Not enough vessels for 20MW-plus wind turbines, warn shipping giants

Operators spearheading a generation of installation vessels able to handle a new generation of supersized offshore wind turbines say numbers entering the sector are still falling short of what is required to plug a yawning supply gap.

Outside of China, the global offshore wind sector has faced persistent warnings about a looming shortage of vessels, even if the ramp up in capacity is less than expected before headwinds created by the Covid-19 pandemic and then the Ukraine war.

The shortfall is most acute when the increasing size of wind turbines is taken into account, warned Even Larsen, CEO of Havfram, a supplier of transport and installation services to the offshore wind sector.

So far, only nine vessels able to handle wind turbines of 20MW capacity are in the construction pipeline or actually operational, he told a SpareBank 1 energy investment conference in Oslo.

Two of these will be delivered later this year to Havfram itself, which was carved out of marine construction contractor Ocean Installer in 2022.

It was an acquisition of these assets by infrastructure funds Sandbrook Capital and PSP Investment that allowed the company to go after the gap in the market for bigger WTIV units, Larsen said.

The two GustoMSC NG-20000X vessels — among the largest jack-ups anywhere — are being built at CIMC Raffles shipyard in Yantai, China.

They will have capacity to install offshore wind turbines of over 20MW in harsh environments, in water depths of up to 70 metres and, with 3,200-tonne capacity cranes, can also handle larger monopiles.

Larsen said demand for the larger class of vessels has reflected in the rapid buildup of 10GW worth of backlog starting in 2026 — clients include RWE (1.3GW Nordseecluster A&B), Orsted (1.4GW Hornsea 3) Iberdrola (300MW Windaker), Vattenfall (1.6GW Nordlicht 1&2).

The company was also chosen by Luxcara, a German asset manager, to handle 18.5MW Mingyang wind turbines for the 300MW Waterkant offshore wind farm in the German North Sea.

"These are likely to be bigger than any other turbines when we install them," Larsen said of the Chinese-made machines.

Two more contracts with undisclosed European clients to be announced make up 10GW of backlog so far.

Twenty-five vessel gap?

Larsen warned that the escalating scale of turbines and a lack of newbuilds in the pipeline after next year is a cause for concern.

“By 2030, average wind turbine size will be close to today’s maximum of nearly 19MW," he commented, stressing that "preparation for future upgrades begins at the design stage".

"The demand curve is also growing significantly, so there is a growing concern that some projects won’t get built due to a lack of vessels coming in 2027 and beyond that," he added.

In an assessment of supply and demand that classified legacy vessels as falling short of capacity for 20MW turbines, Larsen charted a vessel shortfall that would hit 23 in 2030, narrowing to a 15-vessel gap in 2033 but then peaking at 25 in 2034.

On the same conference panel, Maersk Offshore Wind's CEO Michael Reimer Mortensen agreed that a catalogue of economic, regulatory and geopolitical headwinds may have lowered offshore wind ambitions over the last three years, but he argued that the pinch points in the supply chain are still there.

"If you look at challenges such as rising costs and interest rates, (offshore wind) targets look too ambitious. And even more so if you add on geopolitical risks and a slowing down on political ambitions.

"Yet there is still a sound business case for big growth, and we can still see projects delaying due to constraints in the supply chain," Mortensen said.

Where are the newbuilds?

The premium value attached to these bigger vessels means the outlook for day rates is "stable" according to Larsen.

"There are not that many big vessels with our capacity in the market, and we see the clients who want to book a vessel now for maybe three to five years into the future," he said.

The risks and challenges associated with building new vessels have been enough to quell any talk of a boom in vessel orders, however.

"It's about balancing the cost, and there is also uncertainty in the technology risk, and the risk is that the vessel will be obsolete," Fred Olsen Windcarrier's CEO Haakon Magne Ore told the SpareBank 1 conference.

"Historically, the day rate has not necessarily been high enough to justify the cost of a newbuild.

"Of course, we have seen in the last year that it has significantly increased, but two, three, four years ago, it was a struggle to match up the cost of a future vessel out of the yard with what the client was willing to pay."

Big year for Cadeler

Four of the higher-capacity WTIVs coming to market are on the books of Cadeler, owner of the world’s largest jack-up fleet for offshore wind.

The company, which listed in Oslo and New York after its 2023 merger with Eneti but maintains its headquarters in Denmark, has eleven vessels, including seven newbuilds and two upgrades.

The vessel is cutting its teeth on an operations and maintenance (O&M) slot for an undisclosed Cadeler client, before starting its first major installation job on the RWE-led Sofia wind farm project in the UK North Sea later this year.

Cadeler expects to take delivery of an additional three WTIVs within the next 12 months and amid expectations of increased tender activity for foundation installation, has ordered a third A-Class vessel for this segment.

Engaging with analysts on the last earnings call, CEO Mikkel Gleerup stressed the advantages of placing serial orders with the COSCO shipyard in terms of lessons learned and booking capacity.

Without such relationships, he warned that it has become "incredibly difficult" to get a yard slot.

"If you can get a yard slot and you have a completed design ready with detailed engineering, you are still lucky if you can deliver in four or five years," Gleerup noted.

How big is the gap?

Supply chain analysts agree on that the looming vessel gap represents a looming bottleneck for the offshore wind sector.

“If projects and the markets develop the way we're expecting, then when we hit around 2029 we're going to start seeing bottleneck impacts,” said Victoria Maguire Toft, head of data at Aegir Insights.

“Van Oord just took one of their new vessels, Cadeler has a bunch of deliveries and Havfram is getting two new vessels, but even in an offshore wind market where the US is maybe not taking off the way it could, there is a lack of suitable vessels.”

Toft acknowledged that some vessels build more for operations and maintenance can ”play both fields” to some extent.

“But we can only expect partial availability for installation because demand for O&M is growing in line with the total installed base of offshore wind.

"There are some oil and gas vessels or general offshore wind vessels that can lift but it's not their core competence," she added.

"It’s not just a question of technical capability, but also efficiency.”