when they are originally planned, and this just amplifies the problem going into the next year. If this happens from 2025, then it will have major consequences in 2026 and beyond.”

What is the next technology?

One reason behind the lacking will to order ships is, according to Millward, that there are major uncertainties regarding size.

”One of the bigger uncertainties is the size of the turbines. You’ve got all the WTG [wind turbine generator, -ed.] manufacturers coming with their 15-megawatt platforms in 2024-2026. What happens after that? When does the next turbine come in?” he says.

Without knowing the size of future turbines, it is hard to order the correct vessels, Millward explains.

The major WTG manufacturers include companies such as Vestas, Siemens Gamesa and General Electric Renewable Energy.

If you place the wrong bet and order a vessel that would seemingly fit with the current market, you run the risk of being left stuck with a brand-new and shiny vessel that will not function optimally and will need to be altered to function with a different turbine size than what it was initially intended for.

“It is difficult to spec a new vessel for post-17-megawatt turbines as we presently are not sure how big they will get, and they could get really big. Making the wrong decision on having either too large or too small a vessel could mean you end with a vessel that does not hit the necessary sweet spot for the market. It will function as intended, but not optimally in terms of where the turbine manufacturers have set the market. This will be costly for both vessel owners and developers,” Millward says, adding:

”We need more standardization, and a chance for everybody to recoup their investment before we have to get ready for the next big leap in technology, if we are to keep costs down.”

The big players

The Seaway 7 director says it paints a descriptive picture of the uncertain market that the big industry players have yet to reveal their cards.

”You know, there are still leading installation contractors from the last 10 years that have not announced true next-generation vessels yet, and there is a reason for this.”

According to Millward, there are several elements that need to fall into place, such as a balance between ensuring that vessel lifespans are long enough, that companies can earn enough money each year to make a business case, and how much the market is willing to pay before it rushes to the yards.

”So those elements have to come together. And at the moment, the answer isn’t as clear as it used to be,” he says as to why not all major players have announced what their next vessel on order will be.

Accompanying problems

The global offshore wind market is set to accelerate even further.

At least this is what is expected according to a new release from Rystad Energy, with the research and intelligence company stating that ”installations and investments in the global offshore wind industry are set to surge this decade as nations seek to transition to cleaner sources of energy.”

According to Rystad, capital expenditure is projected to more than double from USD 46bn in 2021 to USD 103bn in 2030.

With political eagerness to develop a market that is uncertain around size, technologies will have to overcome bottlenecks, and it seems that uncertainty and a gap in between projects and availability are accompanying problems.

Most interesting point in time

However, Millward – who put up his first wind farm in 2002 – says this is the most interesting point in a time period characterized by not knowing which direction the market will go, nor how to deal with the problems lying ahead.

”It used to be about getting the cost of renewables down. That has now been done. And the next one is how do we deal with the expansion? It is cheap enough and the political will is there, but how do we deal with this next phase – this exponential expansion?,” Millward concludes.

Since the ShippingWatch interview, Millward has entered Garden Leave with Seaway 7 as he awaits joining the Cadeler team at the beginning of 2023.

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