Offshore wind supply chain 'not even nearly big enough' to keep up with growth

Countries around the world may end up falling short of their offshore wind targets because of insufficient manufacturing capacity and a shortage of vessels and key equipment, executives warned June 14.

In Europe, nine North Sea nations — including Germany, Denmark, the Netherlands and the UK — aim to have 120 GW of offshore wind installed by 2030 and 300 GW by 2050, while the US is shooting for 30 GW by the end of this decade.

But executives at lobby group RenewableUK's Global Offshore Wind conference in London said those ambitions might be out of reach if the offshore wind supply chain is not scaled up.

"The size of the supply chain is simply not big enough to deliver [on those targets]," Sven Utermöhlen, offshore wind CEO at RWE Renewables GmbH, said during a panel discussion. "Not even nearly big enough."

While targets are necessary to encourage investment, political commitments alone "won't get us there," Utermöhlen said.

Bottlenecks are evident across the entire supply chain, including turbines, vessels and foundations.

Europe today has the capacity to manufacture 7 GW of turbines per year, which needs to ramp up to 20 GW by 2027 if government targets are to be met, according to Giles Dickson, CEO of lobby group WindEurope.

In the same vein, Europe's capacity to build 600 turbine foundations annually needs to increase to 1,500, while 56 new installation and service vessels are also required between now and 2030, Dickson said.

Part of this growth can be achieved by increasing the scale of procurement processes, according to Paul Cooley, global business director for offshore wind at SSE Renewables Ltd. In 2019, SSE and project partner Equinor ASA locked down a turbine supply agreement with General Electric Co. for their three-phase, 3.6-GW Dogger Bank A, B and C offshore wind farm.

"That was a big decision because those are massive contracts ... but it turned out to be the right approach," Cooley told the conference. "We need to find a better way of coming together as an industry to create that volume."

Mirroring the procurement approach on Dogger Bank, SSE is now running a tender that bundles 5 GW of its future offshore wind projects together, Cooley said.

'Huge bottlenecks' in US

The pressure to expand the offshore wind supply chain comes amid an ongoing race for ever-larger turbines that many in the industry describe as unsustainable.

The major turbine-makers say the rapid rate of innovation — whereby bigger turbines are launched roughly every two years — is creating difficulties for the supply chain and needs to be slowed.

"We strongly believe that stabilizing the technology ... will give us the capacity to industrialize and globalize in a cost-effective way," said Nils de Baar, president of Northern and Central Europe at turbine-maker Vestas Wind Systems A/S, calling for a "pause" on the rollout of new machines.

Meanwhile, the first commercial-scale projects in the US are continuing to advance, intensifying the global competition for vessels and key equipment and adding further pressure on an already-stretched supply chain.

That pressure could be exacerbated by potential delays on several US projects, some of which are in the midst of renegotiating the price of their power contracts due to inflation.

Some of the midterm US offshore wind pipeline could end up slipping toward the end of the decade as a result, according to Jeff Andreini, vice president of marine operations at Crowley Maritime Corp., a marine logistics firm.

"If you move everything to the right and all the projects happen in [2029 and 2030] ... now your [supply chain] capacity shrinks," Andreini said. "That's going to create huge bottlenecks" and will require some kind of "stimulus" to prompt investments in the supply chain.

S&P Global Commodity Insights produces content for distribution on S&P Capital IQ Pro.