Background – What is the offshore wind industry about?
The offshore wind industry refers to the production of electricity through the installations of wind farms in the sea. There are two types of wind parks, floating and fixed. The main advantage of offshore wind farms over the onshore ones is that the number of working hours is higher for the former. This difference is usually around 30%.
The value chain of the offshore wind industry extends from the search of the spot and technical & financial planning to production of turbines and large components; from transport and construction to service and maintenance of offshore wind farms. Because of the heavy demands associated with turbine transportation, construction and erection, the expansion of offshore wind energy present additional challenges for participating companies from the wind industry, in comparison with onshore exploitation.
Growth and perspectives for offshore wind
Offshore wind is becoming a more and more important part of the renewable sector. Offshore wind farms are exposed to more hours of wind than onshore wind parks. Moreover, technology is improving fast. The costs have diminished dramatically in the last years. This trend is expected to continue in the next decade. These facts are positioning offshore wind farms as one of the best options to produce renewable energy.
The offshore wind industry has practically started in the last decade. BNEF is forecasting 115GW by 2030. But there are even wilder predictions made by researched houses well renowned.
Who are the players in the offshore wind industry
The companies involved in this offshore industry are a mix of renewable and oil and gas-related companies. It makes sense as the latter have the expertise in the field of offshore drilling. This knowledge is easily transferable to the offshore wind field.
Different roles in the offshore wind industry
There are several types of companies with exposition to the boom in this industry. First to come in mind are large electric companies which are developing their wind farms. Among the biggest in this sector are Dong Energy, E.ON, RWE Innogy and Vattenfall.
However, to make the construction and operation of an offshore wind farm possible, many actors are involved. There are companies specialised in finding the best spots and obtain the licences to build the wind farm. There is also needed the expertise of some companies (generally leveraging its expertise from the oil and gas offshore sector) to put the cables and take care of the subsea installations. Moreover, there is also needed someone to be in charge of the operations and maintenance of wind farms.
Sometimes, the same company takes two of thee roles. But, the big companies usually buy directly the rights to small companies and they hire EPC, O&M,… By doing that, they have ownership of the installation (the part with the highest margins) and they reduce risks by outsourcing the rest of the process. Although, apart from that, Siemens and Vestas have an interesting monopoly in wind turbine manufacturing.
Does it mean that there is no space for small companies in the offshore wind industry? No. There is still a bunch of small companies that are trying to position in this booming industry.
Small players in the offshore wind industry
There are several small players which are taking an active role in this new field. We have made a research in each one of the different parts of the supply chain and we present and explain briefly some of these small players. The companies presented are not comparable among them as they carry out different types of business. Consequently, the margins are dramatically different
We are developing individual analysis for the companies we believe it is worthy to do it. At the same time, we continue analysing the industry to look for more interesting companies in the field.
Greenalia – Independent Power Producer (it is the owner of the offshore wind parks). It will develop 250MW in the Canary Islands in 2025. Meanwhile, it is developing onshore wind, biomass and PV. It has a capitalisation around €375MM
PNE – Engineering, procurement and construction + operations and maintenance. Although it owns some of the parks it builds, it happens in the onshore sectors. In the offshore one, PNE is the EPC. Its capitalisation is around €600MM
Aker Offshore – It is developing new technologies and partnering with reputable counterparts to develop deepwater projects. It has planned four projects in South Korea, California, Scotland and Norway. Its capitalisation is around €300MM and it went public in August 2020.
TPI Composites – It is an independent manufacturer of wind blades. It has an agreement with Vestas to produce in countries where it is not economical for Vestas to build its own factory. Its capitalisation is around $1800MM.
Tekmar – It is transferring its expertise in subsea installations acquired in the oil & gas industry to offshore wind. Its market capitalization is around £50MM
Floating or fixed-bottom offshore wind parks
Apart from the environmental advantage that the floating offshore wind parks have over the fixed-bottom. There is also the fact that higher wind speeds happen in deepwater. Consequently, floating wind parks can capture these higher speeds by placing them in deeper waters
The main drivers to reduce the cost of each one of these technologies are:
- Onshore (Inland) – rotor-related advancements viewed (Larger and more effective blades)
- Fixed-bottom (offshore) – upscaling, foundations, lower financing costs
- Floating (offshore) – support structures, more efficient installation processes
The offshore wind industry is set to grow a lot in the coming years and we believe that it is an industry to keep an eye on. However, its final success will depend on the ability of different companies to diminish the costs. As well as provide more effective solutions to the ones there are in the market today.
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Annex
