Aberdeen: The offshore wind market and the ships that serve it
The sight of offshore wind turbines off the coast of Aberdeen symbolises a change in direction for the city, its energy mix and its offshore industry.
Looking out to sea from Aberdeen, a gaggle of offshore wind turbines floats among the usual scattering of offshore support vessels waiting at anchor. Beside them waits an enormous wind turbine installation vessel (WTIV), recognisable by its four upright jack-up legs, which are raised above the water while the ship is not in service.
The sight of these structures symbolises a change in direction for Aberdeen, its energy mix and its offshore industry.
The turbines are part of the European Offshore Wind Deployment Centre (EOWDC), which is currently being installed in Aberdeen Bay. The windfarm was this month connected to the National Grid and, once complete, is expected to produce enough energy to power 78,529 homes.
The project will comprise eleven of the world’s largest and most powerful turbines, and will trial the latest generation of offshore wind technology. Aside from these world-leading credentials, the site has also found notoriety in having been subject to an unsuccessful legal challenge by US President Donald Trump, who complained the turbines would ruin the sea view from his Scottish golf course.
The first of the project's super-sized wind turbines was installed in April. The 191-metre-high structure has three blades, each 80 metres in length. A single rotation of these blades is capable of generating enough electricity to power an average UK home for a day.
The EOWDC is being developed by Sweden’s Vattenfall – but it may be surprising to note that the UK owns the largest number of wind turbines installed in the North Sea, with 43% of the count, according to data from WindEurope. Germany owns 34%, the second largest proportion; followed by Denmark (8%), Netherlands (7%) and Belgium (6%).
A total of €18.2 billion (£16 billion) was invested in offshore wind projects in Europe during 2016, which helped finance a record 5GW of new capacity that year, according to WindEurope figures. This total investment dropped to €7.5 billion (£6.6 billion) in 2017 - with the new capacity being financed falling to 2.5GW last year, the lowest level seen since 2014 - due to projects being postponed in Germany.
But this slowdown would appear to be a short-term phenomenon.
Europe’s offshore wind installations today comprise 4,149 turbines across 92 windfarms owned by 11 different countries. By 2024, estimates say 20% of all European offshore activity will be wind-related. But what is remarkable is that, previous to 2001, there were no offshore windfarms being installed worldwide.
State subsidies have driven European enthusiasm in offshore wind power until now, but zero-subsidy projects are emerging in the Netherlands and Germany, and it is hoped the industry will be able to stand on its own two feet within the next three to four years.
Falling costs have been a major driver in this massive buildout in the North Sea and have allowed European Governments to tender projects without the need for subsidies. Over the past three years, the cost of investing in wind farms has halved, resulting in exponential growth of projects in terms of capital expenditure and size.
The average size of the average offshore windfarm in Europe is increasing along with improvements in technology and cost efficiency. In 2007, the average capacity of an offshore windfarm was 79.6MW, less than one-sixth of the 2017 average, which was 493MW. This trend is set to continue. The Hornsea project, off the south-east coast of England, is set to be 1.2GW in size when it comes online this year and 1.8GW by 2020, making it the world’s largest offshore windfarm by capacity.
What is more, offshore wind projects are becoming increasingly attractive to institutional investors. A record $9.36 billion (£6.9 billion) of stakes in these facilities were sold last year, up 77 per cent from 2016, according to data compiled by Bloomberg New Energy Finance. A record-high 23 acquisition deals were recorded in 2017, almost all of which were in Europe. The average transaction price was $407 million (£300 million), another all-time high and a 69 per cent increase on the 2016 average.
But this sector’s rapid growth is facing certain constraints from its shipping service providers. Regulation, too, is still catching up.
There was an initial hope among the North Sea’s platform support vessel (PSV) sector that wind installations would secure employment for idle ships while oil prices remained low. Although PSVs have picked up support contracts here and there, generally speaking the market has not been able to benefit significantly from growing offshore wind activities because the vessels are not built for the trade. That being said, the rock-bottom charter rates for PSVs seen in recent years have helped the offshore wind sector to grow by keeping its costs low.
Wind farms in the North Sea are being installed further and further away from land. Deep-water locations call for taller, heavier turbines, which means stronger foundations and monopiles will be needed to secure them to the seabed. In Europe, there are only three or four vessels that can competently install these kinds of foundations because the cranes on most existing WTIVs are unable to service these heavy loads. This means the specialised WTIVs built five years ago are becoming too small to serve the latest generation of offshore installations.
In 2017, offshore turbines were installed at an average depth of 27.5 metres and located 41km from the shore on average. The installations that are currently under construction in the region are located between 100km and 150km offshore, where bottom-fixed turbines will be installed in water of 40-50 metres in depth. Consent is in place for other projects that are up to 200km from land, where water may be even deeper.
Water depth constrains the areas in which WTIVs are able to operate because they use their four jack-up legs to position themselves on the sea floor. For this reason, WTIVs have been classed as mobile offshore drilling units (MODU) and have been built to comply with the MODU Code, which is seen as a best fit. The vessels are able to jack up twice in three days during busy periods, making them much more dynamic than the average mobile drilling rig.
The increasingly distant location of offshore wind farms also poses a challenge for crew transfers. Workers would face around a 10-hour transit in a crew boat to get to installations around 100nm (185km) out to sea – which is just not practical.
Smaller crew transfer vessels are usually built to comply with local regulations, but the area in which these vessels are able to operate is constrained by wave heights, which can be too great in deep-sea environments. The UK MCA is developing with industry new regulations to cover transfer vessels that are too big to be classified as a workboat (which are up to 24 metres in length) yet are below the 500GT limit for vessels that are regulated by SOLAS.
These crew transfer challenges have necessitated the increased use of hotel ships, which use a hydraulic gangway that attaches to a turbine and allows crew to ‘walk to work’. Permissions are also being sought for fixed structures, much like a platform, with accommodation for workers.
Hotel ships are another offshore vessel type that has a slightly ambiguous class notation. They have to date been classed to comply with the Special Purpose Ships (SPS) Code or the IMO's MODU Code.
The UK MCA, however, does not currently accept the MODU Code due to its recommendatory status at IMO. The agency is looking to develop its own code for mobile offshore units but for now only recognises people on board these units as being either passengers or crew.
Although they carry a high number of people on board (POB), hotel ships are not classed as passenger vessels as they carry wind turbine technicians, not travellers. Because of the Industrial Personnel Regulation, these technicians cannot be classed as crew. The MCA views anyone who cannot provide crew training records for its auditors as being a passenger.
On one vessel, the MCA would not accept the turbine installation technicians onboard as anything other than either crew or passengers. This led to the ship being held in port for a week while technicians were trained to crew standards for firefighting, first aid, lifeboat drills and security measures - incurring great expense for the shipowner.
Despite the rapid growth of the offshore wind services market and the upcoming shortage of WTIVs able to handle the latest generation of turbines, shipowners have been reluctant to invest in brand-new WTIVs because the vessels become too small too quickly. Nevertheless, demand for the few ships able to operate in very deep water could soon outstrip their availability. New vessel orders will surely come.
In the meantime, there are still employment opportunities for the smaller, first-generation WTIVs that are becoming too small to service the more labour-intensive offshore windfarms being built in the North Sea. These smaller vessels could be utilised in operation and maintenance (O&M) projects, or other work such as removing and replacing turbine jackets, particularly in densely packed wind farms that are inaccessible to larger WTIVs.
The smaller ships could otherwise be upgraded with larger cranes and equipment capable of handling the heavier monopiles needed for the latest generation of turbines. Alternatively, there could be opportunities to service the small, initial offshore wind developments that are cropping up in places like Ireland, Japan and South Korea.
Outside of the North Sea, there are still very few offshore wind projects elsewhere in the world, but this is changing. Countries such as Australia, Turkey and India have previously expressed an interest in developing offshore wind farms.
Taiwan has already taken the plunge. At the end of April, the country’s Ministry of Economic Affairs awarded a total of 3,836MW of grid connection capacity to eleven offshore windfarms proposed by seven developers. Of this new offshore wind capacity, 738MW will be completed by 2020, rising to 5.5GW by 2025. Taiwan aims to have 20% of electricity generated by renewable energy by the same year.
The UK is helping the state in its mission. Last month, the British Office Taipei and the Taiwan Offshore Wind Turbine Foundation and Marine Engineering Association signed a memorandum of understanding to cooperate on offshore wind developments in Taiwan.
The UK’s offshore wind sector is leading the world. During its rapid advance, the sector has had to think on its feet to deal with the challenges and opportunities that have come its way. Now this expertise can be shared with the rest of the world.
There have been challenges and opportunities, too, for offshore wind's shipping service providers and the ancillary marine industry. This has resulted in technological advances and operational efficiencies that will be developed further in the years to come.
Much like shipping, offshore wind activity may be invisible from the land, but that fact belies its bright future, in which the UK will play a vital role in helping the widespread adoption of clean, renewable energy worldwide (local golf course owners notwithstanding).