Making offshore wind pay

Companies involved in the complex supply chain needed to successfully develop offshore wind power are rising to the challenge, as Tom Idle discovers


In the next decade, offshore wind power capacity in Europe will grow tenfold. But this huge growth will only be realised with the support of a strong network of suppliers.

From subsea cable manufacturers, network transmission box developers and skilled installers, to project developers and consultants, electrical engineers and maintenance personnel, the supply chain for offshore wind is a complex one.

Turbines need towers, blades and drive train components, and substructures to support them in turbulent seas. And sea vessels are needed to support repair, maintenance and installation functions.

Evidence suggests that the supply chain is responding well to the challenge. Much of the focus so far has centred on wind turbine manufacturers, but they are only part of the picture. More than half of the capital expenditure on offshore wind is typically spent on things like foundations and cabling, and as much as a third is reserved for operations and maintenance.

By 2020, €10.4 billion (£8.4 billion) will be spent on offshore wind energy every year, according to the European Wind Energy Association (EWEA). And between now and then, almost €66 billion (£53 billion) will be invested in the entire supply chain.

“It’s a good business to be in,” says  Jan Declecq, head of business development at CG Holdings, one of the leading transmission and distribution companies, which has won a number of contracts to design, engineer and install onshore and offshore substations. “The offshore market offers good opportunities for good technology – that’s why we’re positive.”

It is a market that has seen a raft of new players emerge. But it has also provided big opportunities for well-established businesses to diversify. “Take HVDC [high-voltage direct current] converters, for example. There are a myriad of companies that could supply into that space,” says Adrian Fox, supply chain manager at the Crown Estate, which owns the UK’s seas. “Companies that might currently supply to the automotive sector could make slight changes to their business and become suppliers to the offshore wind industry.

“Last year, Goliath Cranes signed a £500,000 deal with RWE to supply small cranes for the back of its access platforms. It wasn’t something they had looked at before.”

The latest of the Crown Estate’s UK supply chain events convenes tomorrow, in association with Offshore Wind England, at the National Exhibition Centre in Birmingham, where major developers and suppliers will discuss the sector’s prospects.

Turning wind into energy

Europe’s offshore wind market is dependent on infrastructure renewal projects coming to fruition in the next few years. From electrical cabling, maintenance and repowering operations, to substation construction, electricity grid upgrades and port expansions, it is critical that the appropriate infrastructure is in place to ensure offshore wind becomes a viable future energy source.

Of course, manufacturing plants are needed for the turbines themselves. But other infrastructure needs attention too. According to a recent study by energy analysts Douglas-Westwood, the UK alone needs five foundations factories, 13 cables factories and 20 installation vessels to supply the necessary kit that will create 23gigawatts of capacity by 2020.

The key challenge is to efficiently deliver the power harvested at sea to the onshore transmissions system. As Stefan Jonsson, head of offshore wind connection at the power technologies business ABB, says: “Transporting electricity to the shore and then integrating it into the grid for supplying consumers is a key element in the success of this sector.”

Cabling and electrical infrastructure does not receive the same amount of attention as turbines

As wind farms have got bigger and moved further away from the shoreline in recent years, high-voltage direct current (HVDC) cables have been increasingly sourced for their underwater capabilities and strong performance in transmitting power over long distances. But “substantial additional cable manufacturing capacity” is required, according to the European Wind Energy Association.

“The industry faces a number of challenges,” says Mr Jonsson. “There is an ongoing need for technologies that cater to offshore requirements, like specific auxiliary services such as cable-laying and crane vessels.”

Rhys Thomas, director of renewables delivery at RenewableUK, argues that cabling and electrical infrastructure does not receive the same amount of attention as things like turbines. “Perhaps it’s because they are out of sight, but their importance cannot be underestimated,” he says.

Ports are crucial to servicing a number of supply chain elements. Over the next ten years, more manufacturers and suppliers will be located at port facilities, and the ports need to be suitable. To save on transport costs, turbines, blades, drives and other large, awkward and heavy components need to be built close to the shoreline, ready to be shipped out to sea. The ports will also have to cater for the increasing number of different vessels coming on stream to install, repair and maintain wind farm components. 

POWER TO THE UK

CABLES The success of offshore wind projects pivots on getting the energy generated out at sea back to the shore and into the grid. For this, developers need the offshore cables sector, a highly specialised and lucrative industry dominated by just a handful of companies.

The £2.3-billion sector is in a healthy state, with demand for cables currently at around 800 kilometres a year, stretching to around 1,000 by 2014, according to Bloomberg New Energy Finance.

Three established players – infrastructure giant ABB, French group Nexans and Prysmian of Italy – make up more than 70 per cent of the market, with newcomers NKT and General Cable providing the rest.

Up to now, most of the cables linking wind turbines to shore have been high-voltage AC. But in the future, wind farms will increasingly call on high-voltage DC (HVDC) subsea cables that are capable of transmitting energy over long distances more economically.

But with a limited number of suppliers, there are fears the HVDC cable supply chain could bottleneck, particularly in the second half of this decade.

The European Wind Energy Association’s recent study into the state of the market highlighted a need for “substantial” additional cable manufacturing capacity to meet future demand, especially with lead times for bringing new HV subsea cable capacity online currently set at around two to three years.

ABB points out the need to upgrade the onshore cabling network to cope with increasing offshore power supplies.

“One of the key focus areas is the need to reinforce the onshore grid to enable integration of the power injected from offshore wind farms and transport it efficiently to consumers,” the company says. “This requires the existing grid to become stronger, smarter and more flexible.

“In terms of the electrical transmission system, it is suggested that over £14 billion of investment will be needed to deliver the offshore network connections. This means the need for not only offshore infrastructure, but also significant onshore connection works and upgrades to the existing transmission infrastructure to accommodate the new offshore generation.”