The growing offshore wind market presents a great opportunity in manufacturing, ports and major installation vessels businesses. For generations these have been reliant on the boom and bust of the oil and gas sector. Now they have a significant role to play in a ‘just transition’. Offshore wind provides growing and long-term opportunities for these sectors.
Fabrication facilities, ports and vessels are a vital element of the supply chain. Significant is investment is required in advance of growing demand. Any delay could result in a potential bottleneck to offshore wind expansion. We see the development of offshore wind in emerging markets accelerating rapidly. Investments are needed now to realise the global potential.
Supply chain modelling that combines forecasts with analyses of capacity can identify capability gaps and opportunities. Modelling relies on effective understanding of various threads. On the supply side, established and announced capacities in all locations, has to be combined with an appreciation of technology. This encompasses factors such as turbine size, foundation type and the lead times to deliver these commodities. Equally, the market environment in different jurisdictions will define opportunities. Capacity targets, local content requirements and cabotage restrictions influence investor decisions, which add constraints to trade.
Our recent work for the International Finance Corporation (IFC) included a global analysis of demand and supply for major manufacturing plants, ports and vessels, and what gaps remain. It used a model and dataset that have been developed through numerous client engagements.
For northern Europe, the renewed appetite for offshore wind has led to a range of major investments. Much of this has been in the countries with larger established markets. Poland is starting to attract local investment. We estimate that Europe needs approximately two turbine tower and between one and two cable manufacturing plants before 2030. A minimum of two new wind turbine installation and cable lay vessels are required globally beyond those already announced. We mention these in a European context as this is where the leading vessel operators are based, although localised fleets may emerge in time.
In North America,winners of auction leases have committed to building a local US supply chain. These include EEW’s monopile factory in New Jersey, Marmen and Welcon’s tower factory in New York, Nexans’ cable factory in South Carolina. Several new or repurposed ports have also been announced. By 2030, growth in North America will need a further two turbine tower factories, two blade factories and a jacket manufacturing facility. While Mexico and Brazil could produce these commodities, local economic benefit criteria in several states’ auction rules will drive domestic manufacture.
In Asia, Taiwan is the first market to emerge. Local content requirements there have led to an investment by Siemens Gamesa in a nacelle factory and by Vestas in a blade plant. Several new markets in the region have potential for investment, including Japan, South Korea and Vietnam. We have estimated, excluding China, this region needs around two turbine blade and tower manufacturing sites and that between two and three cable manufacturing plants.
Our proven supply chain gap model provides deep insights into future gaps and opportunities. By assembling a myriad of data points with robust analysis we do not claim to know the future. But we are certain that our model and process will deepen clients’ understanding of it.