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Blog: Global offshore wind goals threatened by lack of suitable infrastructure

05 May 2021 Andrei Utkin

Rapid advances in offshore wind technology are currently outpacing the infrastructure capacity needed to install them, according to a new report, "Offshore Wind Turbine Installation Vessels," by the Clean Energy Technology service.

Annual offshore wind gross capacity additions are expected to grow sixfold by 2030 due to dramatic cost reductions, advances in technology, favorable policies, and ever-increasing national targets for emissions reductions.

However, the industry needs to rapidly develop and invest in new infrastructure to achieve these ambitious plans, the report says. Most critically, the current offshore wind turbine installation vessel (WTIV) fleet is unable to install new turbines in excess of 15 MW that will be hitting the market in the next three years.

Offshore wind turbines are constantly getting bigger and more powerful, reducing costs, improving competitiveness, and opening new markets. However, that presents a new challenge. As new developments are moving further offshore and into deeper waters, logistics, transit, and installation become more complex and require larger specialized, self-propelled jackup vessels with technical capabilities far beyond the existing fleet.

The geographical distribution of the global WTIV fleet is another challenge. Currently comprising around 50 vessels, two-thirds are located off mainland China, and most of the rest are in Northern Europe.

The Chinese fleet does not operate internationally, at least at this point, and much of the remaining global fleet is concentrated around and busy working in the North Sea, requiring significant time and expense to travel for installations elsewhere. Countries outside these regions will therefore face significant roadblocks to expanding offshore wind capacity unless new vessels for other regional markets are rapidly built.

Six vessels are under construction and expected to come online by 2023, but IHS Markit projects that the global industry will need to invest a minimum of $1.2 billion to $2 billion to build at least four additional vessels to meet global demand from 2026 outside of mainland China; because Chinese WTIVs do not operate outside of its waters, the presence of those ships is excluded from this supply-demand analysis.

Depending on where these vessels are built, the total cost may be significantly higher if local content requirements are taken into consideration, particularly in the emerging offshore wind markets of the United States and Asia Pacific.

Seven companies have announced the intention to build up to 16 new vessels, but these are not firm contracts, and final investments have yet to be secured.

On the positive side, conditions for investment are improving as turbine sizes stabilize and the technical capabilities for installing them become increasingly standardized.

One of the reasons for the lack of investment in newbuild turbine installation vessels in the past was concerns over the longevity of the vessels as turbine technology was developing rapidly. Now that turbine sizes have somewhat stabilized, with more standardized technical capabilities required for vessels, you are finally seeing newbuilds being ordered. We expect that with the rise of the emerging offshore wind markets and first commercial projects coming online, investors and owners will be increasingly willing to finance and build new vessels.

The situation in the US represents an additional challenge.

The United States has targeted a particularly ambitious offshore wind goal of 30 GW by 2030. However, the only U.S.-built and flagged WTIV is not set to enter service until 2023. In order to hit its target, the country must ensure new vessels are built and put into service promptly.

This analysis came from the recently published "Offshore Wind Turbine Installation Vessels" report, included as part of the Global Clean Energy Technology service. For more information, please click here.

Posted 05 May 2021 by Andrei Utkin, Senior Associate, Climate and Sustainability Group, IHS Markit

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