Floating platform testConnecting offshore power
When the Offshore Wind energy sector started to develop back in the early 1990’s, there was little demand for specialist vessels. Projects were small in scale, close to shore and any vessel requirement could be met by the existing fleet. Since then, the scale of projects has grown exponentially in terms of number of turbines, their weight and power capacity, plus the projects have moved much further offshore. As a result, several niche vessel markets have emerged where the utilisation of specialist vessels offers project developers greater capability and efficiency.
Specialist heavy lift installation vessels are now an established market as are Crew Transfer Vessel (CTV) which has been a major success for a number of European shipyards, including Damen delivering 33 Twin Axe Design FCS 2610 vessels to the market. More recently there is growing demand for specialist cable vessels, especially for array cable installation.
What is different about the Offshore Wind market?
Cable laying requirements are not dictated by the market but by the cable and the seabed conditions at the installation location. The main necessity for a cable installation vessel is the capacity to deploy the equipment required to install the cable at the site, plus the ability to carry sufficient supply of the cable to be installed. While there are many vessels available with the right capabilities, there is an added constraint that the vessels need to be able to manoeuvre within the confines of the offshore wind farm.
Many of the smaller cable vessels and barges work using four-point mooring rather than Dynamic Positioning (DP). This method works well in areas of shallow water and has been used on a number of projects including the installation of array cables on 630MW London Array in the UK. The Pontra Maris was one of the vessels used to install some of the 200km of cable on site. However, anchoring in the field is not always possible especially in deeper water so DP2 is preferred. Where there is a variation in water depth, several vessels may be used such as on London Array where Cable Innovator and CS Sovereign were used in the deep water areas and Pontra Maris and Stemat 83 in the shallow areas.
Problems on site
Research shows that there are frequently delays to the installation of cables on offshore wind farms. These are often caused by unexpected seabed conditions such as hard soil or boulders obstructing the route, with the result that the correct equipment is not available to overcome the situation. It is essential for efficient operations that the seabed surveys are thorough along with route engineering. This ensures that the installation method is correctly specified and the right tools are available with the right vessel.
Having cable installation vessels with high levels of specification should be very attractive to developers as they would provide more options on site, enabling them to deal with unforeseen situations. Finding both specialist equipment and an available vessel to deploy is not easy – especially at short notice. Building highly adaptable, multi-purpose vessels has been called the ‘Swiss Army Knife’ approach i.e. a tool for every problem. The drawback is that the build cost of such vessels can be higher and subsequently leads to a higher day rate for charters. Research by 4C Offshore has shown that vessel scheduling is the most common cause of delays to project development during the construction phase. Therefore should a different vessel be required part way through installation, significant delays are almost inevitable.
Demand in the market
Even if the utilization of a specialist vessel is attractive to offshore wind developers, building such vessels is not without risk for investors as ensuring maximum utilization is dependent on market demand. The Offshore Wind sector is particularly challenging as it is perhaps more sensitive to changes in government policy than other offshore energy sectors.
The last three years have seen the two major European markets, UK and Germany, experience periods of uncertainty. Changes to the UK Government’s energy policy on financial support has delayed a number of projects and resulted in some developers deciding not to invest (e.g. RWE’s decision to not invest in Galloper OWF). Even now that the changes to legislation have come into force, the UK market still faces a level of uncertainty as developers bid to obtain financial support under the new Contracts for Difference (CfD) regime. In Germany, major delays to the construction of the offshore grid left some developments in a hiatus as developers stopped plans due to lack of available grid connection.
But it is not all bad news. The German market is now moving forward with a more robust and realistic plan for the offshore grid development and changes to government policy to provide the certainty need regarding tariffs to allow developers to make investment decisions. Even more positively, the Netherlands market is again moving forward after a period of stagnation.
The capacity of the projects which will go forward is still significant, despite reduced targets. For example, 10-15GW of capacity is expected in the UK and 6.5GW in Germany by 2020 respectively. The Dutch Government has issued a road map setting targets of 700MW of tenders per year until 2019 and new legislation is due in 2015 to support this.
As a result, 4C Offshore’s latest cable demand forecast suggest that under a medium case scenario, demand for array cable installation will be over 900km per annum for the years 2016 and 2017 and over 1,000km in 2018 with most of the installation taking place in the UK and Germany. The demand is forecast to be lower during some of the later years but there are indications that demand could peak at 1,800km in 2023. This high point would be driven by the construction of Dogger Bank Creyke Beck A (Tranche A) and Hornsea Project Two – Breesea, if these projects go ahead. There is quite a larger variation between the low, medium and high case capacity forecasts for the UK whereas the German market remains more consistent under all scenarios.
All of the projects that are forecast to be built over the next 10 years, apart from a few test sites, are large commercial operations which need to be constructed efficiently if project schedules are to be met. Developers must maximise their construction window by making sure that vessels are not only fit for purpose, but the use of specialist vessels will provide extra scope if needed. Short term cost cutting on day rates for less able vessels may be very short-sighted. Cable lay equipment is not readily available in the market at short notice, so having a vessel with more than the minimum specification gives greater flexibility should it be required, reducing the risk of project overruns while other options are mobilized.