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Offshore Wind Newbuilds 2022 overview and a look ahead to 2023 and beyond

13/01/23

Written by Vegard Vollsæter, Divisional Director | Newbuilds.

Both shipyard and buyers of vessels felt the frustration of a dysfunctional 2022 due to Covid and the impact of geopolitical tensions. Although clients experienced many frustrating moments and delays from shipyards the good news is that we witnessed a record investment program with $6.2bn of new vessel orders of which the Clarksons Offshore & Renewables Newbuild team managed over $1.0bn. The consequences of geopolitical stress were amongst other foreign exchange variations, global inflation, raw material price hikes, and increased oceangoing freight cost which negatively impacted logistics, hull, components, and outfitting cost for yards. Another negative impact from the constrained supply chains is longer lead times and shorter validity of yard Newbuild quotations.

Adding to the challenges for the offshore wind industry is that the global deep sea shipping markets have seen an increase in appetite for ordering LNG and container vessels leading to less available yard slots, something that is starting to become evident for the larger wind installation tonnage.

For the smaller Construction Service Operation Vessel (CSOV) and similar type tonnage there is still availability in the various yards globally, but this is expected to get more constrained as more vessel orders come in from the resurging O&G markets. There are several Floating Production Storage and Offloading (FPSO) orders expected and clear signs that smaller speculative Offshore Support Vessels (OSV) tonnage specifically focused on O&G will be ordered in the coming years due to the aging fleet and oil price stabilized at a higher level.

Big Offshore wind-farm with transfer vessel

Steel prices has stabilized but still we see long lead times for certain specialized components especially focused on semiconductors and specialized equipment, however the industry seem to be managing surprisingly well, to a large extent due to the nature of Newbuilds where component delivery 12-15 months after the component order could be workable.

Clarksons Offshore & Renewables are leaders in Newbuilds and have successfully brokered Newbuilds in the various Offshore Wind segments globally since 2010. The last few years has seen us concluding Newbuild deals for wind support in Korea, China, Vietnam, Turkey and Norway. Our global team consist of naval architects, ex merchant mariners and experts on maritime project financing, all qualities needed to navigate and guide clients through the complexities of the shipyard industry.

Looking ahead to 2023 and beyond, we see that the main trends continue with the larger wind support tonnage being contracted in Asia while smaller tonnage are spread around the world in Asia, Europe and US for Jones Act specific units. Shipowners yard selection continues to focus on yard cost levels, but we see a development where delivery time and precision has an increased focus, especially for units which are ordered against long term charter but also for speculative orders as spot market contracts tend to be signed also a good while before delivery. As the saying goes “buy cheap, buy twice” our clients are embracing best in class suppliers and solutions.

Offshore ROV construction vessel at an offshore wind farm location

Offshore wind is a comparatively young industry and there is still a lot of dependence on vessels and tools developed for O&G, however, we see developments in various segments that specialized tonnage are being developed for the unique requirements of offshore wind. Examples are Floating Foundation Installation Vessels (FFIV) for installation of monopiles while on dynamic positioning, Small Waterplane Area Twin Hull (SWATH) design SOV’s which utilize the low motion characteristics of this hull form for Walk to Work (W2W) or specialized tonnage planned for mooring and installation of floating wind turbines, a market poised for take off within next 5 years.

The market dynamics are riveting with activities in offshore wind, offshore O&G and upcoming offshore industries such as deep-sea mining and offshore fish farming. 2023 and the years towards 2030 will be very active for the yard industry, Clarksons is projecting over 250GW to be active globally by 2030, across 730 farms and 30,000 turbines, and by 2050, we are projecting offshore wind to account for between 7% and 9% of the global energy mix against 0.4% today, all of which will need new tonnage for installation, commissioning, operation and maintenance.

Clarksons continues to have strong supplier relationships, helping clients make the right decision at the right time.  If you would like to contact Vegard about Newbuilds please do so.

 

Contact Vegard