Home Wind Energy Offshore Wind Boom: the winners in the supply chain

Offshore Wind Boom: the winners in the supply chain

First published in Cleantech magazine, May 2010. Copyright Cleantech Investor Ltd 2010

By Jon Mainwaring

In January this year, the UK’s Crown Estate awarded licences to a number of wind power businesses to develop several offshore wind power projects around Britain. The UK Government’s plan is to generate 32GW of electricity, roughly a quarter of the UK’s demand, from offshore wind resources by 2020, which means that the UK offshore wind market represents the biggest opportunity currently for firms around the world planning to make money from the sector.

The award of the licences was undoubtedly very good news for the winners. Consortia which bid for the licences and won included such clean energy firms as Spain’s wind power giant Iberdrola and Portugal’s EDP Renováveis, along with utility firms like Germany’s RWE and E.ON, as well as the UK’s Centrica and Scottish and Southern Energy. Smaller, specialised wind energy businesses, such as offshore wind firm SeaEnergy, also benefited from being part of a consortium that won a licence (AIM-quoted SeaEnergy is EDP Renováveis’s offshore wind partner in the UK).

Investors in the above firms can now be assured of a steady income stream from UK offshore wind power over the coming decades. Meanwhile, the UK wind energy industry itself could see employment increase tenfold, from 5,000 jobs currently to 57,000 by 2020, as UK-based firms serve 70% of the market for offshore wind turbines designated for the UK (source: Bain & Company).

But there are also plenty of other businesses positioned further down the offshore wind energy supply chain that are already beginning to benefit from the offshore wind bonanza.

Of course, firms that already supply equipment and components to the wind energy industry for onshore projects will continue to play a role in supplying offshore wind energy projects. But those that have experience of the marine environment have a big competitive advantage.

Take Korean firm LS Cable, for example. The company supplies cables for a variety of purposes, and its customers range from energy businesses to telecommunications companies. Its background in supplying the marine industry with cables means that it already sells high-voltage cables which are designed to be used offshore and are suitable for offshore wind farms.

Last year, LS Cable completed its first dedicated submarine cable factory in Donghae City in South Korea in order to take on the high-voltage submarine cable market that has so far been dominated by European companies. The firm has an eye on supplying the UK offshore wind energy market and is currently attending UK trade fairs associated with the offshore wind industry.

But, although plenty of firms in the wind energy supply chain will be eager to demonstrate the suitability of their equipment for use in a marine environment, the chief concern for those companies constructing the UK’s offshore wind farms is how they go about getting their equipment and personnel out to sea in the first place. The need to achieve this reliably is already providing a boost to the UK’s marine logistics industry, which had been concerned about its future due to the decline in North Sea oil production.

Wind turbines are composed of cumbersome components that require large vessels to deploy them at their intended locations several miles out to sea. Not only do a wind turbine’s shaft, blades and gearbox need to be transported, but so do the foundations that keep the turbine from toppling over in rough seas.

One firm playing a leading role in delivering wind farm components to offshore locations is MPI Offshore. MPI, based in Stokesley in North Yorkshire, operates the MPI Resolution – the world’s first purpose-built vessel for installing offshore wind turbines, foundations and transition pieces.

Specifically designed to overcome the challenges that defeat current installation practices and techniques – including limited operational weather windows, low capacity and dependence upon a high number of logistical support vessels – the MPI Resolution is a combination of a ship and a rig. Capable of operating in water depths ranging from five metres to more than 35 metres, a dynamic positioning system holds the vessel in place while a jacking system raises it to a height above the water surface, providing a safe, stable working platform that remains operational whatever the weather.

The vessel, which is equipped with 300-tonne and 50-tonne cranes, has a large cargo capacity. Its maximum cargo area is 3,200 square metres, with maximum deck loading of 10 tonnes per square metre, so it is capable of carrying several large offshore wind turbine components in one journey. 

The MPI Resolution was used to install 54 foundations and turbines at Centrica’s Lynn and Inner Dowsing 194MW offshore wind project – currently the UK’s largest offshore wind farm, which is located three miles off Skegness in the North Sea. It has been used for several other UK wind farm projects, the most recent being Thanet Offshore wind farm – a 300MW project off the coast of Kent which is being developed by Swedish utility Vattenfall and is due for completion this year.

Another business that has come about as a direct result of the establishment of an offshore wind energy industry in the UK is North Sea Logistics. Established ten years ago, the company has been involved in the UK offshore wind industry since the very beginning (when the 4MW Blyth wind farm was constructed off the coast of Northumberland in 2000), and today it is dedicated to providing logistical services to firms operating in the offshore wind sector.

North Sea Logistics, which owns a large fleet of specialist vessels, provides: ship-to-ship and ship-to-shore transfer of personnel and equipment; specialist transfer of personnel and equipment to and from offshore turbines; provision of safety and support vessels; and ROV (remotely operated underwater vehicle) investigations and dive support.

The company recently announced that it had won a second five-year contract to provide support and transfer services to the North Hoyle wind farm – a 30 turbine farm off the coast of North Wales. Meanwhile, it has also invested £3 million to buy three specialist craft from boat maker Alnmaritec.

Alnmaritec is a maker of specialist, aluminium workboats that is based in Alnwick in the North East of England. The firm develops customised designs for a variety of applications, including workboats for the offshore oil and gas industry, crew ferries, fire and rescue craft, tugs, patrol vessels and commercial fishing boats.

Recently, the company has been winning orders for wind farm support boats. Alnmaritec’s ‘Wave Commander’ class of wind farm support boat has a displacement of around 22 tonnes, a top speed of over 25 knots and offers a high level of manoeuvrability – a key factor when landing personnel and equipment on offshore wind turbine platforms in rough seas. Alnmaritec has, so far, built twelve of these vessels to support operations on offshore wind farms.

Health and safety will be a top priority for the firms that are installing offshore wind farms. Marine safety specialist Cosalt, a small cap company whose shares are listed on the London Stock Exchange, is already taking advantage of this fact.

Cosalt, headquartered at Grimsby on the east coast of England, supplied safety equipment for the construction of Centrica’s Lynn and Inner Dowsing wind farm during 2008 and 2009. The company plans to obtain further work supplying safety equipment to the offshore wind sector, and not just through its existing relationship with Centrica (with which it also worked in the utility’s North Sea oil and gas fields).  Cosalt has 15 branches around the UK, several of which are located at major ports.

“Given the geographical proximity between our European branch network and recent franchise awards for the offshore renewable energy sector, we are hopeful we can offer our existing services into this growing offshore activity,” says David Ross, chairman of Cosalt.

UK port operators are also set to become beneficiaries of the country’s offshore wind boom.

PD Ports, which is owned by Canadian asset manager Brookfield, operates a handful of ports around the UK. It runs the Ports of Tees and Hartlepool (Teesport), a major deep sea complex located on the north east coast of England that PD Ports hopes will play an important role as a base of operations for an offshore wind farm located at Dogger Bank. Located some 60 miles off the coast of north east England, Dogger Bank is a large sandbank in shallow water. The wind farms proposed for deployment there will potentially yield 9GW of wind power.

PD Ports thinks a jobs windfall could take place in Hartlepool over the next five to ten years as a result. “PD Ports sees significant opportunities for further developing Hartlepool as a major player in the offshore support sector, which could bring sustained economic growth and jobs to the town,” says Michael McConnell, PD Ports’ group property director.

The group sees Victoria Harbour, an area of land owned by PD Ports that links the headland and the marina in Hartlepool, as providing a prime opportunity to support the delivery of offshore wind-related industries as well as acting as a home to expanding engineering companies involved in the sector.

Meanwhile, PD Ports is talking to JDR Cables, a key supplier of subsea power cables, about extending its existing 100,000 square foot facility that was established on PD Ports’ land at Hartlepool in July 2009. PD Ports is also home to Heerema Group, a firm that designs, constructs and installs offshore facilities and which has serviced the offshore oil and gas sector from Hartlepool for more than 15 years.

With wind farms such as Centrica's Lynn and Inner Dowsing development, the UK is already leading the world in offshore wind, and the Round 3 awards and resulting developments mean that it should maintain number one position for quite some time. But other countries, such as the US (see below) and Taiwan, are beginning to take offshore wind seriously too, which means that supply chains servicing offshore wind projects in new regions should also spring up during the next few years.

As the examples above have shown, the cleantech boom is not just about big name clean energy businesses: it is also about giving a new lease of life to existing industries that can adapt in order to service and supply this burgeoning sector. And the offshore wind energy supply chain may well end up employing more people than are employed directly by the offshore wind operators and the manufacturers of wind turbines.

US offshore wind projects

While the UK represents the biggest opportunity currently for companies planning to profit from offshore wind, projects in other countries are also gathering pace.

In the US two projects are competing to be the first offshore wind scheme in that country.

Since 2005, Texas has been planning what it hopes will be the country’s first offshore wind farm. Currently being constructed at Galveston Island, eight miles off the Texas coast in the Gulf of Mexico, the $300 million project, being developed by Louisiana-based Wind Energy Systems Technology (WEST), aims to build more than 60 wind turbines that will provide 150MW of electricity – enough to power around 40,000 homes.

Meanwhile, in April this year the US’s Interior Secretary approved an offshore wind project off Cape Cod. The $1 billion Cape Wind project, located about five miles offshore, aims to install around 130 turbines in Massachusetts’ Nantucket Sound that will generate some 468MW of power.

Other offshore wind proposals are also currently under consideration in several locations around the US, including Delaware, Rhode Island and New Jersey, as well as in a number of Great Lakes states.


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