Message in a bottleneck

The global offshore wind market is seeing unprecedented growth and expects to see game-changing capacity expansion in the coming years.

Projections show forecasts growing from just under 65 GW (giga-watts) today to more than 130 GW by 2027, or 26 GW’s/yr. on average. For perspective, 1 GW provides enough energy to power about 750,000 homes. This means nearly 20 million more homes will be powered by renewable energy each year during this time of growth.

This expected global industry growth rate, estimated around ~15% annually for the next five years, will bring with it supply chain competition and bottlenecks on all levels of manufacturing, construction and operations.

This could prove to be painful in some markets of the offshore sector, such as in securing specialized vessels like wind turbine installation vessels (WTIV) required for offshore installations. These supply chain challenges could be particularly significant for the US, which is planning to install an additional 30 GW of production capacity by 2030.

Rising Demand

The specialised vessels needed for offshore installations typically include cable lay vessels (CLV), service operations vessels (SOV), anchor haul vessels (AHTS) and wind turbine installation vessels (WTIV).

WTIV’s are used in the installation and large component repair of fixed structure offshore wind turbines in shallower waters of less than 60 metres -70 meters, making them critical to wind infrastructure.

Additionally, as wind turbine sizes continue to increase, currently in the range of 10 MWs -12 MWs, but soon to be more than 15 MWs -20 MWs, new construction of WTIV vessels must address these increasing size requirements in addition to fulfilling overall demand.

Foreign markets, recognising this supply concern throughout the next decade, have begun to build these larger vessels but the US has only one in progress.

Dominion Energy is currently building the US’s first Jones Act compliant WTIV and it is set for completion in late 2023. This WTIV, Charybdis, will not only support the installation of its own offshore wind project, the 2.6 GW Coastal Virginia Offshore Wind farm, but is also projected to support the Sunrise and Revolution offshore projects for Eversource/Orsted.

While this is a small step in addressing the WTIV supply chain issue, it is estimated that the US will still need between four and seven WTIVs to meet 2030 goals. This requires an immediate and expedited investment in this space.

While China and the Asian Pacific are well positioned with a sufficient offshore vessel supply chain to meet the foreseeable demand, Europe and the US are on track to see significant shortages by the end of the decade should substantial vessel investments not be made in the next few years to support the rapid market expansion and larger turbines on the market.

Fierce Competition

The increase in vessel demand and weather restrictive installation windows at sea will make for fierce competition within the market. Additional pressures on demand will be seen as more offshore windfarms are commissioned in the US and globally.

As these new farms are brought into service, some of the large components on the turbines face routine failure and WTIV’s will be required to perform the replacement work.

These types of failures can occur even early in the equipment’s 20+ year lifecycle. Consequently, wind farm operations and maintenance requirements will compete for WTIV resources, creating further demand for these specialized vessels.

If these operational demands are not met, offshore wind turbines could remain idle for long periods of time while waiting for a vessel to replace these major components. It seems likely that the US will be challenged to meet offshore wind goals unless it starts building vessels immediately, particularly the WTIV’s.

Jones Act Complications

An additional complication to achieving US offshore wind goals is the Jones Act and its restrictions.

The Jones Act (JA) requires vessels that are being used in certain types of coastwise trade to be US built, flagged, owned and operated. This includes transportation of people, merchandise and other industrial activities in US waters.

The JA inevitably complicates critical aspects of constructing an offshore wind project as many of the nuances revolve around which flag the vessel flies and the “US points” to and from which they are transporting goods.

To date, developers have used JA workarounds to install the modest 42 MW worth of commissioned US offshore wind turbines.

For example, developers may use JA compliant feeder vessels paired with foreign-flagged WTIV’s or components laden at a foreign port. These logistical methods can be mostly inefficient and costly for large scale commercial projects. Regardless, US developers are planning their projects with these considerations.

Logistical Flexibility

While the JA can still be problematic for offshore wind developers, Customs and Border Patrol (CBP) recently provided clarity on certain offshore wind activities where the act does not apply2 which may offer some logistical flexibility.

For example, foreign-flagged vessels can operate in US waters while installing foundations/substructures and other tower components they have transported from a foreign port.

A foreign WTIV is also permitted to move crew members and work materials (tooling) to and from the work site at sea. The CSB ruling further clarified that the JA does not apply to the installation of electric cables between two US points (ie, wind turbines) or to vessels loading cable at a US port.

The laying and burying of subsea cables were also ruled to not be considered as dredging. Both rulings open specific cable laying activities to foreign flagged vessels.

Other rulings were also made on cable protective mats and the protective rock, called sour, around the base of the tower. One can visit the CBP Rulings website for more details and information.

Even as these rulings seemingly offer some logistical relief for developers, the JA can still be quite onerous and complicated, which only exacerbates the supply chain problems and adds additional risk to a project’s success.

Opportunity Knocks

The US will soon be faced with significant challenges in responding to the global goals for an energy transition. This can be seen as an opportunity rather than a future problem.

Momentum for offshore wind will continue to build rapidly over the next decade. We can expect to see a large portion of our future energy needs coming from the sea where the wind resource is abundant and free.

To ensure success, we must respond expeditiously to the future supply chain needs, particularly with the specialized vessels required to get steel in the water. Success here will be critical to reaching both the US 2030 goals and, more broadly, the global GHG reduction goals.