Cadeler sees leaner spell after offshore wind setbacks... but scramble for top vessels goes on

The world’s biggest owner of specialised offshore wind vessels believes that underlying demand for the transport, installation and maintenance of turbines will ensure a bright future for its growing fleet

In the shorter term, however, the company expects its investments in aftermarket services, including large component replacements, to help sustain revenues through a leaner period caused by project cancellations and delays affecting the wider offshore wind sector.

Cadeler became the leading supplier of advanced vessels for installing bottom-fixed wind turbines and their foundations when it completed a merger with Eneti in December 2023.

The Copenhagen-headquartered company has taken delivery of two new wind turbine installation vessels (WTIV) so far this year and has a contractual backlog running at €2.5bn ($2.9bn).

The company currently has seven WTIVs in service, and its fleet is set to reach 10 next year, and 12 by 2027.

The former is heading for Orsted's Hornsea 3 project in the UK and the latter will start with operation and maintenance (O&M) for an undisclosed client.

Cadeler has also been giving O&M services a growing role in its portfolio, based on the equation that more and more turbines are in the water and will require these services, including some major component exchanges.

This is not the end of the story, however.

Setbacks and leaner years

The sequence of setbacks that the offshore wind sector has been suffering in key markets is starting to raise questions about whether demand forecasts for vessels might need to be reassessed.

These setbacks include the US government stop-order that has impacted the Revolution Wind array and Orsted’s decision to halt development of the giant Hornsea 4 in the UK due to a deterioration in project economics caused, principally, by supply chain inflation.

In an earnings call with analysts this week, Gleerup addressed wider questions of supply and demand in the offshore wind sector, as well as the market impacts of regulatory turbulence, as in markets such as the US.

"We are seeing that probably 2027 and 2028 are more challenging now than they were a year ago," he said.

"When one of the bigger projects (like Hornsea 4) goes out of the installation sequence, of course that makes capacity available that we then need to deploy elsewhere,” he said.

"We recognise that there are things that are happening in the market that is outside anyone's control at the moment. But we think that there is a period of recalibration," Gleerup added.

Gleerup said this "recalibration" includes the process of adjusting support mechanisms, with some projects facing delays and timelines shifting "closer to 2030."

"There have also been targets in every market that were basically not achievable with the supply chain we have," he stated.

But the Cadeler CEO added that he expects business conditions and policies to improve to some extent.

"We have seen some of that in the markets that have redone their tenders and have got them right. I think we have seen improved conditions both in Denmark but also in the UK. Like many others we expect that the UK's AR7 will be a solid round," he commented.

Gleerup argued that underlying demand remains robust, including in Asian markets like Vietnam, where, he noted that Copenhagen Infrastructure Partners last week agreed to develop an offshore wind project in partnership with state-run PetroVietnam.

Vessel 'gap' still there

"We see that clients are engaging early with us and others to ensure the right capacity for installation," he said.

The fast evolving market for installation vessels capable of handling larger components is making legacy vessels less efficient or even obsolete, he added.

"This is why Cadeler is confident in the market and its own backlog. We expect to be busy right to the end of the decade," Gleerup said.

"And we see an undersupply of vessels expected coming towards the end of the decade."

Betting on O&M

But Gleerup also acknowledged that this diversification has also been more important than expected in stabilising revenues, given the challenges facing the wind industry, including project delays and cancellations.

The vessel was acquired “at a price well below its replacement cost” and delivered to Cadeler in July. The company quickly lined up a three-year contract for the vessel with Vestas, commencing early in 2026, with additional options for two and a half years.

The vessel is currently in transit to Europe where she will undergo tailored upgrades in advance of commencing her work with Vestas.

Chinese upgrade

The vessel was built by a company in China with the intention of putting it to work in domestic and then international waters, said Gleerup, who acknowledged that interest in the vessel was driven by clients' questions about how adaptable such Chinese units would be to European standards.

Gleerup said some of the design features diverged from Cadeler's own parameters resulting in alterations including installation of a new auxiliary crane to optimise the deck layout plan and addition of a new bow thruster for dynamic positioning in North Sea operations.

The work scope also includes recertifying the main crane under an international classification society to address the lifting curve and a general accommodation upgrade

"We are also working on guides to get the most out of long legs that enables this vessel to work on very very deep water depths and in very complicated soil conditions," Gleerup said.

Cadeler said the upgrade is aimed at enhancing operational capacity and aligning onboard capabilities with the rest of fleet.

Asked about day rates for vessels, Gleerup said he saw a more nuanced market developing.

"If the project is very simple and very easy to install, if it is small or close to the shore, you will not harvest as much benefit from the larger assets," he said.

"But if you look at the big utility scale projects far away from shore, these vessels drive a lot of value for the clients themselves. So the downward pressure on rates is not something we observe to a great scale at the moment."

Gleerup also mentioned Cadeler's latest contract in Taiwan, where Synera Renewable Energy just signed up a next-generation WTIV for the transportation and installation of 35 Siemens Gamesa 14MW wind turbines on the Formosa 4 offshore wind farm. Gleerup described as "healthy project economics" for the deal.

The final two vessels in Cadeler's current construction programme are the Wind Ace and the Wind Apex WTIVs, due for delivery from China's Cosco Quidong shipyard in the third quarter of 2026 and the second quarter of 2027, respectively.

The company says all four of its remaining newbuilds are on or ahead of schedule, and within budget.