World Offshore Wind Market Forecast 2015-2024

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World Offshore Wind Market Forecast 2015-2024 energy business insight e: [email protected] t: +44 (0)203 4799 505 www.douglas-westwood.com Aberdeen | Faversham | Houston | London | Singapore © 2015 Douglas-Westwood 17 World Offshore Wind Market Forecast 2015-2024 By purchasing this document, your organisation agrees that it will not copy or allow to be copied in part or whole or otherwise circulated in any form any of the contents without the written permission of Douglas-Westwood Offshore Wind Project Costs Structure Chapter 3 : Offshore Wind Project Development Capex Phase 2 (Decom) Opex Phase (O&M) Capex Phase 1 (EPC) This page presents a view on the offshore wind cost structure by project stage – the chart on the left shows proportions of various Capex components per MW of installed capacity. The central chart demonstrates contribution of dif- ferent cost items to the total O&M costs during the operational life of an offshore wind project. The chart on the right hand side provides an estimated cost structure for the decommissioning phase of an offshore wind project. Figure 8: Cost Breakdown by Project Phase – Capex, Opex, Decom. 7% 41% 31% 21% Planning & Development Wind Turbine Balance of Plant Installation 51% 9% 8% 6% 5% 21% Replacement Equipment Personnel Transfer Skilled Technicians Installation / Repair Vessels O&M Ports Grid Maintenance, Lease & Other Recurring Costs © 2015 Douglas-Westwood 20 World Offshore Wind Market Forecast 2015-2024 By purchasing this document, your organisation agrees that it will not copy or allow to be copied in part or whole or otherwise circulated in any form any of the contents without the written permission of Douglas-Westwood Capex Phase 1: Balance of Plant Chapter 3 : Offshore Wind Project Development A structure connecting the foun- dation with the tower. The design of the transition piece depends on the type of the support structure. Supplier Examples: Aker Solutions, Bladt, MT Hoj- gaard, LIC Engineering, SIF Group. Proportion of Capex: 3.2% The choice of support structure type depends on site-specific parameters, including water depth and seabed conditions as well as the size and weight of the wind turbines being used. Options include gravity base structures (GBS), monopiles, jackets, tripods, suction buckets. Supplier Examples: Aker Solutions, Ambau, BiFab, EEV, LIC Engineering, MT Hoj- gaard, OWEC Tower, SIF Group, WeserWind. Proportion of Capex: 13.7% Array cables connect wind tur- bines to each other and connect them to a substation. Array cables typically have a medium voltage (MV) rating of 33kV. Supplier Examples: JDR Cables, NKT Cables, NSW, Parker Scanrope, Prysmian Group. Proportion of Capex: 1.9% Offshore transformer substations are used to reduce electrical losses by increasing the voltage prior to exporting the power to shore. A large offshore wind farm may have more than one substation. Supplier Examples: ABB, Areva T&D, Atkins, Bladt, Harland and Wolff, Heerema, HSM Offshore, McNulty Offshore Construction, Siemens Power Transmission, Semco Maritime. Proportion of Capex: 5% Balance of Plant refers to all major equipment required for the completion of an offshore wind farm excluding the wind turbine and tower. Balance of Plant is the second largest expense item in the offshore wind’s Capex structure and is highly sensitive to such parameters as water depth, distance from shore and wind farm power output. HVAC (high voltage alternating current) and HVDC (high volt- age direct current) cables carry the electricity from the offshore substation(s) to shore. HVDC technology becomes increasingly economic over longer distances. Supplier Examples: ABB, Nexan, NKT Cables, Prys- mian Group. Proportion of Capex: 4.8% Onshore facilities transforming power to grid voltage. Supplier Examples: ABB, Areva T&D, Atkins, Bladt, Harland and Wolff, Heerema, McNulty Offshore Construction, Siemens Power Transmission. Proportion of Capex: 2.5% © 2015 Douglas-Westwood 51 World Offshore Wind Market Forecast 2015-2024 By purchasing this document, your organisation agrees that it will not copy or allow to be copied in part or whole or otherwise circulated in any form any of the contents without the written permission of Douglas-Westwood Segment Forecasts: Wind Turbines by Country Chapter 5 : Market Forecasts Over 10,200 turbines are expected to be installed 2015-2024. China, the UK and Germany will account for the majority (65%). 25% of all wind turbines are to be installed in China, as more projects start to come online, including developments in the Zhe- jiang Province Daishan, and the Huaneng Mega Farm. The UK is the second largest market, ac- counting for 21% of turbines installed over the next decade – around 400 turbines are expected to be installed at the large Dogger Bank project by 2022. Over 2,100 turbines will be installed offshore Germany by 2024, spread across a large number of 80 turbine projects such as Veja Mate, Arumbank West and Jules Verne, which are just a few examples. The number of turbines is declining as larger turbines (6MW+) are increasingly used, with 0.25 turbines per MW installed 2021-2024, compared to 0.17 for the 2015- 2020 period. Over 10,000 turbines will be installed over the next ten years. China, the UK and Germany will ac- count for 65% of installations. The UK accounts for over 20% of turbines. Average turbine size is increasing resulting in fewer turbines per farm. Figure 37: Wind turbines installed by country, 2015-2024 0 200 400 600 800 1,000 1,200 1,400 1,600 1,800 2,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Number of Turbines UK Germany China USA France Sweden South Korea Rest of World Table 10: Wind turbines installed by country, 2015-2024 Total © 2015 Douglas-Westwood 49 World Offshore Wind Market Forecast 2015-2024 By purchasing this document, your organisation agrees that it will not copy or allow to be copied in part or whole or otherwise circulated in any form any of the contents without the written permission of Douglas-Westwood Annual Capital Expenditure by Type Chapter 5 : Market Forecasts Figure 30: Expected annual offshore wind Capex, 2015-2024 0 20 40 60 80 100 120 140 Planning Turbine BOP Installation Capex (billions) Figure 31: Planning and Development Capex, 2015-2024, millions Figure 33: Wind Turbine Annual Capex 2015-2024, millions Figure 32: Balance of Plant Annual Capex 2015-2024, millions Figure 34: Installation Annual Capex 2015-2024, millions The figure above illustrates the average annual level of global offshore wind Capex from 2015-2024 in relation to the four spending categories. Based on our research of the cost structure for offshore wind, the category totals have been further segmented in the figures opposite to show the average expected market size for each sub-segment such as surveys, support structures, and cables. Geotechnical Survey 4,195 Offshore Substation 14,981 Offshore Substation 2,697 Onshore Substation 7,490 Onshore Substation 1,798 Transition Pieces 9,588 Construction Ports 3,296 Wind Turbines 11,985 Geophysical Survey 1,198 Export Cable 14,381 Export Cable 14,681 Met Mast 1,198 Array Cable 5,693 Array Cable 11,086 Environmental Services 1,798 Support Structures 41,047 Support Structures 18,576 FEED 599 Development Services 10,486 Drive Train 30,261 Nacelle & Yaw 5,992 Rotor System 36,553 Power Conversion 15,580 Tower 26,066 Additional Components 8,389 © 2015 Douglas-Westwood 40 World Offshore Wind Market Forecast 2015-2024 By purchasing this document, your organisation agrees that it will not copy or allow to be copied in part or whole or otherwise circulated in any form any of the contents without the written permission of Douglas-Westwood Key Markets Chapter 4 : Commercial Insights Europe is the key regional market for offshore wind. The UK is the largest national market with 4.6GW installed to date (May 2015). China, Japan, Vietnam and South Korea are the only countries outside Europe with operational offshore wind farms. The European market accounted for over 90% of the global cumulative capacity by April 2015. The UK continues to lead the way with 4.6GW installed. This represents 52% of global offshore wind installed capacity in Europe. Denmark is the second largest market with ~1.5GW (16% of global installed capacity). Asia accounted for 9% of global installed capacity, 90% of which is offshore China. UK 48% Denmark 16% Germany 15% China 8% Portugal Installed: 2Turbines: 1 Wind farms: 1 UK Installed: 4,625Turbines: 1,344 Wind farms: 26 Asia Installed: 850Turbines: 328 Wind farms:32 Europe Installed: 8,817Turbines: 2,598 Wind farms:79 Ireland Installed: 25Turbines: 7 Wind farms: 1 Norway Installed: 5Turbines: 2 Wind farms: 2 Finland Installed: 26Turbines: 11 Wind farms: 3 Sweden Installed: 223Turbines: 91 Wind farms: 8 Denmark Installed: 1,534Turbines: 517 Wind farms: 17 Netherlands Installed: 247Turbines: 128 Wind farms: 4 Belgium Installed: 712Turbines: 182 Wind farms: 6 Germany Installed: 1,417Turbines: 314 Wind farms: 11 Belgium 7% Netherlands 3% Other 1% Sweden 2% Figure 18: Key Markets, the Global Picture Figure 19: Offshore Wind Installed Capacity, 2015 Figure 20: Key Region, North-Western Europe © 2015 Douglas-Westwood 55 World Offshore Wind Market Forecast 2015-2024 By purchasing this document, your organisation agrees that it will not copy or allow to be copied in part or whole or otherwise circulated in any form any of the contents without the written permission of Douglas-Westwood Segment Forecasts: Cables Chapter 5 : Market Forecasts The increasing size of offshore wind farms will necessitate greater lengths of inter-array cables, while a greater number of projects further from shore will require longer export cables. DW forecasts that over 23,000 km of cables, both array (infield) and export, will be required for offshore wind farms coming online over the next ten years. Reflecting the overall trend, the UK will require the largest proportion (34%), demonstrating the increasing distance from shore and the increasing size of UK offshore wind farms, as the UK accounts for just 19% of turbines installed to 2024. Germany (25%) and China (17%) are the next largest markets in terms of cabling. These markets also have longer than aver- age cables, demonstrating the move of mature offshore wind markets farther from shore. Over the next ten years, the demand for export cables and infield cables is approxi- mately similar, accounting for 51% and 49% of total cable demand, respectively. As cables cover longer distances, there has been increased use of High Voltage Direct Current (HVDC) cables, which lose less power during transmission back to shore, compared to conventional AC cables. Over 23,000km of cabling (array and export) is forecast to be installed. The UK, Germany and China are the largest markets due to turbine instal- lations and a higher than average cable length. Demand for export and infield cables is similar, with just over 11,000km of each. HVDC cables are becoming increas- ingly common, as cables are utilised over long distances. “Over the last year our oil and gas activity has fallen, and been replaced by cables for the offshore wind industry.” Array Cabling Provider Figure 41: Cable length installed by country, 2015-2024 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Cables (km) UK Germany China USA France Sweden South Korea Rest of World Figure 42: Cable length installed by type, 2015-2024 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000 4,500 5,000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Cables (km) Export Infield Table 14: Cable length installed by country, 2015-2024 Table 15: Cable length installed by type, 2015-2024 Total Total Prospects Technologies Markets Potential for 300 billion of offshore wind capital expenditure over the next ten years Now in its sixth edition, the new Douglas- Westwood (DW) World Offshore Wind Market Forecast provides a ten year view of the sector through to 2024. Cumulative off- shore wind capacity is forecast to reach 57GW, driven by the continued development of established markets such as the UK, Germany and China and bolstered by emerging markets including the US and France. Over 5.3GW of capacity is expected to be installed in 2015, with additions anticipated to remain on an upward trend, peaking at 7.5GW in 2020. Capital Expenditure will total 240 billion (bn) between 2015 and 2024. However, these figures only include projects which have passed the conceptual phase of development, resulting in a large potential for upside post- 2020 totalling 60bn. Capital costs have reduced recently, pre- dominantly due to the larger sizes of turbines installed, resulting in less infrastructure (such as support structures) being required. This upsizing presents new challenges for installation contractors but should result in lower opera- tional expenditures once wind farms become operational. The UK will install more than 11GW over the next ten years, with most of this expected to occur by 2022, as Round 3 developments take place. Germany will also install over 11GW, with a longer term outlook predicting activity levels will recover in 2018 following a slow- down in 2016-17. China is expected to install over 8GW of capacity – this is lower than previously targeted, but still represents a strong growth market. Emerging markets include countries such as the US and France, which are expected to have their first operational wind farms in 2015 and 2017 respectively. The US is expected to install 1.8GW of offshore capacity over the next decade, and France 3.2GW. Other emerging markets include countries with historically low levels of offshore wind activity, such as Sweden, Denmark and Belgium. Key Themes The report provides detailed market forecasts through to 2024 and is essential reading for companies working within the offshore wind sector. The report focuses on: Key drivers – a discussion of factors driving offshore wind installation activity including low carbon targets, rising energy demand and the need to replace power generation capacity. "The report is clearly laid out, and gave us an interesting and detailed view of the market" - Research Institution

Transcript of World Offshore Wind Market Forecast 2015-2024

Page 1: World Offshore Wind Market Forecast 2015-2024

World Offshore Wind Market Forecast 2015-2024energy business insight

e: [email protected] t: +44 (0)203 4799 505

www.douglas-westwood.com

Aberdeen | Faversham | Houston | London | Singapore

© 2015 Douglas-Westwood

17

World Offshore Wind Market Forecast 2015-2024

By purchasing this document, your organisation agrees that it will not copy or allow to be copied in part or whole or otherwise circulated in any form any of the contents without the written permission of Douglas-Westwood

Offshore Wind Project Costs Structure

Chapter 3 : Offshore Wind Project Development

Capex Phase 2(Decom)

Opex Phase (O&M)

Capex Phase 1 (EPC)

Decommissioning is still some way off for the offshore wind industry. Therefore, there

is a great deal of uncertainty with regard to decommissioning costs.

The above projection is based on information from decommissioning programmes

submitted by offshore wind developers for their projects.

Decommissioning cost estimations vary significantly: from €50k/MW to €140k/MW.

Decommissioning

The operational phase for an offshore wind farm can last for 20 years or more. The

main aim during this phase is to maximise the availability of offshore wind turbines by

means of regular inspection, maintenance and repairs (when necessary).

Development of local infrastructure (e.g. suitable ports) and availability of specialised

vessels for transporting personnel and equipment are key factors during the O&M

phase.

A guide line for offshore wind O&M cost is ~5% of the capital cost per year, although

costs vary considerably from project to project (3-12%).

Operations & Maintenance

This page presents a view on the offshore wind cost structure by project stage – the chart on the left shows proportions of various Capex components per MW of installed capacity. The central chart demonstrates contribution of dif-

ferent cost items to the total O&M costs during the operational life of an offshore wind project. The chart on the right hand side provides an estimated cost structure for the decommissioning phase of an offshore wind project.

Expenditure for the planning & development and construction phase of a project

contribute to around three quarters of the total life-time costs of offshore wind farms

and represent the riskiest part of the project investment, as they cover procurement

and construction phases.The wind turbine represents the largest share of the total Capex.

Balance of Plant for offshore wind is the second largest expense item and is highly

sensitive to such parameters as water depth, distance from shore and wind farm

power output. Supply and demand for installation vessels is the cost driver during the installation

phase.Although different from project to project, current data shows average Offshore

Wind Capex at €5m per MW.

Planning & Development, Procurement and InstallationFigure 8: Cost Breakdown by Project Phase – Capex, Opex, Decom.

Source: Douglas-Westwood, Centrica, DONG, Vattenfall

7%

41%31%

21% Planning & DevelopmentWind TurbineBalance of PlantInstallation

51%

9%

8%

6%

5%

21% Replacement EquipmentPersonnel TransferSkilled TechniciansInstallation / Repair VesselsO&M PortsGrid Maintenance, Lease & Other

Recurring Costs

53%

32%

2%9% 4% Turbine

FoundationOffshore Substation &

Met StationWaste ManagementSubsea Surveys

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Capex Phase 1: Balance of PlantChapter 3 : Offshore Wind Project Development

A structure connecting the foun-

dation with the tower. The design

of the transition piece depends on

the type of the support structure.

Supplier Examples:

Aker Solutions, Bladt, MT Hoj-

gaard, LIC Engineering, SIF Group.

Proportion of Capex:

3.2%

Transition Piece The choice of support structure

type depends on site-specific

parameters, including water depth

and seabed conditions as well as

the size and weight of the wind

turbines being used. Options

include gravity base structures

(GBS), monopiles, jackets, tripods,

suction buckets.

Supplier Examples:

Aker Solutions, Ambau, BiFab,

EEV, LIC Engineering, MT Hoj-

gaard, OWEC Tower, SIF Group,

WeserWind.

Proportion of Capex:

13.7%

Support Structures Array cables connect wind tur-

bines to each other and connect

them to a substation. Array cables

typically have a medium voltage

(MV) rating of 33kV.

Supplier Examples:

JDR Cables, NKT Cables, NSW,

Parker Scanrope, Prysmian Group.

Proportion of Capex:

1.9%

Offshore transformer substations

are used to reduce electrical

losses by increasing the voltage

prior to exporting the power

to shore. A large offshore wind

farm may have more than one

substation.

Supplier Examples:

ABB, Areva T&D, Atkins, Bladt,

Harland and Wolff, Heerema,

HSM Offshore, McNulty Offshore

Construction, Siemens Power

Transmission, Semco Maritime.

Proportion of Capex:

5%

Array Cables

Offshore SubstationsBalance of Plant refers to all major equipment required for the completion of an offshore wind farm excluding the wind turbine and tower.

Balance of Plant is the second largest expense item in the offshore wind’s Capex structure and is highly sensitive to such parameters as water depth, distance from shore and wind farm power output.

HVAC (high voltage alternating

current) and HVDC (high volt-

age direct current) cables carry

the electricity from the offshore

substation(s) to shore.

HVDC technology becomes

increasingly economic over longer

distances.

Supplier Examples:

ABB, Nexan, NKT Cables, Prys-

mian Group.

Proportion of Capex:

4.8%

Onshore facilities transforming

power to grid voltage.

Supplier Examples:

ABB, Areva T&D, Atkins, Bladt,

Harland and Wolff, Heerema,

McNulty Offshore Construction,

Siemens Power Transmission.

Proportion of Capex:

2.5%

Export Cables

Onshore Substations

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Segment Forecasts: Wind Turbines by Country

Chapter 5 : Market Forecasts

Over 10,200 turbines are expected to be

installed 2015-2024. China, the UK and

Germany will account for the majority

(65%).

25% of all wind turbines are to be installed

in China, as more projects start to come

online, including developments in the Zhe-

jiang Province Daishan, and the Huaneng

Mega Farm.

The UK is the second largest market, ac-

counting for 21% of turbines installed over

the next decade – around 400 turbines are

expected to be installed at the large Dogger

Bank project by 2022.Over 2,100 turbines will be installed

offshore Germany by 2024, spread across a

large number of 80 turbine projects such as

Veja Mate, Arumbank West and Jules Verne,

which are just a few examples. The number of turbines is declining as

larger turbines (6MW+) are increasingly

used, with 0.25 turbines per MW installed

2021-2024, compared to 0.17 for the 2015-

2020 period.

Over 10,000 turbines will be installed

over the next ten years.China, the UK and Germany will ac-

count for 65% of installations.The UK accounts for over 20% of

turbines.

Average turbine size is increasing

resulting in fewer turbines per farm.

Figure 37: Wind turbines installed by country, 2015-2024

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

2,000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Num

ber

of T

urbi

nes

UKGermanyChinaUSA

FranceSwedenSouth KoreaRest of World

Table 10: Wind turbines installed by country, 2015-2024

Turbines2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

UK

283-

99216

356316

256400

--

Germany

485-

- 189293

80347

507214

43

China

262212

508883

372275

50-

--

USA

11

11141

-70

150-

--

France

--

13-

75227

135- 100

-

Sweden

--

--

- 500- 141

--

South Korea-

3012

928

--

--

-

Rest of World125

122154

298709

13622

145230

-

Total 1,156365

797 1,736 1,833 1,604960 1,193

54443

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Annual Capital Expenditure by Type

Chapter 5 : Market Forecasts

Figure 30: Expected annual offshore wind Capex, 2015-2024

0

20

40

60

80

100

120

140

PlanningTurbine

BOPInstallation

Cap

ex (€

billi

ons)

Figure 31: Planning and Development Capex, 2015-2024, € millions

Figure 33: Wind Turbine Annual Capex 2015-2024, € millions

Figure 32: Balance of Plant Annual Capex 2015-2024, € millions

Figure 34: Installation Annual Capex 2015-2024, € millions

The figure above illustrates the average annual level of global offshore wind Capex from

2015-2024 in relation to the four spending categories.

Based on our research of the cost structure for offshore wind, the category totals have

been further segmented in the figures opposite to show the average expected market size

for each sub-segment such as surveys, support structures, and cables.

Geotechnical

Survey 4,195

Offshore

Substation 14,981

Offshore

Substation 2,697

Onshore

Substation 7,490

Onshore

Substation 1,798

Transition

Pieces 9,588

Construction

Ports 3,296

Wind

Turbines 11,985

Geophysical

Survey 1,198

Export

Cable 14,381

Export

Cable 14,681

Met Mast 1,198

Array

Cable 5,693

Array

Cable 11,086

Environmental

Services 1,798

Support

Structures 41,047

Support

Structures 18,576

FEED 599

Development

Services 10,486

Drive

Train 30,261

Nacelle &

Yaw 5,992

Rotor

System 36,553Power

Conversion 15,580

Tower 26,066

Additional

Components 8,389

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Key Markets

Chapter 4 : Commercial Insights

Europe is the key regional market for

offshore wind.

The UK is the largest national market

with 4.6GW installed to date (May

2015).

China, Japan, Vietnam and South

Korea are the only countries outside

Europe with operational offshore wind

farms.

The European market accounted for over 90% of the global cumulative capacity by April 2015. The UK continues to lead the way with 4.6GW installed. This represents 52% of global

offshore wind installed capacity in Europe. Denmark is the second largest market with ~1.5GW (16% of global installed capacity).

Asia accounted for 9% of global installed capacity, 90% of which is offshore China.

UK48%

Denmark16%

Germany15%

China8%

PortugalInstalled: 2MWTurbines: 1Wind farms: 1

UKInstalled: 4,625MW

Turbines: 1,344Wind farms: 26

AsiaInstalled: 850MW

Turbines: 328Wind farms: 32

EuropeInstalled: 8,817MW

Turbines: 2,598Wind farms: 79

IrelandInstalled: 25MW

Turbines: 7Wind farms: 1

NorwayInstalled:

5MWTurbines: 2Wind farms: 2

FinlandInstalled:

26MWTurbines: 11Wind farms: 3

SwedenInstalled: 223MW

Turbines: 91Wind farms: 8Denmark

Installed: 1,534MWTurbines: 517Wind farms: 17

NetherlandsInstalled: 247MW

Turbines: 128Wind farms: 4

BelgiumInstalled: 712MW

Turbines: 182Wind farms: 6

GermanyInstalled: 1,417MW

Turbines: 314Wind farms: 11

N.B Figures are subject to rounding errors.

Belgium 7%

Netherlands 3%Other 1%

Sweden 2%

Figure 18: Key Markets, the Global Picture

Figure 19: Offshore Wind Installed Capacity, 2015

Figure 20: Key Region, North-Western Europe

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Segment Forecasts: Cables

Chapter 5 : Market Forecasts

The increasing size of offshore wind farms

will necessitate greater lengths of inter-array

cables, while a greater number of projects

further from shore will require longer

export cables.

DW forecasts that over 23,000 km of

cables, both array (infield) and export, will

be required for offshore wind farms coming

online over the next ten years.

Reflecting the overall trend, the UK will

require the largest proportion (34%),

demonstrating the increasing distance from

shore and the increasing size of UK offshore

wind farms, as the UK accounts for just 19%

of turbines installed to 2024.

Germany (25%) and China (17%) are the

next largest markets in terms of cabling.

These markets also have longer than aver-

age cables, demonstrating the move of

mature offshore wind markets farther from

shore.

Over the next ten years, the demand for

export cables and infield cables is approxi-

mately similar, accounting for 51% and 49%

of total cable demand, respectively.

As cables cover longer distances, there has

been increased use of High Voltage Direct

Current (HVDC) cables, which lose less

power during transmission back to shore,

compared to conventional AC cables.

Over 23,000km of cabling (array and

export) is forecast to be installed.

The UK, Germany and China are the

largest markets due to turbine instal-

lations and a higher than average cable

length.

Demand for export and infield cables

is similar, with just over 11,000km of

each.

HVDC cables are becoming increas-

ingly common, as cables are utilised

over long distances.

“Over the last year our oil and gas activity has fallen, and been replaced by cables for the offshore wind industry.”

Array Cabling Provider

Figure 41: Cable length installed by country, 2015-2024

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Cab

les

(km

)

UKGermanyChinaUSAFranceSwedenSouth KoreaRest of World

Figure 42: Cable length installed by type, 2015-2024

0

500

1,000

1,500

2,000

2,500

3,000

3,500

4,000

4,500

5,000

2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Cab

les

(km

)

ExportInfield

Table 14: Cable length installed by country, 2015-2024

Table 15: Cable length installed by type, 2015-2024

Cables (km) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

UK 446 - 283 1,116 2,401 1,020 625 1,993 - -

Germany 826 - - 326 451 132 1,529 1,612 902 117

China 355 374 800 1,379 534 403 91 - - -

USA 31 21 51 192 - 114 202 - - -

France - - 131 - 73 351 140 - 133 -

Sweden - - - - - 657 - 394 - -

South Korea - 66 43 17 24 - - - - -

Rest of World 296 165 369 451 871 227 50 239 231 -

Total 1,954 625 1,677 3,480 4,354 2,904 2,638 4,238 1265 117

Cables (km) 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024

Export 784 260 984 1,653 2,193 1,480 1,868 1,720 909 52

Array 1,170 365 693 1,827 2,161 1,425 770 2,519 357 65

Total 1,954 625 1,677 3,480 4,354 2,904 2,638 4,238 1,265 117

• Prospects• Technologies• Markets

Potentialfor€300billionofoffshorewindcapitalexpenditureoverthenexttenyearsNow in its sixth edition, the new Douglas-Westwood (DW) World Offshore Wind Market Forecast provides a ten year view of the sector through to 2024. Cumulative off-shore wind capacity is forecast to reach 57GW, driven by the continued development of established markets such as the UK, Germany and China and bolstered by emerging markets including the US and France.

Over 5.3GW of capacity is expected to be installed in 2015, with additions anticipated to remain on an upward trend, peaking at 7.5GW in 2020. Capital Expenditure will total €240 billion (bn) between 2015 and 2024. However, these figures only include projects which have passed the conceptual phase of development, resulting in a large potential for upside post-2020 totalling €60bn.

Capital costs have reduced recently, pre-dominantly due to the larger sizes of turbines installed, resulting in less infrastructure (such as support structures) being required. This upsizing presents new challenges for installation contractors but should result in lower opera-tional expenditures once wind farms become operational.

The UK will install more than 11GW over the next ten years, with most of this expected to occur by 2022, as Round 3 developments take place. Germany will also install over 11GW, with a longer term outlook predicting activity levels will recover in 2018 following a slow-down in 2016-17. China is expected to install over 8GW of capacity – this is lower than previously targeted, but still represents a strong growth market.

Emerging markets include countries such as the US and France, which are expected to have their first operational wind farms in 2015 and 2017 respectively. The US is expected to install 1.8GW of offshore capacity over the next decade, and France 3.2GW. Other emerging markets include countries with historically low levels of offshore wind activity, such as Sweden, Denmark and Belgium.

KeyThemesThe report provides detailed market forecasts through to 2024 and is essential reading for companies working within the offshore wind sector. The report focuses on:• Keydrivers – a discussion of factors driving

offshore wind installation activity including low carbon targets, rising energy demand and the need to replace power generation capacity.

"The report is clearly laid out, and gave us an

interesting and detailed view of the market"

-ResearchInstitution

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• Commercialinsights – including analysis of cost pressures on capital, life-time costs, risk factors and typical financing models.

• Technologyreview – analysis of R&D prior-ity areas.

• Supplychain – a review of the main play-ers, strengths & weaknesses of contracting strategies and supply chain development challenges.

• Ten-yearmarketforecast – for new capac-ity, capital expendi¬ture, operating ex-penditure, wind turbines, support structures, cabling, substations and vessels.

• Countryanalysis– detailed operational & capital expenditure forecast, including by capacity and segment analysis.

WhyPurchasetheWorldOffshoreWindMarketForecast?DW’s market forecasting is trusted by sector players worldwide, with clients including the world’s top-10 oil & gas companies, top-10 oilfield services companies and top-10 private equity firms.

The report is essential for companies working within the offshore wind sector, wanting to better understand where and when to make investment decisions.

Our proven approach includes:

• Industryconsultation– discussion with a wide-range of companies including: project developers, equipment manufacturers, and installation contractors. Throughout the re-port we highlight pertinent quotes, related to specific aspects of the market.

• Uniqueandproprietarydata – detailed by project in our in-house databases. Updated year-round from published sources and insight gained from industry consultation.

• Detailedmethodology – our forecast pro-vides a ‘medium-case’ scenario for market activity, drawn from our databases, which enables the forecasts to be established on a project-by-project basis; taking into account factors such as project size, location, finan-cial backing and progress to date.

• Comprehensiveanalysis – comprehensive examination, analysis and 10-year forecast of offshore wind expenditure.

• Concisereportlayout – consistent with DW’s commitment to delivering value for our clients, all our market forecasts have a concise layout consisting of industry back-ground and supporting materials condensed to enable quick review with ‘speed-read’ summaries of key points throughout.

ISBN978-1-910045-17-6

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2015

World Offshore Wind Market Forecast

Prospects, Technologies, World Markets

2015-2024

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Contents

Table of Contents

1 Summary and Conclusions ......................................7Summary ......................................................................................................................................... 8

Conclusions .................................................................................................................................... 9

2 Drivers and Indicators ........................................... 10Overview ...................................................................................................................................... 11

Political Drivers ........................................................................................................................... 12

Economic Drivers ....................................................................................................................... 13

Low Carbon Power Generation .............................................................................................. 14

3 Offshore Wind Project Development ............... 15Offshore Wind Project Life-Cycle ........................................................................................... 16

Offshore Wind Project Costs Structure ................................................................................ 17

Capex Phase 1: Planning & Development .............................................................................. 18

Capex Phase 1: Wind Turbine .................................................................................................. 19

Capex Phase 1: Balance of Plant .............................................................................................. 20

Capex Phase 1: Installation ....................................................................................................... 21

Opex Phase .................................................................................................................................. 22

Capex Phase 2: Decommissioning .......................................................................................... 23

Offshore Wind Supply Chain .................................................................................................... 24

4 Commercial Insights .............................................. 25Project Scale ................................................................................................................................ 26

Supply Chain ................................................................................................................................ 27

Capital and Life-time Costs ...................................................................................................... 30

Risk Profile ................................................................................................................................... 31

Financing Challenges ................................................................................................................... 32

Contracting Strategies ............................................................................................................... 34

Industry Challenges .................................................................................................................... 35

Technology: Wind Turbines ...................................................................................................... 37

Technology: Support Structures ............................................................................................... 39

Key Markets ................................................................................................................................ 40

Emerging Markets: Forecast Capacity 2015-2024 ................................................................ 41

5 Market Forecasts .................................................... 42Methodology ................................................................................................................................ 43

Added Capacity by Country ..................................................................................................... 46

Cumulative Capacity by Country............................................................................................. 47

Capital Expenditure by Country .............................................................................................. 48

Annual Capital Expenditure by Type ....................................................................................... 49

Operational Expenditure by Country ..................................................................................... 50

Segment Forecasts: Wind Turbines by Country .................................................................. 51

Segment Forecasts: Wind Turbines by Size ......................................................................... 52

Segment Forecasts: Wind Turbines by Manufacturer ......................................................... 53

Segment Forecasts: Support Structures ................................................................................. 54

Segment Forecasts: Cables ...................................................................................................... 55

Segment Forecasts: Offshore Substations ............................................................................ 56

Segment Forecasts: Vessels ...................................................................................................... 57

6 Appendix .................................................................. 58Data and Text Conventions ...................................................................................................... 59

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Contents

Figures

Figure 1: Capital Expenditure by Country, 2015-2024 ................................................................................8

Figure 2: Drivers for Offshore Wind ................................................................................................................. 11

Figure 3: EU 2020 Targets – Progress to Date ............................................................................................. 12

Figure 4: Global primary energy demand growth ....................................................................................... 13

Figure 5: Energy demand forecast by fuel type 1990-2040 ................................................................... 13

Figure 6: Global Electricity Generation Forecast ......................................................................................... 14

Figure 7: Levelised Cost of Energy – Key Technologies ........................................................................... 14

Figure 8: Offshore Wind Project Life-Cycle ................................................................................................... 16

Figure 9: Cost Breakdown by Project Phase – Capex, Opex, Decom. ........................................... 17

Figure 10: Offshore Wind Supply Chain Overview ................................................................................... 24

Figure 11: Average project capacity, distance from shore and water depth ................................. 26

Figure 12: Offshore Wind Capex Drivers ....................................................................................................... 30

Figure 13: Offshore Wind Average Project Capex, 2000-2024 .......................................................... 30

Figure 14: Example of Planning & Development Time Lines, UK. ...................................................... 33

Figure 15: Size Evolution of Wind Turbines ................................................................................................... 37

Figure 16: Aerogenerator X ................................................................................................................................... 38

Figure 17: Two-bladed Offshore Wind Turbine. ......................................................................................... 38

Figure 18: Types of Floating Foundations. ........................................................................................................ 39

Figure 19: Key Markets, the Global Picture .................................................................................................... 40

Figure 20: Offshore Wind Installed Capacity, 2015 ................................................................................... 40

Figure 21: Key Region, North-Western Europe ........................................................................................... 40

Figure 22: Forecast global capacity installation 2015-2024 .................................................................... 41

Figure 23: Global: Forecast Wind Farm, Capacity and Turbines .......................................................... 41

Figure 24: All Offshore Wind Projects vs. DW Forecast Capacity, 2015-2024 .......................... 43

Figure 25: Global Forecast Capacity .................................................................................................................. 45

Figure 26: Offshore wind forecast capacity installed, 2015-2024 ....................................................... 45

Figure 27: North-Western Europe Forecast Capacity .............................................................................. 45

Figure 28: Added capacity by country, 2015-2024 ..................................................................................... 46

Figure 29: Cumulative capacity by country, 2015-2024 ........................................................................... 47

Figure 30: Capital expenditure by country, 2015-2024 ........................................................................... 48

Figure 31: Expected annual offshore wind Capex, by type 2015-2024........................................... 49

Figure 32: Planning and Development Capex, 2015-2024, €m .......................................................... 49

Figure 33: Wind Turbine Annual Capex 2015-2024, €m ....................................................................... 49

Figure 34: Balance of Plant Annual Capex 2015-2024, €m ................................................................... 49

Figure 35: Installation Annual Capex 2015-2024, €m .............................................................................. 49

Figure 36: Operational expenditure by country, 2015-2024 ................................................................. 50

Figure 37: Operational expenditure by activity ............................................................................................ 50

Figure 38: Wind turbines installed by country, 2015-2024 .................................................................... 51

Figure 39: Wind turbines installed by size, 2015-2024 ............................................................................ 52

Figure 40: Wind turbines installed by manufacturer, 2015-2024 ........................................................ 53

Figure 41: Support structures installed by type, 2015-2024 .................................................................. 54

Figure 42: Cable length installed by country, 2015-2024 ........................................................................ 55

Figure 43: Cable length installed by type, 2015-2024 ............................................................................... 55

Figure 44: Substations installed by country, 2015-2024 ........................................................................... 56

Figure 45: Substations installed by type, 2015-2024.................................................................................. 56

Figure 46: Installation vessels required by type, 2015-2024 .................................................................. 57

Figure 47: Personnel transfer vessels required, 2015-2024 .................................................................... 57

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Contents

Tables

Table 1: Renewable Energy Incentive Mechanisms in Key Markets .................................................... 12

Table 2: Support structures types comparison ............................................................................................. 27

Table 3: Investor types and their attitude to risk ......................................................................................... 31

Table 4: Contracting strategies .............................................................................................................................. 34

Table 5: Offshore Wind Projects’ Status Methodology ............................................................................ 43

Table 6: Added capacity by country, 2015-2024 ......................................................................................... 46

Table 7: Cumulative capacity by country, 2015-2024 ................................................................................ 47

Table 8: Table #: Capital expenditure by country, 2015-2024 ............................................................. 48

Table 9: Operational expenditure by country, 2015-2024 ..................................................................... 50

Table 10: Wind turbines installed by country, 2015-2024 ...................................................................... 51

Table 11: Wind turbines installed by size, 2015-2024 .............................................................................. 52

Table 12: Wind turbines installed by country, 2015-2024 ...................................................................... 53

Table 13: Support structures installed by type, 2015-2024 .................................................................... 54

Table 14: Cable length installed by country, 2015-2024 .......................................................................... 55

Table 15: Cable length installed by type, 2015-2024 ................................................................................. 55

Table 16: Substations installed by country, 2015-2024 ............................................................................. 56

Table 17: Substations installed by type, 2015-2024 ................................................................................... 56

Table 18: Installation vessels required by type, 2015-2024 .................................................................... 57

Table 19: Personnel transfer vessels required, 2015-2024 ..................................................................... 57

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