SHL: Offshore Wind Industry Maturing in Europe (Interview)

During the Offshore Energy Exhibition and Conference 2015, Offshore WIND met with Yarco Hoddenbach, Business Analyst at Seaway Heavy Lifting.

As the offshore wind market is maturing in Europe, we looked into how government is supporting the further expansion of the industry. Also, we bring you a glimpse of other regions with aspiration towards developing offshore wind.

OW: Would you tell us more about your involvement in the offshore wind industry; how everything started and led Seaway Heavy Lifting to being one of the major industry players?

Hoddenbach: Seaway Heavy Lifting (SHL) is a leading offshore contractor in the global Oil & Gas and Renewables industry, offering tailored T&I and EPCI solutions. SHL has executed its first project in the offshore wind industry in 2009 after a client (Fluor) came to SHL with the requests to install the structures for their offshore wind farm. The first project was realized with the transportation and installation of 140 monopile foundations for Wind Turbine Generators and 2 Substations (Gabbard and Galloper). Ever since, offshore wind has become a very important market and the combination with oil and gas and decommissioning projects turns out to be a great success. Seaway Heavy Lifting is currently one of the leaders in the offshore wind industry, having installed over 450 foundations and around 20 platforms in the offshore wind.

OW: What were your latest projects in the offshore wind sector and, when it comes to your part of the job, do you have the same approach to all the projects, or they differ on some level?

SAL Offshore Wind Industry Maturing in Europe (Interview) (2)Hoddenbach: Our latest projects in the offshore wind sector cover the installation of 16 jacket foundations at Baltic 2, the installation of the Dan Tysk offshore substation, Global Tech 1 tripods, the Sylwin Alpha HVDC station and several other substations.

In general, projects are approached the same. We do however experience a trend that the clients are changing, a lot of them who come from the onshore. More stakeholders are involved and this requires the offers to be more educational. There is a longer lead time before project are executed. The scope is also changing, more and more clients are requiring a full EPCI scope. Where SHL in the past only offered a transportation and installation scope, nowadays SHL also offers complete EPCI solutions, capitalising on the EPCI expertise from the parent company Subsea 7.

OW: Europe has the most developed offshore wind industry. How do you see this market developing in the future?

Hoddenbach: The offshore wind industry is maturing in Europe. To the rest of the world, Europe is setting the example for offshore Renewable energy and it will remain a huge market for suppliers for the offshore wind industry. The European offshore wind industry will develop even further, as there is being innovated heavily on new concepts to reduce costs and making offshore wind energy more efficient. Turbines are getting larger and wind farms will be developed in deeper waters. We see this as a huge opportunity for our assets, since these are already capable of installing heavier structures in deeper waters.

SAL Offshore Wind Industry Maturing in Europe (Interview) (3)OW: Do you think the governments have done enough to secure the certainty in the industry beyond 2020?

Hoddenbach: This is a very clear no. Towards 2020, it is very clear which projects will be developed, because we know which projects are subsidized and have a solid financial foundation. However, looking beyond 2020, it is still very uncertain which projects will be developed. There are many projects planned, but for none of them we can clearly say that they will go ahead. The reason is that they will all still apply for subsidies, but we don’t know which one will get how much and when. This is the main problem for other investors as they do not want to take all the risk. And even with projects to 2020, we see some of these problems, as projects are financed (by governments and/or other investors) but still are not likely to be developed and put for sale (ref. Navitus Bay, Nearth na Gaoithe).

What the governments need to do to make offshore wind a success is to look further than 5 years ahead and provide certainty and clarity among which offshore wind projects will be consented in the years post-2020. Gain more public support for the offshore wind industry by promoting what we’re doing here, creating sustainable energy. If more certainty and clarity is provided for post-2020 projects, this should decrease risk, attract more investors and make offshore wind a more sustainable market, which in the end could be developed with out the support of governmental subsidies.

OW: Also, other regions are picking up the pace. USA, for example, has started building its first offshore wind farm which ran into some problems during the foundation installation. How do you comment on this and would you tell us something about the project and this market in general?

Hoddenbach: We’re very glad to finally see first steel in the water in the USA and congratulations to Deepwater Wind for achieving that. The USA has great offshore wind potential, a long coastline with huge energy demand and good wind conditions. However, the USA does encounter several problems. In the past we’ve seen many attempts to get offshore wind going in the States, but in the end fail. The problem lies for one in the fact that the United States of America is less united than Europe when it comes to offshore wind. Here too, the governmental and public support play a very important role to make offshore wind a sustainable industry. The different states have different regulations and where one state is pro-wind, the other might be opposed. We hear it here in Europe very often, collaboration is key. This especially counts for the regulatory bodies in the U.S.

SAL Offshore Wind Industry Maturing in Europe (Interview) (6)Another issue the U.S. is facing is the Jones Act. The Jones Act is a form of protectionism in the U.S. This act, also known as the Merchant Marine Act of 1920, requires that all goods transported between U.S. ports be carried in U.S.-flagged ships that were built domestically, owned by U.S. citizens, and crewed by personnel authorized to work in the United States. The effect for offshore wind development is that only vessels qualified under the Jones Act will be able to transport, construct, install, and maintain offshore wind turbines. Currently there are no Jones Act-compliant vessels, which is a problem. I believe there was a specialized offshore wind construction new build vessel planned, but in the end has been scrapped due to financial issues. That’s why Fred.Olsen will install the turbines for the Block Island Wind Farm. There is a high risk for European offshore wind construction vessels and I don’t think most of them will focus on the U.S. market because there is still plenty of work in Europe and they don’t want to lose ground here.

Despite all the issues, the U.S. is an opportunity market with great potential and I see the move from DONG energy as a good move, which means they do take the U.S. offshore wind potential serious. The U.S. developers lack knowledge and experience and without the European expertise and knowledge I don’t see the U.S. offshore wind getting off the ground.

OW: Do you believe it would be good to be present in this market from its inception?

Hoddenbach: Of course it will be good to be present in the market from its inception. However, like I previously stated, currently the market is still in a very early stage with a lot of uncertainty and issues. They will have to rely heavily on the expertise of European developers and contractors, but then the Jones Act is a problem. If the governmental bodies can be more clear and supportive on offshore wind, this can at some point attract European companies to invest in the U.S. market.

OW: Asia also has aspirations for offshore wind development. China in particular has already developed couple of wind farms, while Japan has few of prototype projects up an running. India, on the other hand, is still in the planning phase. What are your thoughts on these markets? Do you see them turning to experienced European companies for their projects?

SAL Offshore Wind Industry Maturing in Europe (Interview) (4)Hoddenbach: When it comes to Asia, I see a potentially more sustainable offshore wind market than the U.S. This mainly because of the regulations and drive to have offshore wind capacity in that area. I think in the end Asia (China alone) will surpass Europe on offshore wind capacity. There is a huge demand for electricity in these areas and offshore wind can be a good solution. In my opinion, I am sceptical about India, because it will still face practical difficulties like soil issues, oil and gas infrastructure and this combined with lack of expertise and knowledge it still has a long road ahead.

I believe China will be dominant on the long term, surpassing European offshore wind capacity. However, here too there is still a long road ahead, but first steps are being taken. China has a very large demand. I think in the early adoption phase they will rely heavily on European contractors’ experience, as can be noted by the recent A2Sea contract for a Taiwanese demonstration offshore wind farm, but in the end tend to use their own domestic suppliers. There is also a different perception of things and that combined with the drive for low margins by domestic suppliers, could make this not a sustainable market for European contractors.

Japan could be different, as the conditions are way different. There are many deep water sites for the development of floating wind turbines. This is very innovative and challenging and could therefore be more of interest to European suppliers.

Offshore WIND Staff; Image: SHL
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