- Offshore wind’s growth phase continues, with increased project sanctioning and further growth of installed capacity.
- Newbuild investment for dedicated wind vessels (WTIVs, C/SOVs and CTVs) remains strong.
- The European WTIV and ‘Walk-To-Work’ markets have firmed seasonally, with a generally encouraging medium term outlook.
- Energy Transition and energy security trends to support further growth of the global offshore wind sector.
Strengthening FID Activity
- Offshore wind FID activity strengthened in the first half of 2023. A total of $21.1bn of project CAPEX was committed by developers, up 59% y-o-y on an annualized basis following a softening of FID activity in 2022 (high inflation and rising interest rates impacted) (2022: $26.6bn, down 36% y-o-y).
- Strengthening sanctioning activity has been supported by investment in large-scale European projects ($10.9bn has been committed in Europe vs $2.4bn for full year 2022), while $10.2bn has been committed in Asia (including $6bn for projects covered by the 14th Five-Year Plan in China).
- Developers and suppliers continue to face significant margin pressures, especially in Europe and the US amid elevated inflation and rising interest rates, impacting some project viability.
- Global active offshore wind capacity stands at 62.8 GW (across 12,440 turbines and 284 farms), with 9.4 GW on track to start-up in 2023; we project global active offshore wind capacity to grow by 15% across full-year 2023.
Robust Newbuild Vessel Ordering
- Wind vessel newbuild ordering remains strong, with 66 dedicated wind vessel orders (WTIV, C/SOV and CTV) of $1.9bn placed globally in 1H 2023, up 20% on last year’s record 110 orders ($6.1bn) an annualized basis.
- C/SOV ordering activity remains particularly strong; 12 C/SOV orders were placed globally in 1H 2023 including a number of “speculative” orders, equaling last year’s record run rate (24 orders placed in 2022). Meanwhile, 5 WTIV orders were reported globally in 1H 2023 (4 by Chinese owners, 1 international), with activity having eased back following record newbuild orders last year (30 orders, albeit 26 were Chinese owners for principally domestic market use).
- Owners have continued to focus on supporting developers to be ‘green through the supply chain’, especially in the C/SOV sector; all 46 C/SOVs on order are set to feature battery packs, while 9 are set to be alternative fuel capable, including 7 methanol dual-fuel units.
Tightening Wind Vessel Markets
- The European WTIV market remains strong, with WTIV utilization in the region having firmed seasonally to reach 91% at the start of June. The trend towards longer-term WTIV charters has continued to develop with the European market expected to tighten towards the middle of the decade; several developers have booked WTIVs on multi-year charters to secure future installation capacity.
- Meanwhile, the European ‘W2W’ market is expected to remain very tight across the summer of 2023; rate assessments for >40 pax SPS ‘W2W’ units are up ~35% y-o-y.
Energy Transition & Energy Security in Focus
- We expect the offshore wind sector to play a vital role in global energy transition; offshore wind could provide between 7% and 9% of global energy supply by 2050 (it is just 0.4% today; see the Clarksons Research Energy Transition Model for more details) supported by energy security requirements and Energy Transition trends. Globally, our projections suggest ~250 GW of active capacity and ~30,000 active turbines by 2030 (today there is 62.8 GW and 12,440 turbines).
A more detailed half yearly review is available on request or is downloadable from Renewables Intelligence Network for subscribers. For subscription or trial details to Renewables Intelligence Network, contact [email protected]. Any views or opinions presented above are solely those of the author and do not necessarily represent those of the Clarksons group.
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