IN DEPTH: Fighting a sea of troubles
Not everything has been going according to plan in the offshore wind industry in recent years.
The two key markets have recently downgraded their offshore ambitions — Germany reduced its target from 10GW to 6.5GW by 2020, while the UK said its offshore capacity could be as little as 8GW by 2020, having stated in 2009 that 20GW was “achievable”.
For companies that provide jack-ups and cable-laying vessels to the offshore wind industry, such as Denmark-based A2Sea, any reduction in installations can have major repercussions.
Yet Jens Frederik Hansen, the company’s chief executive, is optimistic about its medium-term outlook.
“There have been delays due to discussions in the different governments,” he tells Recharge.
“But it doesn’t mean that the projects aren’t coming. We have just seen that they are coming a little later than maybe originally planned.”
To date, A2Sea has had about a 50% share of the global offshore wind installation market, and this year erected about half of the turbines installed at sea, says Hansen.
This has brought handsome rewards. Last year, A2Sea made a record profit of DKr276.5m ($49.7m), and Hansen says this year it is “doing very nicely”.
“We’re a healthy company with a sound profit,” he says.
However, Hansen is well aware how difficult it will be to maintain a 50% share in the face of increased competition and a smaller-than-expected market.
According to a report by BTM Consult, there are currently 41 vessels with offshore wind experience in the market — more than are needed for the dozen or so projects under construction in Northern European waters.
“There is increased competition due to new vessels coming to the market during the past two years,” Hansen admits. “[But] it’s still a good and interesting market for us, in which we’re doing well.”
A2Sea has an advantage over its rivals due to the fact that it is 51%-owned by Denmark’s Dong Energy, the world’s biggest offshore developer, and 49%-owned by Siemens, the world’s largest offshore turbine supplier.
With Siemens now offering turnkey solutions offshore — including installation — A2Sea would seem to be in an enviable position.
Yet analysts such as Feng Zhao, research director at Navigant Consulting, believe that A2Sea is over-reliant on its parent companies’ projects.
“They shouldn’t rely completely on Dong,” he says. “Relying on one big developer is not always a good idea.”
With so many installation vessels in the market, owning A2Sea seems to no longer be the competitive advantage for Dong and Siemens that it used to be.
Dong’s wind boss, Samuel Leupold, told Danish newspaper Borsen this summer that the controlling stake in A2Sea doesn’t hold the same strategic importance as it did before. “Interested parties are welcome [to make offers] if they believe more value can be added to the company,” he said, before adding that there was no active sales process for A2Sea or its specialist cabling unit, CT Offshore.
Paradoxically, BTM is actually worried that there may be a future shortage in specialised installation vessels, particularly for those able to carry and install the next generation of 6MW-plus turbines.
“There is an oversupply of jack-up vessels for today’s standard offshore wind turbine [3-4MW] at present, but the supply-chain situation for jack-up vessels capable of installing next-generation turbines is not optimistic from 2018 onward,” says the BTM report.
Zhao believes it is essential that A2Sea focuses on installing these larger turbines if it is to maintain its leadership in the sector.
“To stay on top, A2Sea needs to expand its fleet for future [turbine] sizes,” he says.
However, such a concern is dismissed by Hansen, who says that the company’s most modern vessels are already sufficiently equipped for the next generation of supersize machines.
“When the turbines get larger, the weight doesn’t increase much, so we can still handle larger turbines with the cranes and equipment we have,” he explains.
“The only thing that we really need to accommodate for, and which we had prepared on our new ships, is to extend the crane boom in length, because the towers and the turbines get higher and higher due to increasing rotor diameters.”
Its latest vessel, Sea Challenger, which is now installing Siemens’ 6MW machines at the UK’s Westermost Rough project, has already had its crane boom extended by 20 metres, and is able to carry four complete sets of the turbine at a time.
Hansen says he is “pretty sure” that the company’s current vessels would even be able to handle the 10MW giants that Siemens is developing. A bigger concern should be whether ports would be able to deal with the huge components of a 10MW turbine, he says.
In short, A2Sea has no reason to be fearful of the future. Even with the downsizing of the UK and German markets, overall installation volumes in Europe are likely to be impressive in the coming years, with 4.9GW currently under construction.
As Hansen says: “Even a lower market share in a higher market would be a good thing for us.”