Global Evaluation of Offshore Wind Shipping Opportunity

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GLOBAL EVALUATION OF OFFSHORE WIND SHIPPING OPPORTUNITY

Presented to:

Danish Shipowners’ Association and the Shipowners’ Association of 2010

Submitted by:

Navigant Consulting, Inc. Woolgate Exchange, 5th Floor 25 Basinghall Street London EC2V 5HA United Kingdom

Tel: +44 (0)207 469 1110 www.navigant.com

19 December 2013

Notice and Disclaimer

This report was prepared by Navigant Consulting, Inc. for the exclusive use of the Danish Shipowners’ Association and the Shipowners’ Association of 2010. The work presented in this report represents our best efforts and judgments based on the information available at the time this report was prepared. Navigant Consulting, Inc. is not responsible for the reader’s use of, or reliance upon, the report, nor any decisions based on the report. NAVIGANT CONSULTING, INC. MAKES NO REPRESENTATIONS OR WARRANTIES, EXPRESSED OR IMPLIED. Readers of the report are advised that they assume all liabilities incurred by them, or third parties, as a result of their reliance on the report, or the data, information, findings and opinions contained in the report.

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Table of Contents

Abbreviations and Technical Units…………………………………………………………7

Executive Summary ...... 9

Chapter 1. Introduction...... 9 Chapter 2. Offshore Wind Markets and Forecasts ...... 9 Chapter 3. Offshore Wind Vessels ...... 10 Chapter 4. Wind Industry Technology & Industry Trends ...... 10 Chapter 5. Vessel Demand vs. Supply ...... 11 Chapter 6. Vessel Contracts Analysis ...... 12 Danish Shipping Industry Fact Sheet ...... 14

1. Introduction ...... 16

1.1 Report Structure ...... 16 1.2 Methodology ...... 16 1.3 Supplementary Material ...... 18 2. Offshore Wind Market & Forecasts ...... 18

2.1 Installed Capacity by Country and Offshore Developer ...... 18 2.1.1 Installed Capacity by Country...... 18 2.1.2 Installed Capacity (Test Sites) By Country ...... 19 2.1.3 Installed Capacity by Turbine OEM ...... 20 2.1.4 Installed Capacity by Offshore Developer ...... 21 2.2 Historical Development – Technology and Size ...... 22 2.2.1 Historical Development by Turbine Technology ...... 22 2.2.1 Historical Development by Plant Capacity ...... 23 2.2.2 Historical Development by Turbine Capacity...... 23 2.3 Offshore Wind Forecast ...... 24 2.3.1 Introduction to Offshore Wind Market Forecast and Prediction to 2022 ...... 24 2.3.2 Methodology for Offshore Wind Market Forecast to 2017 ...... 25 2.3.3 Methodology for Market Prediction to 2022 ...... 25 2.3.4 360° Market Analysis for Offshore Wind Power Development to 2022 ...... 27 2.3.5 Global MW Demand 10-Year Forecast ...... 28 2.3.6 Forecast Sensitivities ...... 30 3. Offshore Wind Vessels ...... 33

3.1 Segments in Ship-based Services for the Offshore Wind Industry ...... 33 3.1.1 Vessels Adopted in the Offshore Wind Project Life Cycle ...... 33 3.1.2 Definition of Vessel Types in the Offshore Wind Sector ...... 34 3.2 The Availability of Different Vessels Providing Service to Offshore Wind as of 2013 ...... 44 3.2.1 Overview of Geographic Distribution of Offshore Wind Vessels ...... 44 3.2.2 Availability of different vessel types for offshore wind by region and country ...... 45

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3.2.3 Availability of Key Offshore Wind Construction Vessels in Selected European Countries ...... 48 4. Wind Industry Technology & Industry Trends ...... 51

Introduction ...... 51 4.1 Technology Focus & Market Trends – Historical Trends ...... 51 4.1.1 Historical Trend - Rotor (diameter and weight) ...... 51 4.1.2 Historical Trend - Tower (height and weight) ...... 53 4.1.3 Historical Trend - Turbines MW size ...... 54 4.1.4 Historical Trend - Foundations (type and weight) ...... 55 4.1.5 Distance From Shore ...... 58 4.1.6 O&M Developments ...... 59 4.1.7 Advances in Installation Techniques ...... 61 4.2 Summarized Technology & Market Trends – Scenarios ...... 64 4.3 Implications of Technology Demands ...... 66 5. Vessel Demand vs. Supply ...... 68

5.1 Methodology ...... 68 5.1.1 MW Forecast ...... 68 5.1.2 Technology Forecast ...... 68 5.1.3 Conversion Factors for Standard Vessel Types ...... 69 5.1.4 Conversion Factors for New Vessel Types ...... 70 5.1.5 Vessel Demand Forecast...... 70 5.1.6 Vessel Supply ...... 70 5.2 Supply vs. Demand Analysis ...... 70 5.2.1 Construction Vessels ...... 71 5.2.2 Survey Vessels ...... 76 5.2.3 Service Vessels ...... 79 5.2.4 O&M Vessels ...... 82 5.2.5 Summary ...... 84 6. Vessel Contracts Analysis ...... 86

6.1 Introduction ...... 86 6.2 Methodology ...... 87 6.3 Contract Structures ...... 87 6.4 Conclusions ...... 107 7. Appendix A. Profiles of Leading Operators by Vessel Type ...... 109

7.1 Profiles of leading Accommodation Vessel operators ...... 109 7.2 Profiles of leading Cable Laying Vessel operators ...... 111 7.3 Profiles of leading construction support vessel operators ...... 114 7.4 Profiles of leading safety support vessel operators ...... 117 7.5 Profiles of leading Heavy-lift Vessel operators ...... 118 7.6 Profiles of leading Jack-up Vessel operators...... 121 7.7 Profiles of leading multi-purpose project vessel operators ...... 124 7.8 Profiles of leading multi-purpose vessel operators ...... 128 7.9 Profiles of Leading Service Crew Boat Operators ...... 130 7.10 Profiles of leading survey vessel operators...... 135

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7.11 Profiles of leading Tugboat operators ...... 138

Appendix B. Vessel Demand by Country and Year……………..…140

Appendix C. Summary Results of Contracts Questionnaire………149

Appendix D. Summary Results of the Associations Survey………157

Appendix E. Offshore Wind Ports Review ...... 164

8.1 Overview of Ports for Offshore Wind ...... 164 8.1.1 Global Distribution ...... 164 8.1.2 Port types and general requirements ...... 165 8.2 Port by type with track record ...... 165 8.2.1 Construction Phase Ports ...... 165 8.2.2 Manufacturing ports ...... 167 8.2.3 Operation & Maintenance Ports ...... 168 8.2.4 Storage and Logistics Ports ...... 168 8.2.5 Potential Offshore Wind Ports...... 169 8.3 Profiles of Major Installation Ports ...... 170 8.3.1 Port of Esbjerg, Denmark ...... 170 8.3.2 Port of Bremerhaven, Germany ...... 173 8.3.3 Port of Belfast Harbour, U.K...... 177

Figure 1. Danish Offshore Wind Vessels ...... 14 Figure 2. Danish Offshore Wind Vessels by Vessel Type and Year of Construction...... 15 Figure 1-1. Report Structure ...... 16 Figure 2-1. Market Share of Different Turbine Technologies...... 23 Figure 2-2. Historical Development by Plant Capacity ...... 23 Figure 2-3. Average Turbine Size for Historic Global Offshore Wind Farms ...... 24 Figure 2-4. Global Offshore Wind Forecast by Country 2013-2022 ...... 30 Figure 2-5. High and Low Global Offshore Wind Scenarios ...... 32 Figure 3-1. Segments in Ship-based Services for Offshore Wind ...... 33 Figure 3-2. Fugro Seacher Offshore Survey Vessel...... 35 Figure 3-3. Pacific Orca Offshore Turbine Installation Vessel ...... 35 Figure 3-4. Wind Server O&M Vessel ...... 36 Figure 3-5. Oleg Stashnov Heavy Lift Vessel ...... 37 Figure 3-6. CLV SIA Cable Laying Vessel ...... 38 Figure 3-7. M/S Honte Diving Support Vessel ...... 39 Figure 3-8. Aarsleff Bilfinger Berger JV 2 Cargo Barges ...... 39 Figure 3-9. Island Patriot Platform Supply Vessel ...... 40 Figure 3-10. DJURS Wind Crew Boat ...... 40 Figure 3-11. Tuucher O. Wulf 3 Tugboat ...... 41 Figure 3-12. ESVAGT CORONA Emergency Response Rescue Vessel ...... 41 Figure 3-13. ESVAGT OBSERVER Multi-purpose Project Vessel ...... 42 Figure 3-14. Wind Solution Accommodation Vessel ...... 43

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Figure 3-15. PALESSA Multi-Purpose Cargo Vessel ...... 43 Figure 3-16. Geographic Distribution of Vessels Capable of Providing Services to the Offshore Wind Sector ...... 44 Figure 3-17. Vessels in Operation With or Without Track Records in Offshore Wind ...... 45 Figure 3-18. Availability of Different Vessel Types by Region (In-operation Only) ...... 46 Figure 3-19. Vessels by Region (Under construction or planned only) ...... 47 Figure 4-1. Historical Development of Rotor Diameter (1991-2012) ...... 52 Figure 5-1. Methodology for Vessel Supply vs. Demand Analysis ...... 68 Figure 5-2. Next Generation Jack-up Vessel Supply and Demand ...... 71 Figure 5-3. Heavy Lift Vessel Supply and Demand ...... 73 Figure 5-4. Cable Lay Vessel Supply and Demand ...... 74 Figure 5-5. Diving Support Vessel Supply and Demand ...... 74 Figure 5-6. MPPV Vessel Supply and Demand ...... 75 Figure 5-7. Platform Supply Vessel Supply and Demand ...... 75 Figure 5-8. Cargo Barge Supply and Demand ...... 76 Figure 5-9. ROV Support Vessel Supply and Demand ...... 77 Figure 5-10. Geophysical Survey Vessel Supply and Demand ...... 78 Figure 5-11. Geotechnical Survey Vessel Supply and Demand ...... 78 Figure 5-12. Multi-Purpose Survey Vessel Supply and Demand ...... 79 Figure 5-13. Tugboat Supply and Demand ...... 80 Figure 5-14. Safety Vessel Supply and Demand ...... 81 Figure 5-15. Accommodation Vessel Supply and Demand ...... 82 Figure 5-16. Service Crew Boat Supply and Demand ...... 83 Figure 5-17. Tailor-made O&M Vessel Supply and Demand ...... 84 Figure 5-18. Service Operations Vessel Type 2 Supply and Demand ...... 84 Figure 6-1. Pros and Cons of Each Contract Type and the Percentage of Participants Using One versus the Other ...... 88 Figure 6-2. Percentage of Survey Respondents Indicating Use of Particular Contract by Country………92 Figure 6-3. Typical Split of Responsibility Between Employer and Contractor Under Multi-Contracting.91 Figure 6-4. Offshore Wind Capital Costs Breakdown ...... 93 Figure 6-5. Multi-Contracting Structure in which each Construction Package is Responsible for its Own Logistics ...... 98 Figure 6-6. EPC Structure Where Single Contractor Handles All Major Works. In this Case EPC Contract is a Vessel Operator ...... 98 Figure 6-7. Comparative Analysis of EPC Versus Multi-Contracting ...... 99 Figure 6-8. How Respondents Perceived the Importance of Risk Mitigation versus Cost Reduction ...... 101 Figure 6-9. Key Contractual Criteria and Their Relative Importance to Survey Participants ...... 102 Figure 6-10. Multi-Contracting Structure in which Installation has been Bundled/Packaged under each Construction Contract, thus Illustrating “Mini-EPC” Effect ...... 104 Figure 6-11. Multi-Contracting Structure in which One Contractor Handles All WTG-Related Works while an EPC Contractor Handles All Works Pertaining to the Balance of Plant ...... 105 Figure 8-1. G lobal Distribution of Offshore Wind Ports as of 2013………………………………………..164

Table 1. Danish Offshore Wind Companies (partial list) ...... 15 Table 1-1. Offshore Wind Databases Included With This Report ...... 18 Table 2-1. Installed MW Capacity of Offshore Wind by Country, as of end of 2012 ...... 19 Table 2-2. Installed Capacity of Offshore Wind Test Turbines by Country ...... 20 Table 2-3. Installed Capacity of Offshore Wind by Turbine OEM, as of end of 2012 ...... 21 Table 2-4. Top 10 Offshore Wind Operators (end of 2012), MW ...... 21

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Table 2-5. Offshore Wind Market Analysis ...... 28 Table 2-6. Global Offshore Wind MW Forecast 2013-2022 ...... 29 Table 2-7. Global Offshore Wind Forecast Scenarios ...... 31 Table 3-1. Offshore Wind Service vs. Vessel Types ...... 34 Table 3-2. Availability of Different Vessel Type by Region as of 2013 (In-operation Only) ...... 45 Table 3-3. Different vessels type by region as of 2013 (Under construction or planned) ...... 46 Table 3-4. Availability of Jack-up Vessels by Category and Region (In-operation Only) ...... 47 Table 3-5. Availability of Heavy-lift Vessels by Category and Region (In-operation Only) ...... 48 Table 3-6. Availability of Cable Laying Vessels by Category and Region (In-operation Only) ...... 48 Table 3-7. Availability of Jack-up Vessels Operated by Selected European Countries (In-operation Only)49 Table 3-8. Availability of Heavy-lift Vessels Operated by Selected European Countries (In-operation Only) ...... 49 Table 3-9. Availability of Cable Laying Vessels Operated by Selected European Countries (In-operation Only) ...... 49 Table 5-1. Conversion Factors for New Vessel Types ...... 70 Table 5-2. Supply vs. Demand Summary ...... 84 Table 8-1. Port types in the offshore wind sector ...... 165 Table 8-2. Construction Phase Ports ...... 166 Table 8-3. Manufacturing Ports ...... 167 Table 8-4. O&M Ports ...... 168 Table 8-5. Storage and Logistics Ports ...... 168 Table 8-6. Potential Offshore Wind Ports ...... 169

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Abbreviations and Technical Units

Abbreviations

AC Alternating Current

AHTS Anchor Handling, Tug & Supply

BOP Balance of Plant

BIMCO Baltic and International Marine Council

BOP Balance of Plant

CAPEX Capital Expenditures

CCTV Closed-circuit Television

CTV Crew Transfer Vessel

DC Direct Current

DSA Danish Shipowners’ Association

DSV Diving Support Vessel

DP Dynamic Positioning

EBIT Earnings Before Interest & Tax

EPC Engineering, Procurement, & Construction (also known as turn-key)

ERRV Emergency Response & Rescue Vessel

FIDIC Fédération Internationale Des Ingénieurs-Conseils

GBS Gravity Based Structure

GW Gigawatt

HLV Heavy-Lift Vessel

LD Liquidated Damages

LOGIC Leading Oil and Gas Industry Competitiveness

LO/LO Lift-on, Lift-off

MPPV Multi-purpose Project Vessel

MPV Multi-purpose Vessel

MW Megawatt

MWh Megawatt Hour

NEC New Engineering Contract nm Nautical Mile

O&G Oil & Gas

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O&M Operations & Maintenance

OEM Original Equipment Manufacturer

OPEX Operating Expenditures

OSW Offshore Wind

PSV Platform Supply Vessel

R&D Research & Development

RO/RO Roll-on, Roll-off

ROV Remotely Operated Vehicle

ROW Rest of the World

SOV Service Operations Vessel

SSCV Semi-submersible Crane Vessel

TIV Turbine Installation Vessel

WTG Wind Turbine Generator

Technical Units km = kilometer = 1,000 metres k = kilo = 1,000 = 103 kJ = kilo Joule = 1,000 Joule M = Mega = 1,000,000 = 106 kW = kilo Watt = 1,000 Watt G = Giga = 1,000,000,000 = 109 MW = Mega Watt = 1,000 kW T = Tera = 1,000,000,000,000 = 1012 GW = Giga Watt = 1,000 MW MVA = Megavolt-Amp kWh kilo Watt hour = 1,000 Wh = 3,600 kJ = 0.086 kg of oil MWh Mega Watt hour = 1,000 kWh GWh Giga Watt hour = 1,000,000 kWh = 1,000 MWh TWh Tera Watt hour = 1,000,000 MWh = 1,000 GWh

Tonne = Metric ton = 1,000 kg Ton = Imperial ton (aka long ton or weight ton) = 2,240 pounds = approximately 1,016 kg U.S. ton (aka short ton) = 2,000 pounds = approximately 907.2 kg

Annual Energy Production (kWh) Capacity Factor (CF)  x 100 % WTG name plate capacity (kW) x 8760 hours

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Executive Summary

Chapter 1. Introduction.

The Danish Shipowners’ Association and the Shipowners’ Association of 2010 (collectively, the Associations) are seeking a unique insight which identifies and maps all players providing shipping services to the global offshore wind industry. This strategic review maps all active and prospective ships in the offshore wind industry; identifies and profiles all key players in the sector; provides detailed country- level offshore wind 10-year forecasts for all existing and potential offshore wind markets; and delivers a supply versus demand analysis across all major shipping activities which interact with the offshore wind industry. It defines the best practices regarding contracting strategies and harbour requirements and concludes with an identification of the market opportunities for Danish vessels and operators.

Each of the remaining chapters of the report contribute to answering the central question of how members of the Associations can capitalise on the global offshore wind potential. Additional deliverables for this project include two databases and five appendices, which are an integral part of the report.

High level findings and conclusions for each of the remaining chapters are summarised below.

Chapter 2. Offshore Wind Markets and Forecasts

A cumulative total of 5,111 MW of offshore wind installations was installed at the end of 2012. The U.K. leads the market with almost 3 GW of capacity installed, followed by Denmark with more than 920 MW and Belgium with almost 380 MW. Germany and China both started installing offshore turbines in 2009 and continue to expand their portfolios.

Siemens and Vestas remain the market leaders in offshore wind turbine generator (WTG) manufacturing, with cumulative market shares of 55% and 27%, respectively, based on their total installations by the end of 2012. There is no doubt, however, that companies like REpower, Areva Wind, BARD, Sinovel and Goldwind will see more turbines installed in the coming years and that new entrants from the Far East, notably Japan and South Korea, will soon enter the offshore market. DONG and Vattenfall are the leading developers, which own and operate 17% and 15%, respectively, of cumulative offshore wind capacity as of the end of 2012. Seven of the top 10 are leading European utilities, while Chinese Longyuan Power Group represents the only Asian presence in the top 10 list.

Offshore wind turbine technology has been dominated by multi-MW designs. In 2012, the average size of newly installed turbines increased to 4.03 MW as projects have increasingly deployed 5.0 MW and 6.0 MW turbines. Traditional drive train design, incorporating a fast speed asynchronous generator (induction generator) and a three stage gearbox, still dominates the current offshore wind market, although direct drive systems have been gaining an increasing share. A number of manufacturers have opted to find a compromise between the traditional drive train using a three stage gearbox and direct drive systems that totally dispense with a gearbox, settling instead on medium speed systems with fewer stages in the gearbox. Reliability is the key to reducing lifecycle O&M costs, minimising investment risk and improving financial viability.

Annual global offshore wind installations will surpass the milestone of 10 GW by 2018. In the medium term to 2022, offshore wind power will account for 9.3% of global wind power installation. The average annual growth rate for new installations in the next ten years is expected to be 15.4%. The near term (2013

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to 2017) forecast is based upon project-specific data and only includes projects that have a high likelihood of being installed. The long term (2018 to 2022) forecast has higher uncertainty and is derived from information such as: U.K. Round 3 offshore wind farm licensing, projects in detailed planning stages, and projects proposed by governments with realisation within the prediction time period.

By the end of 2022, Europe will account for 60% of total global offshore wind installation and will maintain its position as global market leader. The U.K. and Germany will account for 44% and 24%, respectively, of total offshore wind installation in Europe by 2022. In China, installation of 20.7 GW is expected by 2022, representing 25% of total global offshore wind power generating capacity at that time and making it the largest offshore wind market in the world after the U.K. A total of 5.5 GW is expected to be installed on the North American continent by 2022.

Chapter 3. Offshore Wind Vessels

At least 18 different types of vessels are needed during the offshore wind project life cycle. The following vessel types are considered:

» 8 types of construction vessels (Jack-up, Heavy Lift, Intra-Array Cable Laying, Export Cable Laying, Diving Support, Multi-Purpose and Project, Cargo Barge, and Platform Supply); » 4 types of survey vessels (ROV Support, Geophysical Survey, Geotechnical Survey, and Multi- purpose Survey); » 4 types of service vessels (Tugboat, Safety/Standby ERRV, Accommodation, and Service Operations Vessel), and » 2 types of O&M vessels (Service Crew Boat, Tailor-made O&M Jack-up Vessel).

Navigant’s offshore wind vessel database indicates that 865 vessels can provide offshore wind services. Of this total approximately 798 vessels are in operation and nearly 70 vessels are currently under construction, or in the pipeline. 53% of vessels currently in operation have direct experience in the offshore wind sector. The top three vessel types in the manufacturing pipeline are Service Crew Boats, Jack-up Vessels, and Multi-purpose Project Vessels (MPPVs).

The U.K., Denmark, and the Netherlands are the leading owners and operators of offshore wind vessels currently in operation. 245 vessels are operated by British companies, 132 by Danish companies, and 126 by Dutch companies.

Chapter 4. Wind Industry Technology & Industry Trends

The physical characteristics (e.g. length, height, weight) of key components have steadily increased over the past two decades. WTG rotor diameters have increased from approximately 40-60m in the 1990s to 60- 110m in the 2000s to 110-140m since 2010. WTG tower height has steadily increased from approximately 40-45m in the early 1990s to 60-65m in the 2000s to 80-90m in the last few years. Tower weights ranged between 25-75T in the 1990s, 100-160T in the 2000s, and 210-450T over the last few years. Over the past two decades, offshore WTG unit generation capacity has increased from the first 450 kW Bonus machine in 1991 to the 6.15 MW size range today.

The combination of diverse seabed conditions, deeper water, and larger turbines will likely push the industry away from monopile foundations to alternatives. Alternatives to the monopile include jackets, tripods, GBS, and suction caissons. Space frame designs (e.g., jackets and tripods) are typically preferred

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for deepwater sites. GBS or suction caissons may be viable in the shallower more protected locations, particularly those where seabed geology, rocks, or boulders make it challenging to drive pilings.

European developers are increasingly building offshore wind plants further from the coast and in deeper waters. The plants are located further from shore to capture higher wind speeds and thus higher capacity factors. For far offshore facilities beyond 30 nm from a potential servicing port, servicing could resemble an offshore drilling rig, or even a ship with hoteling facilities such as a modified cruise ship.

Increased turbine size, plant size, and distance from shore all have direct consequences on O&M practices, which will in turn affect vessel requirements and strategy. Larger plants will justify service and crew transfer vessels, while smaller plants will opt for sharing of vessels. The size of turbines will also have an impact on the choice of Service Crew Boat size. Larger plants farther from shore can justify purpose built equipment. Other O&M trends have implications on vessel strategy, such as the increased use of proactive maintenance methods resulting in an increased need for coordinated and flexible scheduling.

Navigant has developed five scenarios to characterise the technology trends in offshore wind that could impact the demand for vessels. Three scenarios rely on traditional foundation types (i.e. monopoles, gravity-based, jackets, etc.) while two other scenarios entail the use of floating foundations. Currently essentially all offshore plants are consistent with the scenario known as Today’s Standard Technology. Under a medium-to-high-growth scenario, Next-Generation Technology would take hold in 2015 and continue through 2020. With continued medium-to-high-growth, a third scenario, Future Advanced Technology, would take hold in 2021 and last through 2030.

Chapter 5. Vessel Demand vs. Supply

Navigant produced a forecast of the 2013-2022 demand for each vessel type and compared it to the current supply. The forecast methodology includes the use of an Offshore Wind Vessel Requirements model to determine vessels per MW conversion factors for various standard vessel types. For vessel types that are not covered by the model, Navigant used alternative methodologies and assumptions to determine the conversion factors. The vessel demand forecast was produced by multiplying the conversion factors by the MW forecast that was developed in Section 2.3. The current supply for each vessel type was determined from analysis of Navigant’s Offshore Wind Vessel Database as described in Section 3.2.

For most vessel types, the forecasted demand is expected to overtake current supply within a few years. The following vessels types are expected to have shortages within the forecast period:

» Next Generation Jack-up Vessels » Geotechnical Survey Vessels » MPPVs » Standby ERRVs » Platform Supply Vessels » SOV Type 2 Vessels » Cargo Barges » Service Crew Boat s » ROV Support Vessels » Tailor-made O&M Vessels

For some vessel types, supply is expected to exceed demand or will be approximately in balance. The following vessels are not expected to have significant shortages within the forecast period:

» Today’s Technology Jack-up Vessels » Geophysical Survey Vessels » HLVs » Multi-Purpose Survey Vessels

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» Cable Lay Vessels » Tugboats » Diving Support Vessels » Accommodation Vessels

Chapter 6. Vessel Contracts Analysis

Navigant conducted a survey of offshore wind industry participants to identify and analyse the prevailing contractual structures that are employed in regards to offshore vessels. The issues that are addressed include the following:

» How different stakeholders, including utilities and banks, view offshore vessel contracts and their particular provisions; » Whether Engineering, Procurement and Construction (EPC) or multi-contracting is the way forward; » Whether cost reduction or risk mitigation is of greater importance; and » What types of contracting standards (e.g. FIDIC, BIMCO) are being used, for what purposes, and in which countries.

Furthermore, contracts need to give due consideration towards the management of interfaces. One way of managing interfaces is by keeping the number of contracts to a minimum (2-6 in total) and where installation works are bundled under each main construction contract.

The overall liability structure is based on the “knock-for-knock” principle in that each party shall hold the other harmless and attempt to handle potential claims via insurance. Insurance coverage should be comprehensive and involves effecting the following forms of coverage: third party liability, hull and machinery, protection and indemnity, as well as workmen’s compensation. Where occurrences are not insurable, liabilities are enforced via liquidated damages (LDs), which are typically capped at 15-25% of contract price.

The industry consensus is that multi-contracting is the preferable option over EPC contracting, because there are few experienced (and financially robust) contractors willing to carry out EPC on a bankable/viable basis. The price difference between an EPC versus multi-contracting setup is roughly 10- 25%. At the same time, multi-contracting places interface risk squarely on the employer and considerable resources have to be dedicated towards managing these interfaces.

58% of respondents indicated that risk mitigation was more important than cost reduction, whereas 42% said that both were equally important. However, none of the respondents indicated that cost reduction by itself was more important. This is attributed to the fact that the industry remains risk averse and that cost reduction upfront could potentially mean greater risks and thereby additional costs over the long-term.

Virtually all respondents indicated that they used FIDIC and many of them made direct reference to the Yellow Book. At the same time, FIDIC is primarily an onshore civil engineering contract and is not

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particularly suited to offshore wind farm installation work. This is perhaps why respondents also indicated that they relied heavily on LOGIC and BIMCO Supplytime as well. Both of these contracts are primarily marine contracts with a long track record of use in the oil & gas business. The general formula seems to be that FIDIC Yellow Book is used as the base template and that marine-related elements from LOGIC/BIMCO are then fed into this base contract.

Lastly, there is a strong need to implement some form of standard structure within the offshore industry. Although BIMCO Windtime is a first step in this direction, it nevertheless does not cover some of the major works that are occurring offshore. The Windtime contract does not apply to all aspects of offshore wind, which is natural since it is a very diverse segment. As such, future research should be dedicated towards identifying ways in which offshore vessel contracting can be standardised by merging various elements together from across FIDIC (Yellow/Silver), LOGIC, and BIMCO Windtime.

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Danish Shipping Industry Fact Sheet

» There are more than 1,000 seafarers in Denmark employed due to offshore wind.

» There are currently 132 Danish operated vessels active in the offshore wind industry. The fleet consists of at least 12 different vessel types which are used in all phases of an offshore wind project. There are also 8 Danish operated vessels currently in construction.

Category Vessel Type # of Vessels Jack-up Vessels 7 Heavy Lift Vessels 1 Cable Laying Vessels 11 Construction Vessels Cargo Barge 1 Platform Support Vessels 8 Multi-Purpose Project Vessels 17 Diving Support Vessels 2 Survey Vessels Multi-Purpose Survey Vessels 3 Tugboats 5 Service Vessels Emergency Response (ERRV) 28 O&M Vessels Service Crew Boats 30 Inbound Vessels Multi-Purpose Vessels 19 Total 132

Figure 1. Danish Offshore Wind Vessels » The Danish fleet is second only to the U.K. in the total number of vessels active in offshore wind.

» Danish vessels have been active in offshore wind since the birth of the industry over 50 years ago. The fleet has grown steadily over the years, particularly in Service Crew Boats and Jack-up Vessels in the past few years.

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Figure 2. Danish Offshore Wind Vessels by Vessel Type and Year of Construction » There are at least 23 Danish companies active in offshore wind.

Table 0-1. Danish Offshore Wind Companies (partial list) Company Core business Website

A2Sea A/S Installation of Offshore WTGs www.a2sea.com

Blue Star Line A/S Seabed survey, guard vessels, cable www.bluestarline.com undergrounding Blue Water Shipping A/S Transport of WTG components and www.bws.dk operation of floating hotels Clipper Group Ro/Ro transport of WTG components www.clipper-group.com

CT Offshore Cable installation and maintenance www.ctoffshore.dk

DBB Service and maintenance of WTGs www.dbbjackup.dk

DONG Energy Offshore wind farm operator www.dongenergy.com

DFDS Transport Transport of WTG components www.dfdstransport.com

Esvagt A/S ERRVs www.esvagt.com

Fred. Olsen Installation and Operation and www.windcarrier.com Maintenance Hanstholm Bugserservice Tugboats for the offshore industry www.tugdk.com

Hyperbaric Consult Subsea operations, seabed www.hbc-tec.dk investigation for wind, oil & gas J. A. Rederiet Heavy lift, support, tugboats www.jashipping.com

J. Poulsen Shipping Special transport www.jpsh ip.dk

J. D. Contractor Cable installation and maintenance www.jydskdyk.dk

KEM Offshore Administration of labour and www.kem-offshore.dk equipment Nordane Shipping Cable layout, crew boats and tugboats www.nordane.dk

Northen Offshore Services Transport, subsea services and crew www.n-o-s.se transport NT Offshore Crew management and guard boats www.nt-offshore.dk etc. Offshore Marine Services Chartering etc. www.oms-offshore.dk

Peter Madsen Rederi A/S Seabed preparation, Cable installation www.peter-madsen.dk and Diving Support Seatruck Ro/Ro transport of WTG components www.seatruckferries.com

Svendborg Bugser Tugboats www.svendborgbugser.dk

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Swire Blue Ocean Installation of offshore WTGS www.swireblueocean.com

World Marine Offshore Guardships, subsea mv. www.wm-offshore.com

1. Introduction

1.1 Report Structure Figure 1-1 is a diagram that shows how the various chapters of the report contribute to answering the central question of how members of the Associations can capitalise on the global offshore wind potential.

Figure 1-1. Report Structure 1.2 Methodology

The purpose, methodology, and data sources for each chapter are described below.

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Chapter 2 (Offshore Wind Markets and Forecasts) provides an overview of historical development in terms of megawatt (MW) capacity installed; geographic distribution; major actors in wind turbine supply; operators/owners of offshore wind farms; and provides a special focus on the track record of Danish players in the industry. A market forecast for offshore wind development is provided for 2013-2022, including a detailed view on project capacity for all countries with an identified offshore wind potential.

This research is founded on Navigant/BTM’s recent Offshore Report 20131 as well as work recently completed for a number of our existing clients. It leverages our proprietary projects pipeline database which identifies all historic, under construction, and pipeline (under development) projects and key features (e.g. turbines, project size, location, owner structure, developers, etc.). This work was updated throughout the course of this study to reflect the very latest data and market trends.

Chapter 3 (Offshore Wind Vessels) provides a complete overview of the types of vessels used in today’s offshore wind market, along with future expected requirements covering all supply chain requirements from site scoping & evaluation, through to installation, operation and maintenance and decommissioning. All vessel categories in the market today are identified and scoped to identify their key features, e.g. country flag, size (dimensioning), carrying capacity, crane capacity, special requirements depending on tasks: Jack-up devices/depth capabilities, Dynamic Positioning systems, deck-space for types of cable laying (intra-array vs. export cabling): and O&M boats for catering daily service of material and service crew. The chapter includes a vessel map matrix which indicates the suitability of the relevant vessels for certain services in the offshore wind industry. This chapter also identifies which vessel types can undergo adaptation/modification to play a role in more than one segment. This is an increasing trend that vessels are re-mapped/re-designed and ultimately modified to deliver new services and cater to the fast evolving offshore wind industry.

This chapter draws upon Navigant/BTM’s Offshore Report 2013, recent and ongoing consulting tasks in the offshore space, Navigant/BTM’s proprietary offshore wind databases, and supplementary new research to ensure that all key information is collected.

Chapter 4 (Wind Industry Technology & Industry Trends) provides a technology trend analysis for both the near-term and medium-to-long-term. This analysis utilises the forecasts presented in Chapter 2 and puts them into context for the next generation of wind turbines. This is a particularly critical task due to the lead time in developing and adapting new and existing fleets to service the offshore wind industry.

This chapter makes use of Navigant/BTM’s internal database which maps turbine development and helps to draw out technology positions for expected dimensions/scaling/weights/form of turbines and their constituent components. The chapter includes trends and expected changes in O&M and the installation process which have a significant impact on ship utilisation and effectiveness.

Chapter 5 (Vessel Demand vs. Supply) provides a complete demand forecast for all individual vessel services in the offshore installation and decommissioning phases on a per country basis to identify where the key opportunities reside. It then compares the demand forecasts with the current and near-term forecasted supply of each vessel type.

Navigant developed a Vessel Demand Model to determine vessel per MW conversion factors for each vessel type. The primary inputs to the model are the technology mix from Chapter 4 and the MW forecast

1 Offshore Report 2013, BTM Consult – A Part of Navigant, November 2012

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from Chapter 2. The resulting vessel demand forecast is then compared to the vessel supply that is determined in Chapter 3.

Chapter 6 (Vessel Contracts Analysis) provides an in-depth analysis of the contracting structures in the supply chain for different offshore wind vessels. It provides both a diagrammatic and descriptive review of the key contracting structures in place and identifies any evolutions in the contracting structures expected in the future.

This chapter relies on data collected in an offshore wind vessel contracting survey. The survey questions are shown in Appendix D and were answered by 13 companies. The chapter also draws upon the extensive internal knowledge collected in the specialist wind team, selected interviews with key industry participants, BTM/Navigant’s recent Offshore Report 2013, and Navigant/BTM’s proprietary Offshore Wind Projects Database.

1.3 Supplementary Material

Additional deliverables for this project include two databases and five appendices which are listed in Table 1-1. These databases and appendices are an integral part of the report and are described in more detail in the referenced chapters.

Table 1-1. Offshore Wind Databases Included With This Report Reference Description Features Chapter 3 Offshore Wind Vessels 865 vessels x 26 data fields 78 ports x 15 data fields. Key data fields include size, facilities, cranes availability/ Appendix E Offshore Wind Ports Database capacities, depth, entrance width, tidal constraints, vessel acceptance, and links to supporting infrastructure Appendix A. Profiles of Leading Profiles of two leading operators from 3 Operators by Vessel Type each of 11 vessel types Appendix B. Vessel Demand by 10-year vessel demand forecast for 16 5 Country and Year countries and 16 vessel types Appendix C. Summary Results of Summary of responses of 13 companies to 6 Contracts Review Questionnaire 14 questions Appendix D. Summary Results of Summary of responses of 8 companies to 8 Associations Survey 10 questions Appendix E. Offshore Wind Ports Detailed profiles of 3 major offshore wind 2 Review harbours

2. Offshore Wind Market & Forecasts

2.1 Installed Capacity by Country and Offshore Developer

2.1.1 Installed Capacity by Country

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Table 2-1 shows the status of offshore installations at the end of 2012, listed by country. The figures indicate how much capacity was installed by the end of each year, without taking into account whether the turbines had been connected to the power grid. Although Denmark was the birthplace of offshore wind, the U.K. has taken a leadership role both in the number and size of wind farms since 2009. The U.K. leads the market with almost 3 GW of capacity installed, followed by Denmark with more than 920 MW and the Belgium with almost 380 MW. Germany and China both started installing offshore turbines from 2009 and continue to expand their portfolios. It is necessary to mention that all the offshore wind projects currently installed in China are near shore or intertidal projects.

Table 2-1. Installed MW Capacity of Offshore Wind by Country, as of end of 2012 Accu. Installed Installed Installed Installed Installed Accu. 2007 2008 2009 2010 2011 2012 2012 Belgium 0 30 165 185 380 China 0 63 39 108 110 320 Denmark 398 228 207 833 Germany 0 60 108 30 80 278 Ireland 25 25 Netherlands 127 120 247 Norway 0 2 2 Portugal 0 2 2 Sweden 133 30 163 UK 730 194 262 925 750 2,861 Total World 1,413 344 645 1,444 140 1,125 5,111 Source: BTM Consult – A Part of Navigant, March 2013

2.1.2 Installed Capacity (Test Sites) By Country Although a total figure of 5,111 MW for offshore installations is given in Table 2-1, it should be noted that, unlike in other assessments, smaller projects with a few turbines are excluded. Such projects are considered not to be commercial developments since they are mostly designed for R&D and testing purposes. In addition, these turbines are mainly situated in near shore sites, so they do not face the typical offshore challenges in their daily O&M activity. These test turbines and similar installations are listed separately in Table 2-2. The geographic distribution of these projects is very wide.

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Table 2-2. Installed Capacity of Offshore Wind Test Turbines by Country

Project Country Units WTG Size Manufacturer MW Construction

Roenland (Siemens) DK 4 2.3 MW Siemens 9.2 2002 Fredrikshavn I DK 1 2.5 MW Nordex 2.5 2003 Fredrikshavn II DK 2 3 MW Vestas 6 2003 Fredrikshavn III DK 1 2.3 MW Siemens 2.3 2003 Setana I JP 2 0.66 MW Vestas 1.32 2003 Sakata JP 5 2 MW Vestas 10 2004 Roenland (Vestas) DK 4 2 MW Vestas 8 2005 Breitling (Rostock) DE 1 2.5 MW Nordex 2.5 2006 Kemi Ajos I FIN 5 3 MW WinWinD 15 2007 Beatrice I UK 2 5 MW Repower 10 2007 Bohai test project CN 1 1.5 MW Goldwind 1.5 2007 Hooksiel DE 1 5 MW Bard 5 2008 Kemi Ajos II FIN 5 3 MW WinWinD 15 2008 Avedøre DK 2 3.6 MW Siemens 7.2 2009 Pori Offshore Pilot FIN 1 2.3 MW Siemens 2.3 2010 Kamisu JP 7 2 MW Hitachi 14 2010 Jiangsu Rudong Intertidal trial project CN 16 1.5-3.0MW Nine Chinese OEMs 32 2010 Jiangsu Xiangshui Intertidal trial project CN 3 2.0/2.5MW Sewind/Goldwind 6.5 2010 Avedøre 2 DK 1 3.6 MW Siemens 3.6 2011 Demonstration offshore project of Jeju Island KR 1 2.0MW STX 2 2011 Jiangsu Xiangshui Intertidal trial project CN 1 3.0MW Goldwind 3 2012 Choshi Offshore Demonstration JP 1 2.4MW Mitsubishi 2.4 2012 Offshore of Kabashima JP 1 0.1MW Hitachi 0.1 2012 Demonstration offshore project of Jeju Island KR 1 3MW Doosan 3 2012 Total 164.42 Source: BTM Consult - A part of Navigant - March 2013

2.1.3 Installed Capacity by Turbine OEM Table 2-3 shows the ranking of turbine suppliers based on their total installations by the end of 2012. With many years’ experience, Siemens and Vestas remain the market leaders, supplying turbines to most of the newest developments. There is no doubt, however, that companies like REpower, Areva Wind, BARD, Sinovel and Goldwind will see more turbines installed in the coming years and that new entrants from the Far East, notably Japan and South Korea, will soon enter the offshore market.

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Table 2-3. Installed Capacity of Offshore Wind by Turbine OEM, as of end of 2012

Turibine OEMs Total installatrion by supplier (MW) Market share %

2,789 54.50%

1,397 27.29%

395 7.71%

170 3.32%

158 3.09%

100 1.95%

36 0.70%

30 0.59%

10 0.20%

Source: BTM Consult - A part of Navigant - March 2013

2.1.4 Installed Capacity by Offshore Developer Table 2-4 shows that the top ten offshore wind operators account for 74% of the global offshore wind market. Of these, the top-five are leading European utilities, while Chinese Longyuan Power Group represents the only Asian presence in the market. The reduced share of the offshore market held by the top ten operators, down from 85% two years ago, indicates increasing market diversification as more utilities, independent power producers (IPPs) and most recently pension funds and industrial conglomerates enter the sector. Table 2-4. Top 10 Offshore Wind Operators (end of 2012), MW Capacity in operation Market share Operater Country (MW) %

Denmark 889.0 17.38%

Sweden 783.0 15.30%

Germany 525.0 10.26%

Germany 459.0 8.97%

UK 344.0 6.72%

China 209.0 4.08%

Norway 158.0 3.08%

UK 142.0 2.77%

Netherlands 120.0 2.35%

Others 1,329.0 26.01% Total 5,116.00 100.00% Source: BTM Consult - A part of Navigant - March 2013

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2.2 Historical Development – Technology and Size

2.2.1 Historical Development by Turbine Technology Currently, conventional gear drive, medium speed and direct drive are three major drive train concepts adopted by the wind industry. Conventional drive train design, incorporating of fast speed asynchronous generator (induction generator) and a three stage gearbox, still dominates the current offshore wind market. Figure 1-1 shows that by end of 2012, 97% of wind turbine installed at commercial offshore wind farms were of traditional design. Turbine vendors still using the traditional design for their next generation offshore wind turbine include REpower, BARD, Sinovel and CSIC Haizhuang.

While the market is dominated by traditional drive trains with gearboxes, direct drive systems have been gaining an increasing share of the wind market. Direct drive turbine accounts 2% of global offshore wind installation by the end of 2012, but its market share is expected to grow since Siemens, Alstom and Goldwind’s next generation 6 MW offshore wind turbine has chosen the direct drive solution.

The interest in direct drive arises from a desire to improve turbine reliability, a critical parameter in the offshore industry. However, price volatility of rare earth metals, which are used in the permanent magnet generators (PMG) most often used in direct drive configurations, is causing the wind industry to question if direct drive is the optimal path to achieving a more reliable turbine with a lower cost of energy.

Ultimately, a number of manufacturers have opted to find a compromise between the traditional drive train using a three stage gearbox and direct drive systems that totally dispense with a gearbox, settling instead on medium speed systems with fewer stages in the gearbox. A lower number of rotations, which for medium speed designs can range between 100-500 rpm, is seen as fundamental to achieving increased reliability. Furthermore, using medium speed systems enables a reduced top-head mass compared with a direct drive system; the reduced mass makes logistics simpler while curbing tower and foundation costs. In fact, medium speed permanent magnet generators yield the highest level of drive train efficiency of any commercial wind design, with high efficiency seen even in the lower spectrum of wind speeds. Companies pursuing this concept for their next generation Multi-MW offshore wind turbine include Areva, Vestas, Gamesa, Samsung and Mingyang. By the end of 2012, only 1% of total offshore wind installation adopted medium speed drive solution, but its market share is also expected to grow.

Source: BTM Consult, A Part of Navigant – March 2013

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Figure 2-1. Market Share of Different Turbine Technologies

2.2.1 Historical Development by Plant Capacity

Over the past two decades, offshore wind farms have become larger in size and capacity. In the early 1990s, most plants were built for demonstration purposes. As developers become more confident in offshore wind technologies and demand increases, it is likely that plant sizes will continue to grow. These larger plants coincide with projects moving further from shore into deeper waters and using larger turbine designs to take advantage of stronger offshore winds. Figure 2-2 illustrates the increasing trend in plant sizes over time, with light brown bubbles showing the anticipated plant size for projects currently under construction according to their planned completion dates.

Wind plant size and location will drive key strategic elements such as staffing, the design and ownership of vessels, and shared facilities. Wind plant farther from shore will require technician crews to reside at accommodation vessel or facilities at sea. Larger plant will justify running their own service and crew transfer vessels, while smaller plant will opt to share vessels as well as O&M and spare parts storage facilities. Each plant will have a breakeven calculation for buying versus leasing versus sharing each type of equipment required.

Note: Plant capacities are shown for the year each project reached completion. Source: BTM Consult, A Part of Navigant – March 2013 Figure 2-2. Historical Development by Plant Capacity

2.2.2 Historical Development by Turbine Capacity

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In terms of offshore wind turbine technology, the market has been dominated by multi-MW designs. The average capacity-weighted nameplate capacity of offshore wind turbines installed between 2007 and 2011 is below 3.6 MW. In 2011, however, the average size of newly installed turbines increased to 3.95 MW as projects have increasingly deployed 3.6 MW and 5 MW turbines. As shown in Figure 2-3, the average size has just passed the milestone of 4.0 MW in 2012 and this trend toward larger turbines will likely continue.

Note: Average turbine size is based on an annual capacity-weighted figure. Source: BTM Consult, A Part of Navigant – March 2013 Figure 2-3. Average Turbine Size for Historic Global Offshore Wind Farms

2.3 Offshore Wind Forecast

2.3.1 Introduction to Offshore Wind Market Forecast and Prediction to 2022

This section presents a forecast for the global wind energy market over the next five years (2013-2017), broken down by countries and regions, plus an additional prediction for the following five years (2018- 2022). Traditionally, the BTM five year prediction period does not include specific data for individual countries because of the uncertainties associated with a forward projection over a long period, however, BTM has developed a best estimate broken down by country and region for this study. Estimates of the outcome beyond 2017 are based on an interpretation of the geopolitical picture in relation to climate change and energy security issues, especially the repercussions from the Japanese Fukushima disaster. The anticipated introduction of consistent policies on energy and the environment, both within the European Union and globally, will be decisive for the future development of offshore wind power and other clean energy sources. Furthermore, consideration of availability of critical items in the offshore wind supply chain factor into the forecast and prediction analysis.

It is important to distinguish between the forecast period (2013 to 2017) and prediction period (2018 to 2022). Both provide an outlook for future offshore wind market development, but the near-term nature of the forecast makes it more robust than the longer-term prediction beyond 2017. Most of the projects included in the forecast period are already in progress and in many cases the wind turbines have been ordered and the commission date set. In the prediction period, the size of project pipelines identified in key markets is significant, but these projects are at an early stage of development, making them highly sensitive to macro-economic changes, the extent to which politicians are willing to take action on avoiding

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or at least slowing the rate of greenhouse gas emissions, and the ability of next generation offshore wind technology to compete on price with other options.

In addition, it needs to be noted that the forecast and projection included in this report do not include activities like decommissioning and repowering. The world’s first commercial offshore wind project greater than 100 MW was installed in 2002. Less than 100 MW of offshore wind turbines were installed before that year. Assuming a 25-year life span for the offshore wind project, consideration of decommissioning and repowering will become more significant for the years after 2027.

2.3.2 Methodology for Offshore Wind Market Forecast to 2017

The methodology applied to forecasting the size of the market in terms of megawatts installed over the next five years is not the same as that used for the market prediction post 2017. In the five year forecast, all projects in development are taken into consideration, but with a main focus on projects that have reached consent application, achieved consent or are in construction, as highlighted below:

Start of Pre- Consent Under Consent Operation planning consent Application Construction

Project progress data from five leading European offshore wind markets indicates that the average time taken for a project to progress from initial planning to the start of operation is six years. In the world’s largest offshore wind market, the U.K., it takes two years to prepare a licensed project for consent application; achieving consent takes a further year; and it takes another two years for a 150-200 MW wind farm to be built and fully connected to the power grid, a process that takes four years for a 500 MW project (assuming 3.0-3.6 MW turbine is selected). In China, experience gained from the first two commercial offshore wind farms indicates that it takes between two and two-and-a-half years to bring an offshore wind farm into full operation from the start of the consent process.

Crucial to the time it takes to build an offshore wind farm are the total number of turbines to be installed and the size of the “weather window” during the construction period. A commercial offshore wind project of 100 turbines can generally be installed in one season, given fair weather. Consequently, a 200-300 MW project typically take two years to reach commissioning from start of construction (assuming 3.0-3.6 MW turbine is selected). In the first year, cabling and foundations are normally put in place and in the following year's construction season the wind turbines are all installed, provided they number fewer than 100.

For the first two to three years of the forecast period (2013-2017), the forecasted megawatt capacities for each country in general reflect the volume of megawatt currently under construction. The rest of the forecast period includes recently consented projects, or projects for which consent applications have been submitted.

2.3.3 Methodology for Market Prediction to 2022

Compared with the five year forecast, the five year prediction of the size of the market in terms of megawatt installed beyond 2017 introduces a greater element of uncertainty. The methodology applied to forecasting the size of the market in terms of megawatt installed over the second set of five years is different from that used for the 2013-2017 market forecast. Essentially, it is a combination of the bottom-up analysis, as deployed in the forecast period, and a top-down approach.

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The bottom-up analysis includes projects as announced by developers/governments that are in the early planning, pre-consent, consent application, and consent phases, as highlighted below:

Projects included in the prediction period (2018-2022) are those at the early stage of development, as illustrated above. As examples, these include most of the projects from the U.K.'s Round 3 of offshore wind farm licensing that are expected to materialise during the prediction period, projects in detailed planning, projects proposed by South Korean and Japanese government authorities for realisation in the medium term, and projects so far proposed by Chinese provincial governments.

The top-down approach is based on a high-level model accounting for certain general assumptions outlined below. These parameters are more concretely defined in the 360° market analysis for wind power development to 2022 in Section 2.2.4.

The general assumptions behind the predictions beyond 2017 are the following:

» The next generation of offshore turbine technology, including supporting structures, is mature, commercially available and ready for deployment. » The levelised cost of offshore wind energy proceeds on a downwards trajectory for wind farms installed in 2013-2017. » Renewables remain an important item on the political agenda in established markets and will grow in importance as energy technologies in emerging markets. » Infrastructure improves to support growth, including timely and sufficient reinforcement of the electricity grid and expansion of transmission capacity in Europe to allow commissioning of projects on schedule; indications of progress towards a fully integrated European electricity transmission system; and sufficient investment in ports near designated offshore wind development areas to facilitate wind farm construction and operation. » Improvement in the provision of service and maintenance, including further adaptation to offshore requirements. » Existence and success of a sizable market for trade of CO2 emissions. » Access to sufficient long-term financing to facilitate equity investment and the establishment of investment vehicles to suit a range of investment profiles. » A significant reduction (up to 30%) in the cost of offshore wind energy.

The degree of influence of each of the relevant parameters on the inputs from the bottom up analysis is based upon a detailed market evaluation and a series of interviews with relevant stakeholders in the respective offshore markets. For the U.K. and Germany, relying solely on the developer announcements (i.e. bottom up analysis) for the prediction period would yield unrealistic annual installation rates; as such, the top-down process has a significant influence on reducing the annual rate of installation to the levels delivered in our final market forecasts.

The overall process used to develop the final prediction figures is outlined below:

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Bottom-up project- Final Top-down model utilising by-project analysis prediction 360° parameters figures

Market insight/ interviews

The final prediction figures which emerge from this evaluation are outlined in Table 2-6.

2.3.4 360° Market Analysis for Offshore Wind Power Development to 2022

Table 2-5 below provides a complete 360° summary of the key parameters used to substantiate the medium and long term market projections for offshore wind power growth. The model includes, but is not limited to, consideration of the parameters described here:

» Historic activity: defines the relevant maturity and level of acceptance of offshore wind in the local market. » Official country targets: indicates the longer-term vision, level of political will, and/or intent to promote a pre-defined milestone and role for offshore wind in the future energy mix. » Market structure: presence of policies known to have a marked impact on industry development and which facilitate technology advances, through R&D, necessary for continued sector growth. » Local supply chain: not essential for a nascent market as sourcing from countries with an established offshore supply chain is possible. Establishing a local supply chain, however, is fundamental for a sustainable, long-term, economically viable offshore industry. » Balance of plant: availability of essential components other than the wind turbines and their supporting structures, such as export cables, that can represent an industry bottleneck. » Availability of finance: Investors other than utilities are able and willing to put money into offshore wind development are fundamental to the sector's success; realisation of the pipeline of offshore wind projects cannot be sustained with utility financing as the sole source. » Ports: access to suitable ports for logistics, the assembly and construction of offshore wind farms is critical for realisation of offshore wind projects and the sector's long-term viability. » Transmission network: timely access to a fit-for-purpose transmission network is crucial to capitalising on the offshore wind potential. A clear framework for delivery, ownership and operation of transmission assets is essential for achieving the required transmission capacity and for ensuring the availability of financing for offshore wind development.

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Table 2-5. Offshore Wind Market Analysis

Legend: Low High

Note: Germany’s incoming coalition government is likely to lower its current offshore wind target by 2020 from 10 GW to 6.5Cause GW andfor to steeply Some cause cut its FiTNo formajor wind power according to the latest energy coalition talks. Source: BTMConcern Consult, Afor part concern of Navigantconcern - September 2013

2.3.5 Global MW Demand 10-Year Forecast

Table 2-6. Global Offshore Wind MW Forecast 2013-2022 shows our 10 year forecast for global offshore wind installations. The near term (2013 through 2017) forecast is derived from BTM’s most recent forecast included in World Market Update 2012 report, coupled with the latest project development status observed after the release of the report by the end of March 2013. The near term forecast is based upon project-specific data and only includes projects that have a high likelihood of being installed based upon equipment orders or progress toward reaching consent. The long term (2018 to 2022) forecast has higher uncertainty and is derived from information such as: U.K. Round 3 offshore wind farm licensing, projects in detailed planning stages and projects proposed by governments with realisation within the prediction time period.

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Table 2-6. Global Offshore Wind MW Forecast 2013-2022

Cum. Cumulative Totals 13'- [MW] End of 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 Total end of 22' 2012 2022 U.K. 2,861 1,150 750 650 1,000 1,500 2,000 2,750 3,250 3,250 3,000 19,300 22,161 Denmark 833 400 0 200 100 300 284 348 285 0 0 1,917 2,750 Netherlands 247 0 78 278 300 200 0 200 368 260 0 1,684 1,931 Germany 278 750 800 1,000 1,050 1,500 1,400 1,400 1,500 1,400 1,300 12,100 12,378 Ireland 25 0 0 0 0 0 0 290 237 0 0 527 552 Belgium 380 111 216 165 0 400 433 145 119 0 0 1,589 1,969 Sweden 163 48 0 86 150 320 567 348 474 463 215 2,671 2,834 Norway 2 3 0 10 24 0 0 58 95 93 107 390 392 France 0 0 0 0 250 850 846 580 474 463 537 4,000 4,000 Finland 0 3 0 0 0 200 236 348 308 324 403 1,822 1,822 China 320 150 600 1,650 1,850 2,100 2,364 2,550 2,847 3,010 3,260 20,381 20,701 South Korea 0 30 144 200 300 500 567 812 625 685 733 4,596 4,596 Japan 0 22 7 42 150 225 200 215 225 250 315 1,651 1,651 Taiwan 0 0 7 14 50 100 95 105 100 150 200 821 821 Canada 0 0 0 0 0 0 0 0 0 93 107 200 200 US 0 0 54 370 126 165 1,030 900 725 1,000 1,000 5,370 5,370 Other 2 0 0 0 0 0 0 0 0 0 0 0 2 (Portugal) TOTAL 5,111 2,667 2,656 4,665 5,350 8,360 10,022 11,049 11,632 11,440 11,177 79,019 84,130 WORLD Source: BTM Consult, A Part of Navigant, September 2013

Table 2-6 details a country-by-country projection of market growth for offshore wind development in 2013- 2022. The most significant figures and trends are:

Global

Offshore wind power represents a significant share of the global market for wind power and is expected to account for 9.3% of global wind power installation by the end of the prediction period. The average annual growth rate for new installations in the next ten years is expected to be 15.4% in the baseline scenario. For the low and high scenarios the annual growth rates are expected to be 13.1% and 17.3%, respectively.

Europe

Annual installation of offshore wind capacity will reach about 5.6 GW by 2022, amounting to 24% of new wind power installations in Europe by that year. By the end of 2022, Europe will account for 60.4% of total global offshore wind installation and maintain its position as global market leader. The leading European countries in terms of both new capacity each year and cumulative capacity by the end of 2022 are the U.K. and Germany, in rank order. These two markets will account for 43.6% and 24.4%, respectively, of total offshore wind installation in Europe by 2022.

Asia Pacific

Offshore wind development in Asia Pacific in the forecast period to 2017 is moderate, but rapid growth is expected in the following five-year period. In China, installation of 20.7 GW is expected by 2022, representing 24.6 % of total global offshore wind power generating capacity at that time and making it the largest offshore wind market in the world after the U.K. After China, strong growth comes from South

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Korea and Japan. The two countries will represent 5.5% and 2.0% of global offshore wind capacity by the end of 2022. By the end of 2022, Asia Pacific will account for 32% of total global offshore wind installation.

North America

On the American continent, offshore wind power development will mainly take place in the United States and Canada. While the U.S. recently installed a small floating offshore wind turbine in the east coast, no commercial offshore wind plant has yet been installed in either country and the extent of the political will to pursue development of an offshore wind market is uncertain. For these reasons, more moderate market growth is expected compared to growth rates in Europe and Asia. A total of 5.5 GW is expected to be installed on the American continent by 2022.

Note: The sources used to calculate offshore wind power as a proportion of combined offshore/onshore global wind capacity are available in BTM's World Market Update 2012 (March 2013).

Source: BTM Consult – A Part of Navigant, September 2013 Figure 2-4. Global Offshore Wind Forecast by Country 2013-2022

2.3.6 Forecast Sensitivities

The Global MW demand 10-year forecast presented in Section 2.3.5 is based on the assumption that the offshore wind development will follow a scenario of “Business as Usual”. The general assumptions behind

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the predictions (2018-2022) are based on a health scenario expected by offshore wind stakeholders. To assess the risk to members of the Associations of unforeseen changes in annual demand, however, we developed high and low demand scenarios by using the Business as Usual scenario as the baseline.

As with any forecast, our degree of confidence decreases over time. Thus, we developed a high forecast that increases in deviation from the baseline over time at a rate of 2% per year and a low scenario with an opposite growth rate (-2% per year). The low scenario, however, will be more realistic compared with the high scenario, due to the following challenges are still remained for the global offshore wind industry.

» Price competition from natural gas following discoveries of alternative sources of gas. » Complex investment climate with equipment manufacturers suffering a delayed hangover from the global economic crisis. » High life-cycle cost of energy from offshore wind compared to other mature generation assets. » Policy uncertainty in key established offshore markets, especially the UK (Electricity Market Reform introduced a new market incentive, Contracts for Difference) and Germany (Incoming government’s energy policy discussion about cutting support for wind power and lowering the current offshore wind target for 2020 and 2030.) » Limited grid availability and the delay of delivery, especially Germany. » Lack of standardisation and modularisation in offshore wind turbine designs and subsequently in the supply chain, with resulting potential supply constraints, particularly in the balance of plant. » Host of natural technical engineering challenges for developing and deploying offshore turbines in deeper waters farther offshore. » Climate change has dropped down the political agenda during the economic crisis that cause further uncertainty of carbon trade market. » Dramatically reducing the cost of offshore wind CAPEX, which is two to three times greater than from land based wind power plant. » Innovative approaches to expanding the "weather window", thus reducing waiting time in construction, service and maintenance of offshore wind farms to lower cost and raise wind turbine productivity.

Table 2-7. Global Offshore Wind Forecast Scenarios

Global Annual Installations [MW] 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022

High 2,667 2,709 4,852 5,671 9,029 11,025 12,375 13,260 13,271 13,189 Baseline 2,667 2,656 4,665 5,350 8,360 10,022 11,049 11,632 11,440 11,177 Low 2,667 2,603 4,479 5,029 7,691 9,020 9,723 10,003 9,610 9,166 Source: BTM Consult – A part of Navigant – September 2013

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Source: BTM Consult – A part of Navigant – September 2013 Figure 2-5. High and Low Global Offshore Wind Scenarios

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3. Offshore Wind Vessels

This chapter includes three parts. Part one identifies and defines all the vessel types adopted in the offshore wind project life cycle. Part two identifies the availability of offshore service vessel by type and region/country. Part three profiles the leading vessel operators in each vessel segment.

3.1 Segments in Ship-based Services for the Offshore Wind Industry

3.1.1 Vessels Adopted in the Offshore Wind Project Life Cycle

The offshore wind project life cycle includes four phases: pre-construction, construction, project O&M and decommissioning. As shown in Source: BTM Consult, A part of Navigant – August 2013 Figure 3-1 below, Phase 1 consists of two types of services: Survey and installation of met mast. Phase 2 is the most complicated process compared with the other phases. Services in Phase 2 include turbine foundation installation, turbine installation, offshore converter station (AC & DC) installation and cable installation. Services in Phase 3 mainly focus on wind turbine operation and maintenance. The last phase is decommissioning. Services in this phase include decommissioning of wind turbines, converter station and met mast. Less than 100 MW of offshore wind turbines were installed before 2002. Assuming a 20-year life span for the offshore wind project, the service in the decommissioning phase won’t become significant before 2022.

Source: BTM Consult, A part of Navigant – August 2013 Figure 3-1. Segments in Ship-based Services for Offshore Wind

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Based on the services involved in offshore wind installation and decommissioning, it can be seen from Source: BTM Consult, A part of Navigant – August 2013 Figure 3-1 that at least 17 different types of vessels are needed during the offshore wind life cycle. Table 3- 1 is a matrix that shows suitable vessels for certain services in the offshore wind industry.

Table 3-1. Offshore Wind Service vs. Vessel Types

Source: BTM Consult, A part of Navigant – August 2013

3.1.2 Definition of Vessel Types in the Offshore Wind Sector

3.1.2.1 Survey Vessel

Survey Vessels are used for a wide range of activities, including scientific and environmental research, for offshore wind industries. Normally three types of surveys are required at the pre-construction phase by the offshore wind developers. These are Environmental surveys, Geophysical surveys and Geotechnical surveys. A representative Survey Vessel is shown in Figure 3-2. Representative vessels are similarly shown in the other sections of this chapter.

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Source: CT Offshore A/S Figure 3-2.CT Offshore MV Sander 2 Survey Vessel Environmental survey (including benthic, pelagic, ornithological and sea mammal environmental surveys) have to be performed for the Environmental Impact Assessment and can be completed by vessels equipped with sensors or a remotely operated vehicle (ROV), also called ROV Support Vessel. For example, anchor handling, tug and supply (AHTS) vessels can be used as ROV Support Vessels.

Geophysical surveys are seismic surveys of the seabed, which helps with the planning of installation procedures, cable routes, jack-up operations etc. Geophysical work covering seabed bathymetry (depth data), seabed features mapping, stratigraphy (geological layering) and analysis of hazardous areas can be done by Geophysical Survey vessel. The small or relatively low-cost vessels can be used for this task at the wind farm with shallow water.

Geotechnical surveys are undertaken at the pre-construction stage to allow detailed design and installation procedures to be developed for foundations, array cables, export cable routes and jack-up operations. Geotechnical work accounting for around 80% of the seabed surveying task requires larger, more stable vessels with highly skilled operators on-board. Geotechnical investigations involving sample boreholes, sample penetration tests, core samples and plough trials can be performed by dedicated Geotechnical Survey Vessels. It should be noted that Multi-purpose Survey Vessels also have been adopted by leading offshore survey service providers to perform the entire survey for offshore wind.

3.1.2.2 Jack-up Barge or Vessel

Jack-up Barges and Vessels had been the most common vessel type used for turbine installation. This type of vessel is also normally used in the installation of foundations and transition pieces at offshore wind projects. Jack-up Vessels used for offshore wind installation can be divided into three categories/generations according to their different functions.

Source: A2SEA Figure 3-3. Sea Installer Offshore Turbine Installation Vessel

The first category is Jack-up Barges, which is a type of self-elevating mobile platform that consists of a buoyant hull fitted with a number of movable legs, capable of raising its hull over the surface of the sea. Once on location the hull is raised to the required elevation above the sea surface on its legs supported by the sea-bed. The first generation of Jack-up Vessels with heavy lift capacity is not self-propelled and needs

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to be towed to the site similar to an offshore oil and gas platform. Additionally, Jack-up Barges don't have large working decks, storage space or accommodation.

The Jack-up Barges included in the second category have a large working deck, storage space and accommodation, but without propulsion. The third category is ship shaped self-propelled Jack-up Vessels, which are purpose built wind turbine installation vessels with a dynamic positioning (DP) system capable of installing monopiles, transition pieces, tripods, jackets and large turbines up to 5-6 MW. The third category is the mainstream system currently built by the offshore wind industry.

Heavy maintenance and major repair and overhaul work can be carried out by the same vessel types used for turbine installation. The offshore wind industry is, however, pursuing the purpose built offshore wind O&M Jack-up Vessels or remodeled Jack-up Vessels and older generation of Jack-up Barges for turbine O&M service, due to the high demand for turbine installation and higher cost of operations. In general, Jack-up Barges or Vessels can be used for the entire offshore wind project value chain.

3.1.2.3 Tailor-made O&M Vessel

With offshore wind installation expanding in North Europe and many plants installed further offshore, finding a smart O&M solution for offshore wind fleets has been listed on the agenda by both offshore turbine OEMs and offshore wind farm operators. The offshore wind O&M services include routine maintenance and regular checks and substantial repair work and turbine overhaul. The first part can be likely done by Service Crew Boats and other small sized vessels, but the second part requires similar vessels to those adopted for turbine erection. Despite the fact that existing Jack-up Vessels for offshore wind sector are capable of performing the major O&M repair work, it is too expensive and sometimes the O&M service sector has to compete with turbine installation and the offshore oil and gas (O&G) industry. In this context, the idea of building Tailor-made O&M Vessels have been brought to the table by Danish and German vessel operators.

Compared with the standard offshore turbine installation Jack-up Vessels, its size (full crane capacity of about 500T and flexible accommodation concept) is smaller, and therefore, has lower capital and operating costs. This vessel design does not require jack-up during loading in port, but still allows full use of the crane, which eliminates the extra charges at some ports for the jack-up process. The purpose built service Jack-up Vessels can stay offshore for longer periods and operate in worse weather conditions and therefore expanding the "weather window".

Source: DBB Jack-Up

Figure 3-4. Wind Server O&M Vessel

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3.1.2.4 Heavy Lift Vessel

Heavy lift vessels are designed to transport and lift large and heavy cargo that cannot be handled by normally equipped vessels, such as the topside of an AC substation with a weight of great than 1,000 metric tonnes. Heavy lift vessels are not new to the wind industry because they have been widely used in the offshore O&G industry. Heavy lift vessels deployed to support offshore wind industry in Europe are mainly drawn from the offshore O&G industry and offshore construction sector, but the purpose built offshore wind installation Heavy-lift Vessel has been available since 2011 when China Longyuan Zhenghua Marine Engineering's first Heavy-lift Vessel was delivered.

The Heavy-lift Vessels are needed for the whole offshore wind value chain. To install or later remove the very large loads of offshore wind AC/DC converter stations, Heavy-lift Vessels are required. In addition, certain offshore wind projects used Heavy-lift Vessels for foundation and turbine installation work as well. In Europe, the Heavy-lift Vessel was only used to install the pre-assembled REpower 5.0 MW turbine at the Beatrice Wind Farm Demonstrator project in Scotland, but its deployment is more widespread in the Chinese offshore wind market.

Source: DBB Salvage A/S Figure 3-5. DBB Samson Heavy Lift Vessel

The Heavy-lift Vessels were classified into five different categories according to different design concepts and foundations. The first category is the ship shaped self-propelled Heavy-lift Vessel with multi-crane on board. This type of heavy lift vessels equipped with a DP system can be used for constructing the offshore foundation. The second category is none self-propelled floating crane barges. The towed floating platform with a dual heavy lift crane on board can be used for the installation of foundations, substations and pre- assembled wind turbine. The third category is the self-propelled Monohull Crane Vessel. Equipped with a heavy lift crane and DP system, this type of vessel can be used for the transportation and installation of foundations and substations and most recently were also adopted for wind turbine installation in China. The fourth category is the Semi-Submersible Crane Vessel (SSCV). The SSCV principle provides the largest heavy lift capacity in the world and can be used for the installation of offshore wind converter foundations and topsides with a weight of more than 9,000 metric tonnes. The fifth category is the heavy lift catamaran that originally was used for bridge construction in Europe. In 2012 China delivered the first customized heavy lift catamaran for wind turbine installation.

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3.1.2.5 Cable Laying Vessel

The primary function of the Cable Laying Vessel is to install the array cable (interconnections between the turbines and the offshore substation) and install the export cables (linking the wind farm offshore substation to the onshore grid). Cable laying equipment has been developed to serve the telecom and O&G sectors since the mid-1960s and more recently to serve the renewable energy industry. The main features of a cable laying platform include cable carrying capacity, availability of deck-space, and vessel maneuverability. The central feature is single or multi-layer carousel which has the cable spooled onto it. Upon installation, the cable is unwound, straightened and laid onto the seabed in a “J-lay curve” typically from the vessel stern. Cable layers are also equipped with additional devices that assist with the trenching and burial process; these include a cable plough and Remotely Operated Vehicles, or ROVs. The latest Cable Laying Vessels in today’s market include those equipped with Dynamic Positioning (DP) systems designed to hold the ship stable and in-position under challenging weather conditions.

Source: CT Offshore Figure 3-6. CLV SIA Cable Laying Vessel

Cable Laying Vessels can be divided into Inter-array cable installation vessels and Export cable installation vessels. Normally, the cable-laying barges are needed for shallow waters, in which case the ship shaped large Cable Laying Vessels are no longer practicable. Often there is some overlap in the timing of the installation of array and export cables and separate vessels are typically contracted for each activity, although some vessels are capable of installing both cable types. Those vessels are also called “Multi- purpose Cable Laying Vessel”.

3.1.2.6 Diving Support Vessel (DSV)

Diving support vessels/boats are used to provide commercial diving services for offshore wind farm projects. The diving services normally include scour surveys, underwater inspections and maintenance, J & I tube installations, cable pulls, rock armour placement, CCTV video, etc. DSVs can be equipped with mobile decompression chambers, diving monitors, communication radios, diving supervisor workstations and other tools for supporting the diving assignments under the water up to 100 meters. DSVs are needed for the construction period of the offshore wind farm.

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Source: JD-Contractor A/S Figure 3-7. M/S Honte Diving Support Vessel

3.1.2.7 Construction Support Vessel

Construction support vessels include Cargo barges (or Transport barges) and Platform supply vessels (or offshore supply vessels), which are used as suppliers of transportation services during the offshore wind project construction period.

Cargo Barges are used to transport the heavy cargo such as offshore turbine foundations (monopiles, transition pieces, jackets, tripods, and tripiles), substation foundations and topsides from the offshore wind logistics port to the offshore wind farm. The Cargo Barges with large open deck and higher availability can also support the first generation of offshore wind Jack-up Barges relying on the separated Cargo Barges for large working decks and storage space. Cargo Barges provide a cheap solution to transport wind turbine related BOP (balance of plant) items from shore to offshore wind installation sites, but they are too slow and have a limited weather window of operation. Cargo Barges can be not only used during the construction period, but also for project decommissioning.

Source: Aarsleff Bilfinger Berger Joint Venture Figure 3-8. Aarsleff Bilfinger Berger JV 2 Cargo Barges

Platform supply vessels (PSV) are used to transport cargo, supplies and crew from the offshore ports to the offshore wind farms. PSVs are mostly equipped with a Dynamic Positioning (DP) system and range from 20 to 100 meters in length with a deck up to 1,000m² and have accommodation available for between 5 to 35 personnel. PSVs are capable of maintaining high speeds even in tough weather conditions compared with Cargo Barges, but are more expensive to charter. In the offshore wind sector, PSVs are also used to transport foundations and nacelles.

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Source: Maersk Figure 3-9. Maersk Finder Platform Supply Vessel

3.1.2.8 Service Crew Boat/Vessel

Offshore wind Service Crew Boats/vessels, or Personnel transfer vessel are designed to transport personnel comfortably and safely between the shore and offshore wind farms. The Service Crew Boats normally adopt the design of a monohull, or catamaran, with a length between 15 to 25 meters. This type of vessel includes storage areas, WC, shower, cabin for crew, air conditioning/heating, navigation equipment, a small sized hydraulic crane (optional) and personal access equipment (optional) and is capable of transporting 10-15 passengers at a time. The Service Crew Boat can be used to provide support during both the construction phase and the O&M phase of an offshore wind project. Owing to the wide availability of small to medium size contractors, service crew transfer boats can be contacted on short or long term leases.

Source: Dong Energy Figure 3-10. DJURS Wind Crew Boat

3.1.2.9 Tugboat

The Tugboat is a standard component required at each stage of the offshore wind supply chain. Most tugs have two-stroke engines, which makes them capable of towing weights of up to 5 to 10 times their own weight. The exact towing capacity also depends on engine type, propeller size and shape of the Tugboat apart from the engine size. Most of the Tugboats used for offshore wind are ocean-going tug types capable of operating in the open sea for towing Cargo Barges, Jack-up Barges, cable laying barges, and even floating turbine and floating converter stations.

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Source: JD-Contractor A/S Figure 3-11. T/B Naja Tugboat

3.1.2.10 Safety Vessel/Standby ERRV

With more offshore turbines being installed in rough seas and several major offshore accidents having recently occurred in the German North Sea, the HSSEQ (health, safety, security, environment and quality) is under the spotlight in the offshore wind sector. This is also why standby Emergency Response Rescue Vessels (ERRV) are now required by some offshore wind project developers to locate at offshore wind farms where they are ready to provide emergency response duties such as firefighting and personnel rescue. Standby ERRVs, with a normal length of 30 to 45m operated by a well-trained and experienced crew are able to perform offshore rescue operations in adverse weather conditions. The Danish company Esvagt, which mainly provides ERRVs for offshore O&G, is also a leader in the offshore wind business sector at present.

Source: ESVAGT A/S Figure 3-12. ESVAGT CORONA Emergency Response Rescue Vessel

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3.1.2.11 Multi-Purpose Project Vessel (MPPV)

As the name implies, Multi-purpose Project Vessel (MPPV), or multifunctional/ multirole vessel, means it can be used to provide different services during offshore wind project construction.

Source: ESVAGT A/S Figure 3-13. ESVAGT OBSERVER Multi-purpose Project Vessel

Anchor Handling Tug Supply Vessel (AHTSV) is a typical Multi-purpose Project Vessel (MPPV) adopted in the offshore wind sector. AHTSVs have a powerful engine and can operate in deep water and handle rough offshore weather conditions. The vessels are built to tow the platforms, or barges to and from sea, and then anchor the platforms in a desired location. In addition, AHTS vessels can be used as supply vessels for project construction and O&M, ROV support vessel and standby ERRV. Apart from AHTSV, Multicat have also been adopted by the offshore wind industry as MPPV to provide services such as towage, anchor handling, survey and dive support, etc. It is important to note that other vessels capable of providing more than 2 to 3 different services for offshore wind are also classified as MPPV.

Multi-purpose Project Vessels (MPPVs) are not involved in the inbound service; therefore, it should be distinguished from the Multi-purpose Vessel (MPV) cargo vessels that play a major role in this area.

3.1.2.12 Accommodation Vessel

When working at the offshore wind project, the engineers, technicians and service crew often spend more time travelling to and from the site than actually working on the installations. The concept of an accommodation vessel, or a floating hotel, however, provides a solution to this challenge and enables the technicians to access the offshore site in short weather windows. The accommodation vessels are specially designed to provide suitable accommodation for people working on offshore installations and can be moved around other vessels, so it makes the project construction work much more efficient. To provide a comfortable environment for the workers out of shore, the accommodation vessels normally include restaurant/canteen, lounge, fitness room and entertainments such as a cinema.

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Source: C-Bed Floating Hotel Figure 3-14. Wind Solution Accommodation Vessel

Most of the accommodation vessels used by the offshore wind industry are converted from passenger Ro/Ro vessel, or ferry boats, although the purpose built float hotel is also available for chartering. The tailor-made accommodation vessels are smaller than the converted vessels, but they have a user-friendly design for the offshore wind sector, such as personal access equipment, a DP System, and onboard crane.

3.1.2.13 Multi-Purpose Vessel (MPV)

Operational flexibility is the key when it comes to multi-purpose vessels (MPV). They have to be ready for any task and any cargo transport requirements at all times across the sea. There are several types of vessels falling into this category. To distinguish the MPPV from MPV, this study defines MPV as the vessels that can carry Roll on/ Roll off (RO/RO), or Lift on / Lift off (LO/LO) cargo together with containers. The MPV cargo vessels in the offshore wind sector are used to perform both the wind turbine related tasks and BOP (Balance of Plant) related tasks. For the WTG related tasks, MPV cargo vessels are used to transport nacelles, blades, hubs, and towers. For the BOP related tasks, MPVs are used for the transportation of foundations (such as monopiles, transition pieces and jackets). In the offshore wind sector the inbound role are mainly played by MPV cargo ships, but outbound role are primarily played by Jack-up Vessels and construction support vessels.

Source: J.Poulsen Shipping A/S Figure 3-15. PALESSA Multi-Purpose Cargo Vessel

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3.2 The Availability of Different Vessels Providing Service to Offshore Wind as of 2013

3.2.1 Overview of Geographic Distribution of Offshore Wind Vessels This section first presents the overview of geographic distribution of offshore wind service vessels and then identifies the availability of different vessel types by region and country. According to our latest offshore wind vessel database, the availability of vessels that can provide offshore wind services is 865, of which nearly 70 vessels are currently under construction, or in the pipeline. Figure 3-16 shows that globally 798 vessels are in operation at present. In terms of vessel flag, 575 units are from Europe, 122 units from North Americas, 68 units from Asia Pacific. The geographic distribution is, however, different if the calculation is based on the nationality of vessel operator. Due to the fact that many non-European built vessels are actually owned and operated by European vessel operators, it makes sense to use this methodology to reflect the real business situation. According to Figure 3-16, nearly 86% of identified vessels currently in operation are operated by European companies, which make Europe the leader in this business sector. Asia Pacific ranks as the No. 2, followed by North America and the rest of world (ROW).

900

800 700

600 Number of vessels by flag (Left) 500 400 Number of vessel by 300 operator nationality (Right) 200 100 0 Total Europe Asia North ROW World Pacific America

Source: BTM Consult, A Part of Navigant - September 2013 Figure 3-16. Geographic Distribution of Vessels Capable of Providing Services to the Offshore Wind Sector

Figure 3-17. Vessels in Operation With or Without Track Records in Offshore Wind shows that nearly 54% of vessels currently in operation have direct experience in the offshore wind sector. For any vessel that has involved in project work in the offshore wind sector (reference offshore wind project can be found), we count it as having direct experience or track record for offshore wind. It is necessary to mention that non- track-record vessels included in our database are capable of providing services for the offshore wind sector. That is, if the offshore wind development takes off immediately, those vessels are the best candidates to be considered as a back-up. However, competition is expected because those vessels are normally providing services for other industries as well.

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900

800

700 Number of vessel by

600 operator nationality

without track record 500 (Up) 400 Number of vessels by

300 operator nationality with track record 200 (Down) 100

Total Europe Asia North ROW World Pacific America

Source: BTM Consult – A part of Navigant – September 2013 Figure 3-17. Vessels in Operation With or Without Track Records in Offshore Wind

3.2.2 Availability of different vessel types for offshore wind by region and country Table 3-2. Availability of Different Vessel Type by Region as of 2013 (In-operation Only) is the distribution of different vessel types currently in operation by region. As Figure 3-18 illustrates, Europe is playing a leading role in each vessel category. Despite the fact that vessels have been identified in both Asia Pacific and North America, most of them are mainly used for project construction. At present, no project crew transfer boat/vessel has been recorded in regions out of Europe. This situation is expected to change with more projects to be built in those two regions. It is interesting to note that fishing boats were used in China for transferring crew to wind farms in the intertidal zone along the east coast.

Table 3-2. Availability of Different Vessel Type by Region as of 2013 (In-operation Only)

Vessel Type/ Region Total World Europe Asia Pacific North America Rest of world Accommodation Vessel 17 11 2 3 1 Cable Laying Vessel 113 79 16 12 6 Construction Support 54 51 3 0 0 Diving Support Vessel 11 10 1 0 0 Heavy Lift Vessel 58 35 18 5 0 Jack-up Barge or Vessel 57 43 8 2 4 MPPV 107 98 7 1 1 MPV 50 49 1 0 0 Service Crew Boat/Vessel 187 187 0 0 0 Standby ERRV 40 37 0 1 2 Survey Vessel 43 35 1 3 4 Tugboat 61 54 6 0 1 Source: BTM Consult - A part of Navigant - September 2013

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200 187 187 180 160

140 120 113 107 100 98 79 80 58 57 61 54 50 54

Vessel Unit Vessel 51 60 43 49 40 43 35 37 35 40 17 18 11 16 11 8 20 12 6 10 2 4 7 1 2 3 4 6 2 3 1 3 0 0 1 0 0 5 0 1 1 0 0 0 0 0 0 1 1 0 1 0

Total World Total Europe Asia Pacific North America Rest of world

Source: BTM Consult – A part of Navigant – September 2013 Figure 3-18. Availability of Different Vessel Types by Region (In-operation Only)

Table 3-3 lists all the vessels currently under construction or ready to be built by region. It shows that most of the vessels currently under construction or in the manufacturing pipeline (94%) are located in Europe. Three vessels are identified in the pipeline in Asia Pacific, but no vessel has been reported under construction in North America for offshore wind as of September 2013. Figure 3-19 illustrates the top three vessel types under construction or in the pipeline at present are Service Crew Boat, Jack-up Vessel and Multi-purpose Project Vessel.

Table 3-3. Different vessels type by region as of 2013 (Under construction or planned)

Vessel Type/ Region Total World Europe Asia Pacific North America Rest of world Cable Laying Vessel 3 3 0 0 0 Construction Support 5 4 1 0 0 Heavy Lift Vessel 7 7 0 0 0 Jack-up Barge or Vessel 16 13 2 0 1 MPPV 10 10 0 0 0 Service Crew Boat/Vessel 26 26 0 0 0

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20 Total World 15 Europe

10 Asia Pacific

0 Cable Laying Construction Heavy Lift Jack-up Barge MPPV Service Crew Vessel Support Vessel or Vessel Boat/Vessel Source: BTM Consult - A part of Navigant - September 2013Source: BTM Consult – A part of Navigant – September 2013 Figure 3-19. Vessels by Region (Under construction or planned only)

Since Jack-up Vessels, Heavy Lift Vessels and Cable Laying Vessels are critical for offshore wind installations, we decided to take a close look at their availability by vessel category and by region.

Table 3-4 shows the global distribution of Jack-up Vessel by category. As of September 2013, more than 82% of the identified Jack-up Vessels belong to the second and third generation, mostly from Europe. With offshore wind farms moving farther offshore and with next generation multi-MW turbines becoming the mainstream offshore products, it is no doubt that the first generation of Jack-up Barges can only be adopted for near shore projects. Instead, more tailor-made offshore turbine installation vessels (TIVs) will be needed to sail at the rough sea. Currently, only 22 vessels are the 3rd generation ship shaped self- propelled Jack-up Vessel, but this figure is going to grow because all the Jack-up Vessels currently under construction or in the pipeline in Europe are either purpose built offshore wind turbine installation vessels or tailor-made O&M Jack-up Vessels.

Table 3-4. Availability of Jack-up Vessels by Category and Region (In-operation Only)

Vessel Type/ Region Total World Europe Asia Pacific North America Rest of world 1st Generation 10 6 2 0 2 2nd Generation 24 20 3 1 0 3rd Generation 22 16 3 1 2 Source: BTM Consult – A part of Navigant – September 2013

Table 3-5 shows distribution of different Heavy-lift Vessel type by region. It is the same situation as the Jack-up Vessel that Europe remains the leader in this sector, followed by Asia Pacific where 13 out of identified 18 Heavy-lift Vessels are from China and two from Japan. Non self-propelled floating crane barges and self-propelled monohull crane vessels are the most popular Heavy-lift Vessels in operation. As of September, only two units of heavy lift catamaran have been recorded for the offshore wind installation, of which one is from Europe and another is from China. In terms of the purpose built offshore wind Heavy-lift Vessels, three units have been observed in China, but such vessels don’t exist in Europe, which means that offshore wind must compete with other industries like O&G to share the availability.

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Therefore, it is going to be a challenge for European offshore wind industry particularly when the O&G industry enters a period when a lot of decommissioning work has to be done for O&G platforms. Note that offshore wind relies on Heavy-lift Vessels for installing AC/DC converter stations, which are normally greater than 1,000 metric tonnes.

Table 3-5. Availability of Heavy-lift Vessels by Category and Region (In-operation Only)

Vessel Type/ Region Total World Europe Asia Pacific North America Rest of world Self-propelled Heavy-lift 6 6 0 0 0 Vessel None self-propelled 20 10 7 3 0 floating crane barges. Self-propelled monohull 23 13 9 1 0 crane vessel Semi-Submersible crane 7 5 1 1 0 vessel (SSCV) Heavy lift catamaran 2 1 1 0 0 Source: BTM Consult – A part of Navigant – September 2013

Table 3-6 lists the availability of Cable Laying Vessel both by category and by region. As of September 2013, there were 113 Cable Laying Vessels, of which 26 units are in fact the cable laying support vessel only acting as a service support role. For the remaining 87 Cable Laying Vessels, a little more than half have offshore wind cable laying experience. Among those vessels with direct offshore wind experience, more than 75% are operated by European companies. At present, five Asian vessels have experience in the offshore wind sector, of which two are from China, two are from South Korea and one is from Japan.

Table 3-6. Availability of Cable Laying Vessels by Category and Region (In-operation Only)

Vessel Type/ Region Total World Europe Asia Pacific North America Rest of world Inter-array Cable Laying 38 23 4 9 2 Vessel Export Cable Laying 27 17 8 1 1 Vessel Multi-role Cable Laying 22 14 3 2 3 Vessel Cable laying support 26 25 1 0 0 vessel Source: BTM Consult – A part of Navigant – September 2013

3.2.3 Availability of Key Offshore Wind Construction Vessels in Selected European Countries Europe is the largest offshore wind market in terms of both cumulative installation and the size of offshore wind project pipelines. Currently most of the offshore wind installation is in the North Sea. Countries primarily involved in the offshore wind construction work include the U.K., Denmark, Germany, Belgium, the Netherlands and Sweden. To help understand those European countries’ competitiveness in the business sector of offshore wind installation, Table 3-7, Table 3-8, and Table 3-9 summarizes the availability of those three critical vessels operated by seven European countries that border to the North Sea and the Baltic Sea.

As shown in Table 3-7, the U.K., the Netherlands and Germany are the top 3 operators of Jack-up Vessels in Europe, closely followed by Denmark. Denmark, however, is very competitive and becomes the leader

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after the U.K. if only the 2nd and 3rd generation Jack-up Vessels are taken into account. Currently, there are 12 Jack-up Vessels under construction or announced to be built in Europe, of which four units are going to be operated by Danish companies. If all the vessels could be delivered on time, Denmark will maintain its position as the largest operator of purpose-built Jack-up Vessels after the U.K.

The situation for the supply of heavy lift vessels is completely different compared with that of jack-up vessels. Table 3-8 shows the two market leaders, the U.K. and Denmark have lost their competitiveness to the Netherlands. The country operates nearly 2/3 of Heavy-lift Vessels in Europe and has vessel available in each Heavy-lift Vessel category. In general, the Benelux countries (Belgium, the Netherlands and Luxembourg) are very strong in this business sector.

In the European offshore wind cable laying business sector, the leaders are the U.K., the Netherlands, Denmark and Norway according to total operated vessel units included in Table 3-9. Denmark and the Netherlands are specialists in support vessels, each with 6 vessel types.

Table 3-7. Availability of Jack-up Vessels Operated by Selected European Countries (In-operation Only)

Vessel Type/ Region Belgium Denmark Germany Netherlands Norway Sweden U.K. 1st Generation 1 0 2 3 0 0 0 2nd Generation 4 2 3 6 0 1 4 3rd Generation 1 5 3 1 1 0 6 Total 6 7 8 10 1 1 10 Source: BTM Consult, A part of Navigant - September 2013

Table 3-8. Availability of Heavy-lift Vessels Operated by Selected European Countries (In-operation Only)

Vessel Type/ Region Belgium Denmark Germany Netherlands Norway Sweden U.K. Self-propelled Heavy- 0 0 0 5 0 0 0 lift Vessel None self-propelled 1 1 0 6 1 0 1 floating crane barges. Self-propelled 1 0 1 3 1 0 3 monohull crane vessel Semi-Submersible 0 0 0 3 0 0 0 crane vessel (SSCV) Heavy lift catamaran 0 0 0 1 0 0 0 Total 2 1 1 18 2 0 4 Source: BTM Consult, A part of Navigant - September 2013

Table 3-9. Availability of Cable Laying Vessels Operated by Selected European Countries (In-operation Only)

Vessel Type/ Region Belgium Denmark Germany Netherlands Norway Sweden U.K. Inter-array Cable 0 0 1 4 4 1 7 Laying Vessel Export Cable Laying 1 1 2 2 3 1 2 Vessel Multi-role Cable 0 4 0 2 2 0 3

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Laying Vessel Cable laying support 1 6 1 6 1 0 5 vessel Total 2 11 4 14 10 2 17

Source: BTM Consult, A part of Navigant - September 2013

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4. Wind Industry Technology & Industry Trends

Introduction This chapter provides an overview of offshore wind technology trends based on the historical trends recorded by BTM in the past two decades and the impact they may have on the vessels needed to further develop the offshore wind sector.

We begin with an analysis of historical trends of the physical characteristics (e.g. length, height, weight) of key components. We then discuss technology scenarios of how the characteristics may evolve in the future.

4.1 Technology Focus & Market Trends – Historical Trends To understand the trends of offshore wind technology development, this section provides an overview of the historical development of critical components such as rotors (diameter, weight), towers (height and weight); turbines (MW size) and foundations (type, weight), O&M developments and advances in installation techniques. Graphics illustrations of historical trends start at 1991 when the first offshore wind project was installed and end at the end of 2012.

4.1.1 Historical Trend - Rotor (diameter and weight) The primary reason for turbine growth is an increase in the rotor diameter of the turbine as the rotor diameter is directly related to the amount of energy produced by a wind turbine.

Figure 4-1 shows how rotor diameter has steadily increased from approximately 40 to 60m in the 1990s to 60 to 110m in the 2000s to 110 to 140m since 2010.

The Siemens SWT3.6-107/120 turbines, the turbines with the greatest deployed capacity, have had a rotor diameter of 107 to 120m. Its recently installed SWT6.0-154 direct drive turbine has increased the rotor diameter to 154m. The turbine with the second greatest installed capacity is the Vestas V90-3.0 MW with a rotor diameter of 90m.

The larger turbines coming online, primarily in the 5-6 MW class, have larger rotor diameters. The REpower 5M/6M turbine has a rotor diameter of 126m while the BARD 5.0 has a diameter of 122m.

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Rotor Diameter (m) 180 160 154

140

126 122 126 120 116 120 107 100 104 90 Rotor Diameter (m) 80 82,4 76 72

60 Diameter(m) 43 Lineær (Rotor 40 40 39 37,3 35 Diameter (m)) 20 0

Year of Deployment

Source: BTM Consult, A Part of Navigant – September 2013 Figure 4-1. Historical Development of Rotor Diameter (1991-2012)

As rotor diameter increases in size, rotor weight (including hub) increases as well. Figure 4-2 shows how rotor weight has steadily increased from approximately 5-40 metric tonnes in the 1990s to 40-160 metric tonnes in the 2000s and 2010s.

The Siemens SWT3.6-120 turbine has a rotor weight of 101 metric tonnes while the Vestas V90-3.0 MW has a rotor weight of 40 metric tonnes. Among the 5 MW turbines, the REpower 5M turbine has a rotor weight of 120-125 metric tonnes while the BARD 5.0 has a rotor weight of 156 metric tonnes.

Rotor Weight (incl Hub) (t) 180

160 155,5 140 135

120 120 109 100 101 92,5 Rotor Weight (incl 80 82 Hub) (t) Weight(t) 60 52 54 Lineær (Rotor Weight 40 40 39,8 (incl Hub) (t)) 20 26 9,8 0 4,9 1991 1997 2001 2003 2007 2009 2011 Year of Deployment

Source: BTM Consult, A Part of Navigant – September 2013

Figure 4-2. Historical Development of Rotor Weight (1991-2012)

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4.1.2 Historical Trend - Tower (height and weight) Larger rotors and nacelles require taller and consequently heavier towers. Figure 4-3 shows how tower height has steadily increased from approximately 40-55m in the 1990s to 60-65m in the 2000s to 80-90m in the last few years. Figure 4-4 shows the evolution of tower weight. During the 1990s, tower weights ranged between 25-75T. In the 2000s, weights increased to 100-160 metric tonnes. Over the last few years, tower weights have increased to 210-450 metric tonnes.

The Siemens SWT3.6-107 and 120 turbines have average tower heights of 57m and 90m and weights of 180 metric tonnes and 260 metric tonnes, respectively. The Vestas V90-3.0 MW has a typical tower height of 53m and weight of 108 metric tonnes.

Among the 5 MW turbines, the REpower 5M turbine has a tower height of 85m and weight of 210 metric tonnes while the BARD 5.0 turbine uses towers of 63m in height and 450 metric tonnes in weight.

Tower Height (m) 100 90 90 90 85 85 80 80 70 70,5 70 64,764 63 60 60 50 53 Tower Height (m) 44,5 40 41,5

Height (m) Height 39 39 Lineær (Tower Height 30 (m)) 20 10 0 1994 1996 2000 2002 2005 2008 2010 2011 Year of Deployment

Source: BTM Consult, A Part of Navigant – September 2013

Figure 4-3. Historical Development of Tower Height (1991-2012)

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Tower Weight (t) 500 450 450 400 350

300 250 260 Tower Weight (t) 200 210

Weight(t) 180 150 159 160160 162 Lineær (Tower Weight 130135 134 (t)) 100 98,4 108 104 50 20 28,5 0 1991 2000 2001 2002 2005 2007 2009 2011 Year of Deployment

Source: BTM Consult, A Part of Navigant – September 2013

Figure 4-4. Historical Development of Tower Weight (1991-2012)

4.1.3 Historical Trend - Turbines MW size Offshore turbine technology has changed considerably since the first 450 kW Bonus machine was installed in 1991. Over the past two decades, wind turbine manufacturers have progressed through four generations of offshore designs. Figure 4-5 illustrates the evolution of offshore turbine technology. This fourth generation of turbines is currently under various stages of development from a number of major European suppliers. The latest to be installed in European waters is in the 6 MW size range. Turbine vendors who have products in this size include REpower (6M), Siemens (SWT6.0-154) and Alstom (Haliade 150).

Source: BTM Consult, A Part of Navigant – September 2013 Figure 4-5. Historical Development of Wind Turbine Power Rate (1991-2012) As shown in Figure 4-6, the 3.6 MW capacity turbine accounts for 38.27% of total installations, closely followed by 3 MW models. Siemens is the main supplier of both 3.6 MW and 2.3 MW turbines while Vestas dominates the 3 MW bracket. Wind turbines with rated capacities of 5 MW have been available for

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commercial offshore installation from REpower since 2008. Turbine models greater than 5 MW made up nearly 12% of the total market by the end of 2012. REpower has the longest 5 MW+ track record of all turbine OEMs as of the end of 2012.

Source: BTM Consult, A Part of Navigant – September 2013

Figure 4-6. Historical Wind Turbine Installation by Power Rate as of 2012

4.1.4 Historical Trend - Foundations (type and weight) Today offshore turbines are largely installed on monopile foundations. A monopile foundation consists of a long cylindrical steel tube driven into the seabed, and a transition piece that connects the substructure and the wind turbine tower. Through 2012, monopiles were about 73.5% of the cumulative offshore wind installation. However, as turbines grow and deeper water depths are pursued, alternatives are likely to be increasingly attractive. Moreover, certain seabed conditions may be more favorable to alternatives such as gravity base structures (GBS) or suction caissons. By the end of 2012, gravity base structure accounted for 11.4% of total offshore wind installation, however, market share of GBS is expected to decline based on currently planned and proposed projects.

Despite long-term trends that suggest a declining market share for monopiles, they are expected to continue to be in use for many years after the XL (extra-long) monopiles have been recently introduced to the offshore wind market. In addition, the monopile’s relative simplicity and low labour requirements make it an attractive platform for future innovations that might extend its useful life.

Even when considering alternative materials and design architectures, it is likely that the combination of diverse seabed conditions, deeper water, and larger turbines will push the industry away from monopile foundations to alternatives. Alternatives to the monopile include jackets, tripiles, tripods, GBS, and suction caissons. This trend of increasing diversity in foundation types is illustrated in Figure 4-7.

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Source: BTM Consult, A Part of Navigant – September 2013

Figure 4-7. Historical Installation of Foundation by Type as of End of 2012

Space frame designs, like jackets, tripods and tripiles are typically preferred for deepwater sites. Jackets entail significantly more fabrication and assembly but are less material intensive than tripod and tripile designs. GBS or suction caissons may be viable in the shallower more protected locations, particularly those where seabed geology, rocks, or boulders make it challenging to drive pilings. GBS relies exclusively on the mass of the structure and the force of gravity for stability. Suction caissons are similar to GBS in that they do not require pilings. However, suction caissons rely on a large diameter cylindrical structure fixed to the seabed by pumping out the water that would otherwise fill the structure to create a vacuum.

The combination of gravity base and piles (also called “high-rise pile cap”) and multi-pile solutions have been adopted in China, but it is not going to become a mainstream concept in Europe because it is a tailor- made design for the Chinese seabed.

The data for foundation weights is not as abundant as it is for other turbine and balance of plant components. As seen in Figure 4-8, weights for monopile foundations, the most popular foundation type to date, have ranged primarily between 300-400 metric tonnes over the last two decades. Gravity base foundations have typically weighed between 1,500 and 4,000 metric tonnes, 8-10 times more than their monopile counterparts. (See Figure 4-9)

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Monopile Foundation Weight (t)

600 530 500

423 400 400 350 Monopile 300 Foundation Weight 300 280 300 (t)

Weight(t) 218 215 200 165 Lineær ( Monopile 100 80 Foundation Weight (t) ) 0

2007 1994 2000 2002 2003 2005 2008 2009 2010 2011 2012 Year of deployment

Source: BTM Consult, A Part of Navigant – September 2013

Figure 4-8. Historical Development of Monopile Foundation Weight (1991-2012)

Gravity Base Foundation Weight (t) 4500

4000 3900 3500

3000 3000 Gravity Base 2500 Foundation Weight 2000 (t) 1800 1800 1900 Weight(t) 1500 Lineær (Gravity Base 1000 Foundation Weight 500 (t)) 0 2000 2003 2007 2008 2010 Year of Deployment

Source: BTM Consult, A Part of Navigant – September 2013

Figure 4-9. Historical Development of Gravity Base Foundation Weight (1991-2012)

The weight of jacket, tripile, and tripod-based foundations are slightly more than that of monopile foundations. A sampling of foundations for 5-6 MW turbines shows weights between 500-700 metric tonnes.

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Source: BTM Consult, A Part of Navigant – September 2013

Figure 4-10. Historical Development of Jacket, Tripile & Tripod Foundation Weight (1991-2012)

4.1.5 Distance From Shore European developers are increasingly building offshore wind plants further from the coast and in deeper waters. BTM internal analysis of planned and under-construction projects shows that this trend will likely continue.

Offshore wind projects are increasingly located further from shore to capture higher wind speeds and thus higher capacity factors. Once a project is more than about 15 nautical miles from the nearest possible servicing port, it begins to become prohibitive to transport technicians from land to the site and back in a single shift while still allowing adequate time for work to be completed. Beyond 30 nautical miles from a potential servicing port, the need for offshore hotels for technicians starts to become economically viable. For these far offshore facilities, servicing could resemble an offshore drilling rig or even a ship with hoteling facilities such as a modified cruise ship. In either of these cases, staff would be located at sea for a period of weeks at a time and then rotate out with another set of workers who are then located at sea for a similar period. Such a model dramatically increases the offshore wind technician costs by doubling the required workforce and also requiring additional service workers to staff and maintain the hoteling facilities themselves (e.g., cooks). Offshore hoteling models will likely necessitate very large project sizes to ensure the ability to capture economies of scale. Nevertheless, they are expected to be particularly valuable in locations with very limited access opportunities due to weather or very deep water.

Figure 4-11 shows a plot of the average water depth and distance from shore for the operating offshore wind farms around the world.

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Source: BTM Consult, A Part of Navigant – September 2013

Figure 4-11. Depth and Distance from Shore for Global Offshore Wind Farms

4.1.6 O&M Developments

This section provides an overview of recent trends within the wind industry related to operations and maintenance (O&M) of offshore wind farms. Many of these trends are a direct result of technology changes that are discussed in previous sections. In particular, increased turbine size, plant size, and distance from shore all have direct consequences on O&M practices, which will in turn affect vessel requirements and strategy.

These trends will add to the logistical difficulties of maintaining offshore turbines. The longer distances from shore will increase the challenges in accessing turbines due to weather conditions and will increase the focus on reliability. Larger turbines will result in increased capacity factors and a higher cost of downtime, which will allow less time for maintenance. Plant lifetimes will increase due to more reliable components, which will result in service schedules being driven by lifetime analyses.

Many O&M trends have a direct impact on vessel requirements. These trends are described below and summarised in Table 4-1.

Table 4-1. Offshore Wind O&M Trends and Implications for Vessels

O&M Trend Implications for Vessels Increased crew size resulting from larger Increased need for larger crew vessels with more turbines and larger wind farms extended rules/procedures Plants farther from shore require crews to Increased need for accommodation vessels and “satellite remain on site for 7-14 days crew-vessels” for reaching the turbines in the wind farm

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Larger plants farther from shore can Increased demand for Tailor-made O&M vessels justify purpose built equipment Increased use of proactive maintenance Maintenance activities are only performed when there is methods an impending need rather than based upon a specified period of time Increased multi-contracting of O&M Vessels will be required by more different types of services companies Project owners assume access risk Owners will have increased responsibility to provide transportation to the offshore site Increased use of helicopter services for O&M vessels will have increased competition for time- certain wind/visibility conditions sensitive deliveries of small to medium sized parts Source: BTM Consult, A Part of Navigant – September 2013

Increased crew requirements. Wind plant size and location will drive key strategy elements such as staffing, vessel ownership, and shared facilities. Larger plants will justify service and crew transfer vessels, while smaller plants will opt for sharing of vessels.

The size of turbines will also have an impact on the choice of Service Crew Boat size. Today a service team of two technicians need to be transferred to each turbine, but in the future with 6-8 MW turbines it is likely that a team will be 3-4 technicians per turbine (to minimize off-time). If the vessel carries more than 12 crew members, then it becomes an “ordinary passenger vessel” which must adhere to a much more extended set of safety rules and procedures. Therefore the OPEX is significantly higher than for smaller vessels.

There is no simple rule for the optimal size of a crew vessel as it depends a lot on the conditions on the site such as water depth, wave frequency etc. In some cases a large vessel is not the best. The current development of crew-vessels may lead to a few standard types of vessels, which gives a big shipyard an opportunity to build larger volumes of the same vessel type.

Accommodation Vessels. Plants farther from shore will require technician crews to reside at accommodation facilities or large crew vessels for one to two week periods. Notably, vessels offer the potential for greater lift and equipment storage capacity, as well as mobility, not afforded by fixed hoteling platforms; however, efficiencies may be gained from either type of hoteling facility by allowing technicians to service multiple projects within a general area while reducing transport time and cost.

Several smaller “satellite crew-vessels” will be needed for transporting the crews from the accommodation facility or vessel to the turbines in the wind farm.

Based on the new vessel designs for the next generation of offshore wind service vessel, it is expected that Accommodation Vessels will eventually be replaced by larger Service Operations Vessels (SOVs), which are used to transport crew and equipment for a variety of purposes. Type 2 SOVs will be large enough to handle crews larger than 60 people and are expected to replace Accommodation Vessels after 2017.

Larger plants farther from shore can justify purpose built equipment. Each plant will have a breakeven calculation for buying vs. leasing vs. sharing each type of equipment or vessel required. As a rule of thumb, the breakeven point for justifying the purchase of a dedicated purpose built lifting vessel is ~100 turbines, which also includes using the vessel during the construction period. All owners/operator of large

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wind farms will demand purpose built vessels for O&M and in some cases tailor made for their own specific climate and location.

Increased use of proactive maintenance methods. Within the wind industry in general and offshore wind in particular, there has been movement towards utilising more proactive maintenance methods (e.g., condition monitoring, predictive maintenance, etc.) in an effort to preserve availability and reduce operating costs. Predictive maintenance activities are only performed when there is an impending need rather than based upon a specified period of time. The implication for vessels is a need for more coordinated and flexible scheduling, which gives an advantage to owners of larger fleets.

Increased multi-contracting of O&M services. Over the past few years, there has been a clear shift in the offerings that are provided by the turbine OEMs with regard to turbine O&M. Offshore wind O&M is now generally treated in a multi-contract fashion. Turbine suppliers are now limiting their risk exposure by focusing solely on operating and maintaining their turbines, and putting the onus on the owner to contract for the other services. Vessels will therefore be required by more different types of companies, including project owners and independent service providers (ISPs). Presently, none of the ISPs offer all of the necessary O&M services in-house, and none of them offer maintenance services for the wind turbines themselves. Often ISPs will manage workboats, cables and foundations individually.

Project owners assume access risk. The topic of access risk is very important to consider with regard to the operation of an offshore wind facility. The inability to access the farm due to inclement weather conditions can have a significant impact on plant availability. In many recent O&M service agreements, the contractual risk associated with accessing the turbines has been assumed by the owner, not the OEM. This is a key difference from the scope of many of the earlier OEM service agreements. The service contracts will in some cases stipulate that it is the owner’s responsibility to provide transportation to the offshore site.

4.1.7 Advances in Installation Techniques As the offshore wind industry has progressed, advancements in installation techniques have been driven by the need to reduce the time needed for installation, as well as the time for transferring foundations, towers, turbines and blades to sites farther from shore. These advancements have been aided by the increased use of Jack-up vessels, particularly Generation III vessels, which have all the features of Generation II and also propulsion with DP2 / DP3 capability.

Using Jack-up vessels for the installation of turbines and foundations is the main stream installation approach in Europe. Heavy Lift Vessel (HLVs) were used to install two completely assembled REpower 5 MW turbines at Beatrice 1 in Scotland, but that is the only the exception. HLVs are currently used in Europe to install substations and foundations, but it is normal to use HLVs to install offshore wind turbines in China where the tailor-made turbine installation HLVs are available.

Given the importance of the role that Jack-up Vessels play within the offshore wind industry, some turbine suppliers and project owners are seeking to hedge against the potential future scarcity of vessels by building their own vessels or entering into strategic relationships to secure access, including the following:

» DONG Energy and Siemens jointly own the offshore vessel operator A2Sea » RWE has built two Jack-up Vessels to install its own offshore wind projects

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» REpower has two Jack-up Vessels currently being built, the first should be available in 2013, and the second in 2014 » Areva Wind has a long-term charter on the HGO Infrasea Solutions Innovation

By utilizing this type of approach, the suppliers and project owners: 1) make sure that Jack-up Vessel availability is not a bottleneck for their growth in the offshore wind industry, 2) have added assurance they can meet their obligations during construction and operation, and 3) can improve their responsiveness to major O&M activities.

Apart from using the most advanced Jack-up Vessels to improve the efficiency of turbine installation at sea, five different turbine installation concepts have been developed to reduce the time spent on turbine installation. The installation techniques become critical, especially when the sizes of project and wind turbine get bigger and the offshore wind farms are located further from shore. Figure 4-12 illustrates the evolution of installation concepts in the past ten years. Installation Method 1 and 2 was popular when the small size wind turbines were installed at small near-shore wind farms. Methods 4 and 5 have become the most popular concepts at present, which were adopted for the world’s two largest offshore wind farms, London Array Phase 1 (Kent, UK) and Gwynt y Mōr (North Wales). Method 3 was used for REpower’s 6M at Thornton Bank (Belgium).

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Figure 4-12. Offshore Wind Turbine Installation Concepts for Jack-Up Vessels

In addition, transportation demands will vary with the installation practices and strategies of the industry. Transportation demands will also evolve as the life cycle of each project proceeds. During construction, transport vessels, either in the form of dedicated transport vessels or the actual installation vessel itself, are needed to collect the foundation and turbine equipment from a centralised distribution point that can meet the required lift capacity and air draft requirements. Utilizing the installation vessel to transport equipment from the staging port to the project site minimizes the number of required equipment transfers but also consumes highly valuable installation time ferrying equipment between the staging area and the project site. Dedicated transport vessels may allow for more efficient use of the installation vessel but also create the risk for component damage during transfers unless the dedicated transport vessel is capable of carrying out fixed (as opposed to floating) lifts at sea. The trade-off between these two approaches can be expected to be a function of distance between the staging port and the project site. When in closer proximity, the time lost ferrying equipment with the installation vessel is less substantial; sites located farther from port may require dedicated transport vessels.

4.2 Summarized Technology & Market Trends – Scenarios As described in section 4.1.3, offshore wind has gone through three generations, with the development of the fourth generation still underway. Innovation is the key for offshore wind turbine technology. Over the past two decades, wind turbine technology has experienced major advances, a steady increase of turbine size together with the evolution of turbine drive train concepts. Figure 4-13 shows the road map of offshore wind turbine technology development from 1991.

Source: BTM Consult, A Part of Navigant - September 2013 Figure 4-13. Road Map of Offshore Turbine Technology Development 1991-2015

Based on the historical development of trends and current cutting edge technologies observed in the market, Navigant/BTM has developed five scenarios to characterize the technology trends in offshore wind as shown in Table 4-2.

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Table 4-2. Offshore Wind Technology Development Scenarios

Recent Historical Today's Next- Future 1st Generation 2nd Generation Standard Generation Advanced Floating Floating Metric Technology Technology Technology Technology* Technology Nameplate Capacity (MW) 2-2.3 3 - 4 5 - 6 7 - 10 2 -4 5 -10 Hub Height (meters) 60-70 70 - 90 85-100 > 100 70 -90 >85 Rotor Diameter (meters) 65-82 90 - 130 120 - 160 160 - 200 90 - 130 –>120 Water Depth (meters) 5-15 10 - 37 15 - 45 20 - 65 > 50 > 50 Monopile Foundations yes yes no no n/a n/a Jacket Foundations no yes yes yes n/a n/a Tripod Foundations No yes yes yes n/a n/a Gravity Base Foundations yes yes yes yes n/a n/a Distance from Shore (km) 1-20 5-55 5-115 30-290 <10 >10 Proximity to Staging Area** < 100 miles > 100 miles > 100 miles < 100 miles > 100 miles Proximity to Interconnection** < 50 miles > 50 miles > 50 miles < 50 miles > 50 miles Proximity to Service Port** < 30 miles > 30 miles > 30 miles < 30 miles > 30 miles Project Size (MW) 10-150 200 -400 500 - 1,000 > 1,000 <10 > 100 60-85 90-150 metric 230-360 metric 300-550 metric 215 metric tons 550 metric tons Max Nacelle Weight*** tons tons tons (5 MW) (10 MW) Max Nacelle Footprint *Proof of commercial viability (one step from prototype testing) **Based loosely on staging area distances for planned German installations but recognizing that US installations are likely to be closer to shore ***The nacelle is typically the heaviest component, however heavier lifts may be required depending on the number of tower sections and the installation method (e.g., total turbine lift) Source: BTM Consult, A Part of Navigant – September 2013 The five technology scenarios cover three scenarios for conventional foundation and two for floating foundation:

Conventional foundation Floating foundation » Today’s Standard Technology » 1st Generation Floating Technology » Next Generation Technology » 2nd Generation Floating Technology » Future Advanced Technology

According to the historical trend of offshore wind turbine technology and the evolution of turbine installation technology, in the near-term, for offshore wind with the conventional foundation, there are two primary scenarios of interest: Today’s Standard Technology and Next-Generation Technology.

Under a low-growth scenario, Today’s Standard Technology will continue through 2017 (Table 4-3). We would then see Next-Generation Technology take hold through 2030. Under a medium-to-high-growth scenario, Next-Generation Technology would take hold earlier, in 2015, and continue through 2020. With continued medium-to-high-growth, we would see a third scenario, Future Advanced Technology, take hold in 2021 and last through 2030.

At a high-level, the evolution from Today’s Standard Technology to Next Generation Technology to Future Advanced Technology entails the introduction of progressively larger turbines. Larger turbines will have longer/heavier blades, larger/heavier nacelles, taller/heavier towers, and larger/heavier foundations.

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Average plant size will grow. Additionally, plants will be progressively further from shore and in deeper waters.

Table 4-3. Offshore Wind Technology Scenarios vs Offshore Markt Growth Scenarios

Year Turbine Size Project Size Scenario Low growth Med/High Growth (MW) (MW) Recent Historical N/A 2000-2004 2 - 2.3 10 - 150 Today’s Standard Technology 2015-2017 2005-2014 3 - 4 200 - 400 Next-Generation Technology 2018-2030 2015-2020 5 - 6 500 - 1,000 Future Advanced Technology N/A 2021-2030 7 - 10 >1,000 1st Generation Floating Technology N/A 2009-2017 2 – 4 <=10 2nd Generation Floating Technology N/A 2018-2030 5 – 10 >100 Source: BTM Consult, A Part of Navigant 2013 – September 2013

For the floating technology, these two scenarios are not exclusive of the three above but rather are complementary as some floating foundations will co-exist with fixed foundations in the offshore market. It is no doubt that small pilot projects will be built up continuously to test or prove technologies, but we are cautious about the large scale deployment of floating offshore wind turbine under the low-growth scenario. Under the medium-to-high scenario, however, the first generation floating technology is expected to be deployed through 2017 and the second generation will be ready from 2018 onward to 2030.

The characteristics of the turbines anticipated for the 1st Generation Floating scenario are generally consistent with those of Today’s Standard Technology. The turbines corresponding to the 2nd Generation Floating scenario are similar to those expected under the Future Advanced Technology scenario.

4.3 Implications of Technology Demands As shown in Table 4-3, under a medium-to-high-growth scenario, Next-Generation Technology and Future Advanced Technology would take hold in 2015 and 2021, respectively. What does this mean for the offshore wind installation services providers, especially, for turbine installation vessel operators? Are current jack-up barges and vessels capable of installing next generation multi-MW offshore wind turbine? Does the industry need more tailor-made vessels? This section will look at the implications of turbine technology development, and summarize factors that have an impact on the availability of installation vessels and factors that need to be taken into account for the design of new offshore wind service vessels.

With turbine technology moving from Today’s standard into Next-Generation, it is not just the increase of nameplate capacity. In fact, several other factors such as nacelle weight, hub height, rotor diameter and foundation weight have increased as well. The nacelle weight, for example, has increased from 90-150 metric tonnes for Today’s standard to 230-360 metric tonnes for Next-Generation. If the offshore wind industry uses today’s mainstream turbine installation concepts (Method 4 and 5 in Figure 4-12), the total weight of nacelle and hub will reach to 300-440 metric tonnes for the Next-Generation turbine technology. In this scenario, Jack-up Vessels with crane lifting capacity of less than 300 metric tonnes will be uncompetitive for the installation of Next-Generation offshore wind turbine. For the installation of foundations, the implication is the same. The foundation weight will increase from 200-400 metric tonnes for today’s mainstream foundation type, monopile, to 500-700 metric tonnes for jacket, tripile and tripod- based foundations mainly adopted for the Next-Generation offshore turbine. The increase of foundation

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weight also means some Jack-up and Heavy-lift Vessels will no longer be capable of installing turbine ≥ 5.0 MW.

Table 4-4 lists all the key factors having an impact on the availability of selection of installation vessels. To make sure the newly built installation vessels, particularly Jack-up Vessels, can meet the technical requirements for installing the Next-Generation and Future Advanced turbines, these key factors also have to be taken into consideration by vessel designer.

Table 4-4 Implications of Technology Demands on Vessel Selection and Design Features of offshore wind technology Parameters of selection Impact on vessel design Weight of Nacelle Onboard crane capacity Boom length, radius, SWL, Jacking deadweight Weight of Blade Onboard crane capacity Boom length, radius, SWL Weight of Tower Onboard crane capacity Boom length, radius, SWL, Jacking deadweight Weight of foundation Onboard crane capacity Boom length, radius, SWL, Jacking deadweight Hub Height Hook height above the deck Hook height, boom length Rotor Diameter Hook height above the deck Hook height, boom length Deck space Deck space Size of Nacelle Deck space Deck space, Jacking deadweight Size of Foundation Deck space Deck space, Jacking deadweight Size of Tower ( Diameter at the bottle) Deck space Deck space, Jacking deadweight Size of Project Turbine installation method Deck space Cargo capacity Cargo capacity, Onboard accommodation Jacking deadweight Size of accommodation Water depth of project Leg length Leg length Distance of project from shore Turbine installation method Deck space Cargo capacity Cargo capacity Onboard accommodation Jacking deadweight Self-propelled system Size of accommodation Source: BTM Consult, A Part of Navigant – September 2013

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5. Vessel Demand vs. Supply

This section presents the methodology for developing the vessel demand and supply scenarios, followed by a graphical representation of the supply and demand situation for each vessel type.

5.1 Methodology Navigant produced a forecast of the demand for each vessel type and compared it to the current supply. Figure 5-1 is a flow diagram of the methodology employed, showing the various elements that were used as input to the calculations. Each of the steps of the calculation is discussed in the following sections.

Figure 5-1. Methodology for Vessel Supply vs. Demand Analysis

5.1.1 MW Forecast Navigant’s offshore wind MW installation 2013-2022 forecast by country is provided in Section 2.3, along with a description of the forecast methodology. The Middle Scenario of this forecast is used as a starting point for the vessel demand calculation.

5.1.2 Technology Forecast Navigant used an Offshore Wind Vessel Requirements model to determine vessels per MW conversion factors for various standard vessel types. The model was developed by Douglas-Westwood as part of its recent study for the U.S. Department of Energy2. Both Navigant and its subcontractor Knud E. Hansen assisted Douglas-Westwood in this study. One of the key inputs to the model is the mix of the various

2 “Assessment of Vessel Requirements for the U.S. Offshore Wind Sector”, Douglas-Westwood, prepared for the U.S. department of Energy, March 2013.

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offshore wind technologies employed. As discussed in Section 4.3, the following technology scenarios are considered:

» Today’s Standard Technology » Next-Generation Technology » Future Advanced Technology » 1st Generation Floating Technology » 2nd Generation Floating Technology

For each country and year, Navigant evaluated the offshore wind development pipeline and other factors to determine the percentage likelihood that each of the five technology scenarios will occur. As an example, the offshore wind fleet in Germany is expected to evolve as follows:

» 2013: 70% Today’s Standard Technology, 30% Next-Generation Technology » 2017: 10% Today’s Standard Technology, 90% Next-Generation Technology » 2022: 70% Next-Generation Technology, 30% Future Advanced Technology

5.1.3 Conversion Factors for Standard Vessel Types

As discussed in Section 3, Navigant has identified 18 different types of vessels that are needed during the offshore wind life cycle. Most of these vessel types correspond to the standard types used in the Offshore Wind Vessel Requirements model. The Offshore Wind Vessel Requirements model covers the following 12 standard vessel types:

» Survey Vessels o Environmental Survey Vessels o Geophysical Survey Vessels o Geotechnical Survey Vessels » Construction Vessels o Jack-up Vessels o TIVs o Cable-lay Vessels o Heavy-lift Vessels » Service Vessels o Tugs o Barges o Supply Vessels » O&M Vessels o Personnel Transfer Vessels (Service Crew Boats) o Heavy Maintenance Vessels (Tailor-made O&M Vessels)

For all vessel types except for O&M Vessels, the model calculates the number of vessels required for a given number of new MW installed in a given year. For O&M Vessels, the model calculates the number of vessels required for a given number of cumulative MW installed through that year. The output is a conversion factor which has the units of vessels per new MW or vessels per cumulative MW. Since the technology mix changes by country and year, there is a unique conversion factor for each country and year.

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5.1.4 Conversion Factors for New Vessel Types

For vessel types that are not covered by the Offshore Wind Vessel Requirements model, Navigant used alternative methodologies and assumptions to determine the conversion factors for additional vessel types, as described in Table 5-1.

Table 5-1. Conversion Factors for New Vessel Types

Vessel Type Conversion Factor Methodology Diving Support Vessel One vessel for each 2 new plants >300 MW1 through 2019, then zero (replace by MPPV) Multi-purpose Project Vessel (MPPV) A portion of the Service Crew Boat demand (10% in 2013, growing to 28% in 2022) Multi-purpose Survey Vessel 30%-80% of Survey Vessels will be multi-purpose Safety Vessel/Standby ERRV One vessel for each 2 cumulative plants >300 MW1 Accommodation Vessel One vessel for each cumulative plant >300 MW and >20 km from shore1 through 2017, then zero (replaced by large Service Operating Vessels) Service Operating Vessel, Type 2 One vessel for each cumulative plant >300 MW and >20 km from shore1 after 2017 1 plus one vessel for each additional 400 MW after the first 300 MW.

5.1.5 Vessel Demand Forecast

Navigant has produced a Vessel Demand Model which uses as input the Offshore Wind Vessel Requirements model outputs along with the conversions factors described in Table 5-1. The Navigant model produces spreadsheets and graphs showing vessel demand for each country (by vessel type and year) as well as for each vessel type (by country and year). Similar to the MW forecast, the High and Low Scenarios are calculated as a function of the Middle Scenario. The results are shown graphically in Section 5.2 and in tabular form in Appendix A.

5.1.6 Vessel Supply

As discussed in Section 3.2, Navigant’s Offshore Wind Vessel Database contains information on approximately 865 individual vessels. The database contains summary spreadsheets showing the number of vessels of each type by country of its flag as well as the country of the vessel operator. Another important field in the vessels database is whether the operator has offshore wind experience. Only 435 vessels meet this criterion.

Navigant determined the number of each vessel type that is currently in operation, as well as the number of each vessel type that is currently under construction or in the pipeline. The sum of those two numbers is the estimated vessel supply in 2015.

5.2 Supply vs. Demand Analysis

In this section, the 2013-2022 global demand for each vessel type is graphically compared to the 2013-2015 global supply. In most cases there is currently sufficient vessel supply but the forecasted demand is expected to overtake current supply within a few years.

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5.2.1 Construction Vessels

5.2.1.1 Jack-up Barges or Vessels

In the Middle Scenario, the global demand for Jack-up Barges or Vessels will peak in 2019 at approximately 46 vessels. In the High Scenario, the peak will be approximately 51 vessels. On the supply side, there are 60 Jack-up Vessels identified globally that is expected to grow to 70 vessels by 2015. Despite the fact that in general the supply figures are much higher than the forecasted demand figures, it doesn’t mean that oversupply is going to challenge the offshore wind sector during the forecasted period. Instead, we expect a shortage of supply of the third generation Jack-up Vessels capable of installing the next generation of offshore wind turbine during the middle of the forecast period.

According to BTM’s offshore wind project pipeline and turbine technology forecast scenarios, more than 85% of wind turbines expected to be installed in the world’s two largest offshore wind markets, the UK and Germany, in 2017 will be the Next Generation turbine. The trend of installing larger offshore wind turbines will bring the global market share of the Next Generation turbine to about 75% by 2020. Figure 5-2 shows that the global demand of Jack-up Vessels for Next Generation turbine technology will peak at 37 vessels in 2020 in the Middle Scenario. The peak will be around 42 vessels in the High Scenario.

80 Total World Supply 70 Total Supply w/OSW experience

Supply of TIVs for Next Gen Turbine 60 Next Gen Demand - High Scenario Next Gen Demand - Middle Scenario

50 Next Gen Demand - Low Scenario

Vessels 30

0 2012 2014 2016 2018 2020 2022 Year of Operation

Figure 5-2. Next Generation Jack-up Vessel Supply and Demand

The supply analysis, however, shows only 23 turbine installation vessels that can be used for the installation of Next Generation turbines by September 2013, of which 16 units are third generation purpose built turbine installation Jack-up Vessels with a maximum crane lifting capacity of ≥300 metric tonnes, and 7 units are second generation Jack-up Vessels with the experience of installing the Next Generation offshore wind turbine. Albeit another 7 purpose built turbine installation Jack-up Vessels currently under construction will be delivered to the offshore wind market by 2015 (4 will be delivered by end of 2013), the total number of Jack-up Vessels suitable for Next Generation offshore turbine installation could just reach

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30 by 2020 (assuming no new Jack-up Vessels will be built), which is actually 7 units lower than the demand in the Middle Scenario. The gap will increase to 12 units in the High Scenario by 2020. Note that the gap between demand and supply will be even bigger if other parameters such as maximum working water depth, hook height and boom length are taken into consideration for Jack-up Vessel selection.

In addition, a lesson learnt by offshore wind Jack-up Vessel operators and offshore wind project developers/operators is that a slight oversupply for offshore wind turbine installation vessels is necessary and healthy. The reasoning is threefold: firstly, the weather window is limited so demand for vessels in certain periods each year (high season) is very high. This will cause a lot of competition to charter Jack-up Vessels; secondly, some vessels are not available for the open market since they are committed to offshore wind operators who built and own those vessels; thirdly, due to the uncertainty of weather conditions or other factors it is normal that the project construction period has to be extended or re-scheduled. In that case, being a little flexible with the vessel contract is critical for the success of project installation.

In short, there is an oversupply of Jack-up Vessels for today’s standard offshore wind turbine (3-4 MW) at present, but the supply chain situation for Jack-up Vessels capable of installing Next Generation turbines is not optimistic from 2018 onward. A shortage of offshore wind Jack-up Vessels for the Next Generation and Future Advanced Technology is going to appear unless more Tailor-made TIVs are delivered before 2018.

5.2.1.2 Heavy Lift Vessels

Figure 5-3 shows that in the Middle Scenario, the global demand for Heavy Lift Vessels will peak in 2020 at approximately 15 vessels. In the High Scenario, the peak will be approximately 17 vessels in 2021. Both of these figures are significantly less than the current global supply of 58 vessels, which is expected to grow to 65 vessels by 2015. However, only 17 of these existing vessels are directly involved in offshore wind installation, which is a level much closer to the expected peak demand. In addition, there are a limited number of purpose-made HLVs that are dedicated for offshore wind (mainly in China). For the majority of HLVs, offshore wind must compete with offshore O&G. HLVs will be in particularly high demand by the European offshore O&G industry during the period 2015-2018, so a bottleneck may be reached by then. Another bottleneck could be the availability of HLVs with lifting capacity greater than 9,000 metric tonnes. The topside of DC converters with a capacity of 800 MW (made by ABB) reaches more than 9,300 MT, but only two HLVs identified at present with a capacity of larger than 9,000 tonnes. In addition, 12 HLVs in our database with a lift capacity lower than 600 MT, which cannot be used for the installation of large foundations like tripiles, tripod and gravity base foundation.

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60 Total World Supply 50 Supply w/OSW experience Demand - High Scenario 40 Demand - Middle Scenario Demand - Low Scenario

Vessels 30

0 2012 2014 2016 2018 2020 2022 Year of Operation

Figure 5-3. Heavy Lift Vessel Supply and Demand

5.2.1.3 Cable Lay Vessels

Figure 5-4 shows that in the Middle Scenario, the global demand for Cable Lay Vessels will peak in 2020- 2021 at approximately 19 vessels. In the High Scenario, the peak will be approximately 22 vessels in 2021. Both of these figures are significantly less than the current global supply of 87 vessels, which is expected to grow to 90 vessels by 2015. However, only 42 of these existing vessels have been used specifically for offshore wind cable installation, which is a level much closer to the expected peak demand, although still considerably higher.

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Figure 5-4. Cable Lay Vessel Supply and Demand

5.2.1.4 Diving Support Vessels

Figure 5-5 shows that in the Middle Scenario, the global demand for Diving Support Vessels will continue to grow until it reaches its peak of approximately 21 vessels in 2018. In the High Scenario, the demand will peak at approximately 23 vessels. Both of these figures are considerably greater than the current global supply of 11 vessels. Only 4 of these existing Diving Support vessels have been identified with offshore wind experience, which is a figure that will be eclipsed by demand by 2017. The reason for the drop in demand in 2020 is that according to the trend of vessel design the diving support function will be handled by multi-purpose vessels after that point. In fact, more than five MPPVs currently in operation already have the function of a DSV. Therefore there will be no reason for DSVs since the next generation of multi- purpose vessels will be designed to also handle the diving support function.

Figure 5-5. Diving Support Vessel Supply and Demand

5.2.1.5 Multi-Purpose Project Vessels

Figure 5-6 shows that in the Middle Scenario, the global demand for Multi-Purpose Project Vessels (MPPVs) will grow throughout the forecast period, reaching approximately 166 vessels in 2022. In the High Scenario, the demand will be approximately 195 vessels in 2022. Both of these figures are significantly greater than the current global supply of 107 vessels, which is expected to grow to 117 vessels by 2015. At present, only 60 of these existing vessels have offshore wind experience, which is a level considerably higher than the current demand. This, however, doesn’t mean that MPPVs are in oversupply because a portion of these Multi-purpose Project Vessels can be used as Diving Support Vessels, Towing Vessels, Crew Transfer Vessels and even Platform Supply Vessels, which are discussed in the following section.

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Figure 5-6. MPPV Vessel Supply and Demand

5.2.1.6 Platform Supply Vessels

Figure 5-7 shows that in the Middle Scenario, the global demand for Platform Supply Vessels will peak in 2019 at approximately 203 vessels. In the High Scenario, the peak will be approximately 227 vessels. Both of these figures are significantly greater than the current global supply of 19 vessels, which is expected to grow to 23 vessels by 2015. Only 6 of these existing vessels are operated by companies with offshore wind experience. These supply figures are significantly less than the current demand, but a portion of the demand can be met by using Multi-Purpose Project Vessels, which are currently in surplus.

Figure 5-7. Platform Supply Vessel Supply and Demand

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5.2.1.7 Cargo Barges

Figure 5-8 shows that in the Middle Scenario, the global demand for Cargo Barges will peak in 2019 at approximately 46 vessels. In the High Scenario, the peak will be approximately 51 vessels. Both of these figures are significantly greater than the current global supply of 35 vessels, which is expected to grow to 36 vessels by 2015. Only 16 of these existing vessels are identified with offshore wind track record, which is a level approximately equal to the current demand. We expect that there will be shortages of Cargo Barges by 2017 if none are delivered to the offshore wind sector before that year.

Figure 5-8. Cargo Barge Supply and Demand

5.2.2 Survey Vessels

5.2.2.1 ROV Support Vessels

Figure 5-9 shows that in the Middle Scenario, the global demand for ROV Support Vessels will peak in 2018 at approximately 5 vessels. In the High Scenario, the peak will be approximately 6 vessels. Both of these figures are greater than the current global supply of 3 vessels. However, the ROV function can be handled by some Multi-purpose Project Vessels, Geophysical, Geotechnical and Multi-purpose Survey Vessels, which will help to relieve the projected shortage.

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Figure 5-9. ROV Support Vessel Supply and Demand

5.2.2.2 Geophysical Survey Vessels

Figure 5-10 shows that in the Middle Scenario, the global demand for Geophysical Survey Vessels will peak in 2018 at approximately 5 vessels. In the High Scenario, the peak will be approximately 6 vessels. Both of these figures are less than the current global supply of 10 vessels, but it doesn’t represent the oversupply situation will remain, because some geophysical survey vessels have been used as ROV Support Vessels as well in the offshore wind sector.

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Figure 5-10. Geophysical Survey Vessel Supply and Demand

5.2.2.3 Geotechnical Survey Vessels

Figure 5-11 shows that in the Middle Scenario, the global demand for Geotechnical Survey Vessels will peak in 2018 at approximately three vessels. In the High Scenario, the peak will be approximately four vessels. Both of these figures are higher than the current global supply of one single vessel. However, Multi-purpose Survey Vessels have provided such services in the offshore wind sector, alleviating any shortage concern.

Figure 5-11. Geotechnical Survey Vessel Supply and Demand

5.2.2.4 Multi-Purpose Survey Vessels

Figure 5-12 shows that in the Middle Scenario, the global demand for Multi-purpose Survey Vessels will peak in 2021 at approximately 21 vessels. In the High Scenario, the peak will be approximately 24 vessels. Both of these figures are less than the current global supply of 27 vessels, but Figure 5-12 also shows that only 14 of these existing vessels currently have a track record in the offshore wind sector, which is a level much closer to the expected demand in 2017. Using Multi-purpose Survey Vessels to cover all offshore wind survey services is a trend in the offshore wind sector; therefore we expect an increase in demand for this type of vessel during the forecast period; at the same time we expect a drop in demand for survey vessels that can provide only a single offshore wind function.

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Figure 5-12. Multi-Purpose Survey Vessel Supply and Demand

5.2.3 Service Vessels

5.2.3.1 Tugboats

Figure 5-13 shows that in the Middle Scenario, the global demand for Tugboats will peak in 2019 at approximately 49 vessels. In the High Scenario, the peak will be approximately 55 vessels. Both of these figures are slightly less than the current global supply of 61 vessels. However, only half of these existing vessels have been directly involved in offshore wind project work, which is a level higher than the current demand but close to the expected demand in 2015. Considering the total availability of tugboats at present, we expect that tugboats will be approximately in balance through the forecast period.

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Figure 5-13. Tugboat Supply and Demand

5.2.3.2 Safety Vessels/Standby ERRVs

Figure 5-14 shows that in the Middle Scenario, the global demand for Safety Vessels and Standby ERRVs will continue to grow throughout the forecast period, reaching approximately 80 vessels in 2022. In the High Scenario, the demand will be approximately 94 vessels in 2022. As stated in Table 5-1, this forecast is based on the assumption that one standby ERRV will be needed for each 2 cumulative plants >300 MW. In reality, however, there is no standard requirement for having such vessel during offshore wind project construction, and it currently depends on whether offshore wind project developers require standby ERRVs during project installation to bring down the risk.

Some 40 ERRVs with the capability of providing service to offshore wind are from the offshore O&G industry, of which only 11 have experience in offshore wind. At present, there is no challenge for existing ERRVs to serve offshore wind, but it is expected to become a challenge if ERRVs become a standard requirement by the offshore wind industry. It is expected that MPPVs with the ERRV function could help relieve the shortage.

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100

90 Total World Supply 80 Supply w/OSW experience

70 Demand - High Scenario Demand - Middle Scenario 60 Demand - Low Scenario 50

Vessels 40 30 20 10 0 2012 2014 2016 2018 2020 2022

Year of Operation

Figure 5-14. Safety Vessel Supply and Demand

5.2.3.3 Accommodation Vessels

Figure 5-15 shows that in the Middle Scenario, the global demand for Accommodation Vessels will continue to grow through 2017 and then remain level at approximately 30 vessels. In the High Scenario, the demand will level off at approximately 35 vessels. Both of these figures are significantly greater than the current global supply of 17 vessels. Only 8 of these existing vessels have offshore wind experience, which is a level slightly higher than the current demand.

The reason that the demand is expected to level is that beginning in 2018, the hoteling function will be handled by larger Service Operating Vessels, which are discussed in the next section.

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Figure 5-15. Accommodation Vessel Supply and Demand

5.2.4 O&M Vessels

5.2.4.1 Service Crew Boats

Figure 5-16 shows that in the Middle Scenario, the global demand for Service Crew Boats will continue to grow throughout the forecast period, reaching approximately 426 vessels in 2022. In the High Scenario, the demand will be approximately 502 vessels in 2022. Both of these figures are significantly greater than the current global supply of 187 vessels, which is expected to grow to 213 by 2015. Only 110 of these existing vessels have provided services to the offshore wind sector, which is a level that will be eclipsed by demand in 2016. We expect that there will be a shortage of Service Crew Boats by 2017 if no orders of new crew boats are signed before 2016 (assuming an 8-10 month lead time for a proven design).

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Figure 5-16. Service Crew Boat Supply and Demand

5.2.4.2 Tailor-made O&M Vessels

Figure 5-17 shows that in the Middle Scenario, the global demand for Tailor-made O&M Vessels will continue to grow throughout the forecast period, reaching approximately 71 vessels in 2022. In the High Scenario, the demand will be approximately 84 vessels in 2022. Both of these figures are significantly greater than the global supply of just 3 vessels that is expected by 2015. In short, the offshore wind industry is going to face an extreme shortage of supply of Tailor-made O&M Vessels. Despite the fact that some small size Jack-up Barges or Vessels (that cannot to be used for Next Generation turbine installation) could be adopted for providing O&M services, investment is imperative in this segment in order to meet forecasted demand.

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Figure 5-17. Tailor-made O&M Vessel Supply and Demand

5.2.4.3 Service Operations Vessels

Service Operations Vessels (SOVs) are used for crew transfer, spare parts storage and floating hotel during the project operational phase. Type 1 SOVs (smaller SOVs) are appropriate for crew sizes of 60 people or less and are included in the MPPV category. Type 2 SOVs (large SOVs) will be larger (110-130m long) in order to handle crews larger than 60 people. After 2017, Type 2 SOVs will replace Accommodation Vessels for new 300+ MW plants which are greater than 20km from shore.

Figure 5-18 shows that in the Middle Scenario, the global demand for Type 2 SOVs will continue to grow from 2017 onwards, reaching approximately 82 vessels in 2022. In the High Scenario, the demand will be approximately 97 vessels in 2022. There are currently no SOV Type 2 vessels in operation or under construction, but the offshore wind industry will get there when the market for large (300+ MW plants) takes off in 2017. Like Tailor-made O&M Vessels, this will be another area for investment.

Figure 5-18. Service Operations Vessel Type 2 Supply and Demand

5.2.5 Summary Table 5-2 is a summary of the peak Middle Scenario demand and current and expected supply of each vessel type. The rows are colour coded in order to identify the vessels which are expected to be in surplus (pink), approximately in balance (yellow), or in shortage (green).

Table 5-2. Supply vs. Demand Summary Peak Expected Supply Peak Current Vessel Type Demand 2015 w/OSW Demand Supply Year Supply Experience Next Gen Jack-up Barges or Vessels 2020 37 27 30 27 HLVs 2020 15 58 65 17 Cable Lay Vessels 2020 19 87 90 42

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Diving Support Vessels 2018 21 11 11 4 MPPVs 2022 165 107 117 59 Platform Supply Vessels 2019 203 19 23 6 Cargo Barges 2019 46 35 36 16 ROV Support Vessels 2018 5 3 3 0 Geophysical Survey Vessels 2018 5 10 10 0 Geotechnical Survey Vessels 2018 3 1 1 0 Multi-Purpose Survey Vessels 2021 21 28 28 14 Tugboats 2019 49 61 61 30 Safety Vessels 2022 80 40 40 9 Accommodation Vessels 2017 30 17 17 8 SOV Type 2 Vessels 2022 82 0 0 0 Service Crew Boat s 2022 426 187 213 103 Tailor-made O&M Vessels 2022 71 0 3 0

Green shaded rows: peak demand exceeds supply Yellow shaded rows: supply and demand approximately in balance Pink shaded rows: supply exceeds peak demand

The strategic implications of this analysis are discussed in Chapter 8. In general, attractive segments for members of the Associations are the vessel types where peak demand is expected to exceed current supply (i.e., the green shaded rows in Table 5-2).

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6. Vessel Contracts Analysis

6.1 Introduction One of most pressing issues facing the offshore industry in recent times is the lack of standardisation, particularly in the area of vessel contracting. This presents a major dilemma in an industry that is transnational, with a supply chain and financing pool spread out across a number of countries and where the realisation of national targets is dependent on a well-developed supply chain. Furthermore, as an increasing number of projects are being realised farther out to sea and in deeper waters, thereby increasing technical complexity, logistics costs (and risks) will continue to rise. While there is much experience and know-how that could be drawn from the oil & gas sector, the scale on which oil & gas projects have been realised is vastly different from offshore wind projects. It is for these reasons why it is essential to outline the overall contractual nature of this business, how structures and conditions vary from country to country, as well as potential measures that can be taken at this stage to establish some form of standardisation in this nascent industry.

In addressing these questions this chapter focuses on a number of relationships with regards to offshore contracting, some of which are assumed by many observers to be mutually exclusive. They include the following:

» Whether EPC or multi-contracting is the way forward; » Whether cost reduction or risk mitigation is of greater importance; » How different stakeholders, including utilities and banks, view offshore vessel contracts and their particular provisions; and » What types of contracting standards (e.g. FIDIC, BIMCO) are being used, for what purposes, and in which countries.

Although many projects to date have been financed by utilities via balance sheet, the sheer number of projects that need to be built in European waters in the coming years will greatly exceed balance sheet capacity. This is occurring at a time when the liquidity of most European utilities has been hit by lower electricity prices and where a large capital program is required to replace conventional generation with new build assets. According to a recent survey conducted by Freshfields Bruckhaus Deringer, 61% of the senior executives they surveyed “do not believe that utilities are sufficiently capitalised to self-finance the equity component of future offshore wind projects.”3 To fill the investment gap, project financing is being employed as an alternative. Between February 2012 and March 2013, over €2 billion in debt financing was raised for five European offshore projects. There are currently up to 15-20 banks in the market that lend to offshore projects on a continual basis as well as a number of multilateral institutions (EIB, GIB, and KfW) that have earmarked a considerable amount towards financing offshore wind. As such, due consideration must also be given to how the financial sector perceives the offshore vessel market which is why this chapter places particular emphasis on “bankability”.

There are four parts contained within this chapter, including the introduction. Part II highlights the methodology we employed in the overall study, how the research has been designed, how information was collected, the business segments that were surveyed, and why certain questions were asked. Part III highlights the various contractual structures that are employed in the industry, the advantages and

3 “European Offshore Wind 2013: realising the opportunity”, conducted by Freshfields Bruckhaus Deringer. Link: http://www.freshfields.com/uploadedFiles/SiteWide/News_Room/Insight/Windfarms/European%20offshore%20wind%202013%20- %20realising%20the%20opportunity.pdf

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disadvantages of one structure versus another, the differences as well as pros/cons of EPC versus multi- contracting, and the key risks and considerations that should be taken into account over the course of the project lifecycle. The chapter concludes with Part IV, which highlights the conclusions reached and makes potential recommendations for the future.

6.2 Methodology

The methodology employed within this chapter entails drawing on information from two types of sources: 1) Desk Research, and 2) Conducting surveys across a range of companies and professionals that are active at various levels of the offshore industry. The desk research includes a series of public reports, studies, presentations, and articles that are cited in footnotes throughout this chapter. The primary objective of the survey component is to provide a comprehensive overview of the common viewpoints, opinions, and dilemmas that are faced by professionals working in this sector on a daily basis. The survey was generally designed with the aim of identifying the prevailing contractual structures and standards that are employed in the industry as well as identifying evolving the gaps and general trends. The particular questions that were raised included asking participants to rank contractually relevant criteria (e.g. price, interfaces, liquidated damages, etc.), identifying the pros and cons of EPC and multi-contracting, identifying what types of contract formats (e.g. FIDIC, BIMCO) were used and where, what types of insurance are relevant in the context of offshore vessels, and to map out the general obligations of both contractor and employer.

In gathering such information, we solicited responses the following business segments: finance, legal, power generation, vessel operators, and others (e.g. technical advisors, insurance providers, etc.). In total we received responses from 13 parties and from 6 different countries. In terms of geography, the study attempts to take a general European view where possible, but there is particular emphasis on U.K., Germany, Denmark, and Benelux. France has not been covered in the study the first major offshore projects in that country will not be executed until 2017 at the earliest.4

6.3 Contract Structures

a) Commonly Used Contracting Formats

One of the key issues in regards to offshore contracting is the absence of a standard format. The realisation of an offshore project ultimately requires using at least 2-3 different contract formats, and where considerable time and effort is spent modifying the contract to make it fit for purpose. Within the survey, a series of questions were raised asking whether FIDIC, LOGIC, NEC3, or BIMCO Supplytime contacts were being employed. These are effectively a series of contracts that correspond to onshore construction, marine construction, marine installation, and marine transport. In the context of offshore wind, there is no single contract that is being used across the board and a combination of different contracts need to be employed over the course of construction. Most of these contracts are used on the basis of a lump-sum basis, but some (such as BIMCO) are used primarily on a time-charter basis. The survey furthermore asked where these formats were being used as well as the pros/cons of each format. The table below illustrates the results.

4 http://www.offshorewind.biz/2013/05/28/france-aims-for-large-scale-offshore-wind-power/

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FIDIC NEC3 LOGIC BIMCO BESPOKE

Widely used across all A pure marine Widely-accepted me Many respondents PROS markets, especially Simple, user-friendly contract that covers charter, favourable use individual or FIDIC Yellow where FIDIC lacks for vessel operators custom formats

Not a marine Was developed Lack of contract, requires originally for oil & Not balanced vis-à-vis standardisa on in employer, only used CONS considerable Not commonly used gas, which is a industry if everyone for transport modifica on different pla orm has own contract

Used mostly for Used mostly for jack- Used mostly for CTV, VESSEL construc on vessels, N/A up, heavy-li vessels ROV, support vessels, N/A heavy-li , jack-up, in the UK and transport

% 100% 11% 78% 78% 67%

Figure 6-1. Pros and Cons of Each Contract Type and the Percentage of Participants Using One versus the Other

» Engineer: the person appointed by the employer regarding the execution of the contract. The employer therefore retains some design responsibility. » Sub-contracts: the contractor shall be responsible for the acts or defaults of any sub-contractor, his agents or employees, as if they were the acts or defaults of the contractor (this is how it is supposed to work in theory, but as one will see in later parts of this chapter, limitations are placed on such responsibility in practice). The contractor shall furthermore provide to the engineer/employer all possible information regarding the sub-contractor and their respective scope of work. » Obligation of Information: the employer provides site data to the contractor, but the contractor has the obligation to interpret such data. This data includes site conditions, climactic conditions, hydrological data, and sub-surface conditions. » Unforeseen Physical Conditions: includes unforeseen sub-surface and hydrological conditions, but excluding climactic conditions, that are encountered at the project site by the contractor. To the extent where the conditions were unforeseeable and where the contractor is delayed and notifies the engineer/employer on a timely basis, they may be entitled to an extension of time and/or reimbursement of cost. » Health and Safety (HSE): primarily the obligation of the contractor to ensure that they are complying with the applicable regulations and taking care for the safety of persons on site. Employer will usually have the right to audit the contractor on matters pertaining to HSE. » Contract Price: shall be lump-sum and subject to adjustments designated within the contract. » Limitation of Liability: each party shall hold the other harmless for consequential loss, but this shall not apply in cases of fraud, deliberate default, or reckless misconduct.

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» Right to Termination: reciprocal by nature. Employer has the right to terminate if contractor fails to execute the works in accordance with their obligations and fails to comply with instructions. Contractor has the right to termination if employer does not make timely payment or if part of the contract is assigned by the employer to another party. » Employer’s Risk: to the extent where the employer interferes in the execution of the works beyond what has been contractually agreed upon or where unforeseeable events (e.g. force of nature) prevent an experienced contractor from carrying out the works, and where such events result in loss/damage/delay to the works which adversely affect the contractor, the employer shall reimburse the contractor in accordance with cost plus reasonable profit. » Dispute Resolution: shall be referred to a dispute adjudication board in the first instance. If amicable resolution is not possible via dispute adjudication board, then dispute shall be subjected to arbitration.

Although, FIDIC Yellow Book is commonly used, parts of the FIDIC Silver Book might be used more for projects that are being realised on an EPC/turn-key basis or where project financing has been employed. Even then, it is often the case that Silver Book is not used on its own and is rather used to feed into a contract template that is based on the Yellow Book. The Silver Book largely resembles the Yellow Books, however here are a few areas in which differences exist between equivalent clauses:

» Whereas FIDIC Yellow Book makes provision for an engineer, the FIDIC Silver Book refers to this person as the “Employer’s Representative”. This is probably attributed to the fact that under an EPC structure the employer plays more of a passive and observatory role than they would under a multi-contracting approach. Under FIDIC Silver the contractor is in the driver’s seat. » FIDIC Silver Book explicitly states that the contractor is responsible for verifying and interpreting all site data and that the employer bears no responsible in regards to the accuracy, sufficiency, or completeness of such data unless stated otherwise. » In regards to the consequences of unforeseen physical conditions, FIDIC Silver Book states that the contractor accepts total responsibility for having foreseen all difficulties and costs for successfully completing the works and that the contract price cannot be adjusted accordingly. » In regards to employer’s risk, where the employer is required to make compensation to the contractor for unforeseeable events, such compensation is merely referred to as “cost”. It is not known whether this cost excludes the “reasonable profit” that is specified in yellow book. It could be the case that under EPC, where a detailed cost breakdown does not exist, that the contractor has included profit but has not itemised it separately. » Lastly, per FIDIC Silver Book the contractor accepts all responsibility and consequences associated with design.

The FIDIC suite has the general benefit that it is used primarily for major works and has many versions that can be used/adapted for different purposes. At the same time, FIDIC is primarily an onshore civil engineering contract and is not particularly suited to offshore wind farm installation work. This is perhaps why respondents also indicated that they relied heavily on LOGIC and BIMCO Supplytime contracts as well. Both of these contracts are primarily marine contracts with a long track record of being employed in the oil & gas business. Furthermore, FIDIC is generally based on English common law and considerable modification is needed to make it compatible with projects based in other jurisdictions.

BIMCO contracts are typically used for transport-related works and on a time-charter basis. It is commonplace to use BIMCO for the transport of components, for example the transport of personnel/components from harbor to the project location. BIMCO is also used for the contracting of crew transfer vessels (CTVs). BIMCO Supplytime 2005 has clearly defined provisions with respect to the charter

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period, vessel condition, crew provision, bunker fuel requirements, and other aspects that are central to vessel chartering and operation.5 LOGIC contracts are primarily used in the oil & gas sector and might be preferred by professionals in the offshore wind industry who have an oil & gas background. It captures some of the key installation-related provisions that are critical within any marine contract. LOGIC is more comprehensive than BIMCO in that it can be used for marine construction and installation and is thus more compatible to major works. It makes direct reference to the marine-related insurances that need to be effected (e.g. Marine Hull and Machinery, P&I, etc.) whereas FIDIC does not. On the other hand, LOGIC does bear a number of similarities to FIDIC in regards to mutual indemnification, consequential loss exclusion, force majeure, and the right to termination.

Even-though they might be more compatible for marine works, there are nevertheless a number of reasons why BIMCO and LOGIC do not take overall precedence over FIDIC. First, BIMCO Supplytime is a time- charter contract that is primarily used for transport and is generally structured in favor of the vessel owner and is thus not fully adaptable to major works where having a lump-sum is essential. Second, LOGIC was originally created for the oil & gas business and has predominance in the U.K. market as a marine contract focusing on the installation of balance of plant (foundations, substations, cables). It furthermore, has limitations in that there are considerable differences between how oil & gas and offshore wind projects are realised. For example, offshore wind involves repeated activities (e.g. hundreds of foundations being transported and installed in different locations), whereas in the oil & gas space all works are centered on a single platform. Third and finally, in countries like Germany, which never had an offshore oil & gas business, there is more familiarity with FIDIC than LOGIC/BIMCO. Respondents were asked to identify which types of contracts they used in various countries. Their geographical distribution and prevalence is shown in Figure 6-2.

FIDIC NEC3 LOGIC BIMCO

UK 71% 29% 71% 71%

GER 86% 14% 43% 71%

DEN 43% 14% 43% 57%

Figure 6-2. Percentage of Survey Respondents Indicating Use of Particular Contract by Country

As such, the general formula seems to be that FIDIC Yellow Book is used as the base template and that marine-related elements from LOGIC/BIMCO are then fed into this base contract. Where turn-key solutions are employed, parts of FIDIC Silver will be incorporated into the FIDIC Yellow. The end result is a usually a bespoke or customised contract which many utilities and major vessel operators have created on an in-house/individual basis.

5 http://www.maritimeknowhow.com/wp-content/uploads/image/Charterparties/Time-CP/SUPPLYTIME_2005.pdf

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b) Key Contractual Obligations

This section focuses on some of the key considerations that should be taken into account by employers and contractors alike and highlights their contractual obligations during the construction stage (and to a lesser event during the operating period). A good starting point is outlining and distinguishing the contractor’s and employer’s obligations under the contract (primarily for major works). In situations where multi- contracting is employed, which encompasses most of the offshore market at the moment, a typical split of responsibilities is shown in Figure 6-3.

Summary of Typical Obliga ons for Major Marine Contracts Contractor’s Reponsibili es Vessel provision, managing sub-contractors, execu ng works according to milestone schedule and contract, HSE, weather risk (shared)

Employer’s Responsibili es Permits, grid connec on, coordina ng interfaces, audi ng contractor, provision of harbour faciii es, paying on me, clearly deefin d scope of works Risks retained by Owner Permits, grid connec on, interface risk, changes in applicable law, weather risk (shared), soil risk. Risk of loss/damage usually transferred to employer upon comple on.

Interface Responsibility Project Manager, Marine Warranty Surveyor, Interface Manager, Marine Coordinator, Package Manager

Penal es for Late Comple on Liquidated damages capped at 15-25% of contract price

Whom does the contract FIDIC typically favours the employer. BIMCO contracts favour the generally favour or protect? contractor. Employer has burden of proof regarding liquidated damages. Consequen al loss exclusion favours contractor.

Figure 6-3. Typical Split of Responsibility Between Employer and Contractor Under Multi-Contracting. c) Key Contractual Obligations: Timing & Availability

The first step is to establish a plausible milestone schedule, taking into account vessel capabilities, weather provisions, and interfaces. It will ideally set out each milestone, the commencement and completion date, the responsible party for that milestone, and the amount of time (number of days) needed for completion. The milestone schedule will furthermore incorporate weather downtime and vessel availability. Weather downtime is usually priced into the bid/price of a contractor on a lump-sum basis. More often than not, this amount is capped and it is often the case that the employer has to make some weather downtime allocation as well. The employer will normally try to pass weather risk on to the contractor, who in turn may use larger, operationally flexible, and thereby more expensive installation vessels to meet this requirement. Banks in particular will take considerable notice of whether sufficient weather risk has been incorporated into the overall planning. In general, they require an installation schedule that is based on P90 weather downtime (conservative scenario). They may furthermore require that the contract make provision for an extension period of up to 3-6 months in the overall planning to cater for weather downtime and/or vessel delays.

A number of respondents mentioned that they recognise the technological capabilities of new vessels and their ability to operate in harsher weather, but vessel contracts nevertheless have to remain flexible if WTG

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installation has to be postponed. This effectively touches on the issue of vessel availability. The vessel operator should offer alternative time slots if the installation schedule has to be reorganised or they should provide an alternative vessel outright. Furthermore, as many vessels are currently being built, it can be the case that project owners and/or lenders will prefer that a vessel is built and operational prior to financial close. A contract under such circumstances should establish that the manufacturing process for the vessel is well under way, that the shipyard is a reputable builder, that the ship design is fixed and cannot be changed, and last but not least, a clause establishing for the provision of a substitute vessel in the event of delay.

It can also be the case that the vessel owner becomes insolvent and thus cannot execute its obligations under the contract. This is applicable in instances where the vessel owner has debt obligations. A letter of “quiet enjoyment” is then put into effect between the party financing the vessel (usually a bank) and the employer and/or main contractor. The letter stipulates that the financing party, as a result of the vessel owner’s default of its obligations per the loan agreement, will rely on fees payable by the employer and/or the main contractor to repay the outstanding debt.

From a contractor’s perspective, on occasions where they have subcontracted their works it is essential that they mitigate risks associated with the availability of a vessel, which could result in the main contractor paying liquidated damages in case of delay during the construction and operating periods. For such a risk,` they need to ensure that provisions within the main contract are matched with the availability provisions stipulated per their subcontract. d) Key Contractual Obligations: Planning, Coordination, & Management

The importance of interfaces cannot be understated as utilities, banks, law firms, and contractors alike consistently identify it as being a key risk requiring an organisational structure dedicated to its continuous management. Not only can there be dependency between contracts, but also some installation works involve multiple transfers of ownership between different parties. For example, it is sometimes the case, particularly with multi-contracting arrangements where there are a number of interfaces, in that ownership and responsibility of a component (e.g. WTG, foundations) passes back and forth among the contractors, or between the contractors and employer, over the course of loading at harbor, sea transport, positioning, and installation. Hence, in light of these complicated circumstances many contracts will contain a series of annexes in which the responsibilities of both parties are set out under an interface matrix, or responsibility matrix. These tables supposedly provide a comprehensive breakdown of every task that is to be carried out during the installation process, where each interface sits, and which party bears responsibility in each instance. However, there are also limitations to the responsibility matrix. Some survey respondents were keen to point out that they have had problems in the past reconciling these matrices with other parts of the contract and that they can at times contradict the terms & conditions of the contract itself. Hence, particular attention should be paid to over the course of contract negotiations in ensuring that the contract and responsibility matrix are clear, fully aligned, and free of contradictions.

One way of managing interface risk is by keeping the number of construction contracts to a minimum and also by bundling/packaging installation-related works within supply contracts. For example, vessel supply and installation works can be subcontracted under the main construction contracts (e.g. WTGs, Foundations, Cables, Substation), the main contractor would take responsibility for the performance of its own logistics. In fact, some in the industry classify this structure as mini-EPC on the basis that the various logistics works are packaged into the main construction contracts under a multi-contracting structure. This will be discussed in greater length in latter parts of this chapter.

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A number of personnel are employed in managing interfaces. These individuals should typically be experienced professionals who have an extensive track record in managing complex contracts during execution and in regulating relationships between parties. The most important of these is the marine warranty surveyor, appointed by the employer or lead contractor, who audits and approves various offshore activities and furthermore acts as a link between both parties on the vessels. In particular, this is a person who monitors the installation process, ensures that proper practices and methods are being employed, and that safety and risk management systems are adequate. The marine warranty surveyor is also there to protect the interests of the insurer, given that whoever underwrites the insurance cover has a strong interest in managing the associated risk. In addition to the marine warranty surveyor, there may also be other employees involved in managing interfaces, such as the interface and package managers, contract managers, and the project manager, who all work in the project company. e) Key Contractual Obligations: Liability Structure

Before discussing the prevailing liability structures that are associated with offshore wind, it is first necessary to understand the risks involved in monetary terms. This can be understood by evaluating the size of the projects, providing a theoretical estimate for the contract values and revenues involved, in order to better understand how various risks are considered and mitigated by different parties. With regards to the overall capital expenditures (CAPEX), it can be estimated that logistics-related costs amount to roughly 19% of total CAPEX (see Figure 6-4).

Source: Navigant Figure 6-4. Offshore Wind Capital Costs Breakdown

According to BTM Consult, total CAPEX for offshore wind projects being realised in European waters ranges anywhere from €3.3 – 4.4 million per MW.6 For the purpose of this exercise we use a theoretical CAPEX per MW value of €3.5 – 4.0 million.7 Under these parameters, the cumulative value of logistics-

6 “Offshore Wind Report 2013” by BTM Consult 7 Rough estimate based on projects listed on 4C Offshore, Link: www.4coffshore.com

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related works during construction for a 300 – 500 MW project could amount to €200 – 380 million. These figures are important to understand because during the construction period, the vessel operator will have to affect a number of insurances, provide a number bonds/securities backed up by a parent company or guarantor, and commit to potential liabilities that are connected to the profile above. On top of this amount, under exceptional circumstances vessel operators can be held liable for revenue loss and most European projects generate at least €15 million per month when fully operational. Hence, the liability structure is a critical part of the contract that measures the trade-off between price and risk.

In particular, cable laying has been identified by insurers as being the riskiest. Although cable laying may not be the largest contract within the installation lot in terms of CAPEX, it is nevertheless a high-risk that requires considerable risk mitigation and insurance provisions up front. It was reported that between 2003- 2011 there were 100 insured claims in offshore wind, out of which 40 were cable-related.8 In reality, it can easily account for up to 80-90% of offshore claims. Cable laying is particularly risky because it requires the laying and burying of cable often without a complete understanding of seabed conditions. It is for this reason why contractors and employers tend to pass off seabed risk to each other. Such works typically require experienced personnel because any damages (for example to an export cable) could result in considerable revenue loss to the affected party. Furthermore, companies that are active in this area are often financially vulnerable and lack the ability to carry out their obligations during execution. In fact, a number of cable laying companies have gone insolvent in recent years. It is for this reason, why procurement decisions associated with cable laying need to give due consideration to criteria involving credit worthiness and parent company guarantees, although it seems that this part of the supply chain is not particularly well developed and employers may have little choice but to rely on small/vulnerable contractors.

A contract should contain a comprehensive liability structure that is fully aligned with the risk profile of the works and the corresponding project. Some respondents indicated that the total limitation of liability could amount to anywhere from 10-100% of the contract value for both EPC and multi-contracting, dependent of course on the circumstances, which include the following:

» The respective bargaining positions of both parties; » The size/financial stability of the contractor; » The duration and value of the contract; and » Board requirements (applicable in the case of utilities and major vessel providers).

Within the liability structure, liquidated damages serve to mitigate various risks between contractor and employer. At the same time, the applicability of liquidated damages is heavily conditioned and cannot be used on a categorical basis. “This is generally consistent with the legal principal that liquidated damages must be commercially justified and not extravagant, or oppressive. The project company would risk a challenge that the provision was penal if it sought to impose liquidated damages which were not commercially justified.”9 In other words, project owners need to make plausible assumptions (a genuine “pre-estimate”) regarding liquidated damages that could potentially be incurred as a result of delay and/or breach. In order to ensure that liquidated damages are commercially justified, and in the context of offshore wind, project owners need to identify the exact point in time in which they have grid access and furthermore must be able to estimate the electricity production during the ramp-up stage, as many projects

8 “Cable Laying: Insurers Point of View & Perspectives.” By Ralf Skowronnek, Marsh Germany, 15 August 2012: http://www.hk24.de/linkableblob/2023646/.4./data/Vortrag_von_Herrn_Skowronnek_MARSH-data.pdf 9 “Offshore Wind Construction Practice” by Watson, Farley, & Williams. Link: http://www.wfw.com/Publications/Publication1274/$File/WFW-OffshoreWindConstruction.pdf

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operate at partial capacity leading up to full commissioning. The burden of proof with regards to liquidated damages therefore rests with the employer.

Although there is no golden rule with regards to liability caps, most respondents indicated that typical caps for late completion amount to roughly 15-25% of the contract value and to the extent where such delay was directly attributable to the contractor. The higher the liability cap for liquidated damages, the higher the contract price, as the contractor will re-incorporate the risk back into the price. Furthermore, it can also be the case that the employer provides the contractor with a grace period before liquidated damages come into effect. However, lenders will likely frown upon this concession as it means greater risk allocation to the project and hence less favorable financing conditions.

Liquidated damages must not only be aligned with the milestone schedule, but they must also be aligned with the cash flow and payment forecast contained within the payment schedule. The payment schedule will highlight how much has been paid upfront within the initial payment and should furthermore identify which particular milestones trigger payment and in what percentages. The payment profile and cash flow forecast must also be illustrated on a monthly basis. In securing these payments and obligations, a series of securities such as advance payment bonds and performance bonds will be issued by a guarantor (lender or a parent company with acceptable credit worthiness). Such securities can typically amount to 5- 15%10 of the contract price and will vary considerably from project-to-project and according to circumstance. The value of the bonds will be reduced on a pro-rata basis over time and subject to the fulfillment of milestones. In the event that a security cannot be implemented, for whichever reason, an alternative approach could involve the incorporation of a retention mechanism under the contract, whereby payment to the contractor is withheld until a particular milestone is fulfilled.

At the same time, as much as one may attempt to do so, it is not possible to secure all potential risks. The “domino effect” that a delay in one contract could have on another is an example of consequential loss (such as lost profit, loss of other business), which cannot be claimed outright by the plaintiff. It would need to be demonstrated by the project owner that such loss was attributed directly to the actions of the supplier/operator and that such losses were contemplated at the time in which the contract was made. Furthermore a number of respondents indicated that the exclusion of consequential loss must be stipulated within a contract and that such losses are generally excluded in supply & construction contracts in the U.K. and Germany.

Within the overall liability structure, a number of respondents mentioned that knock-for-knock provisions are essential and will remain important going forward. Knock-for-knock stipulates that each party shall hold the other harmless, or claim its own insurance provider when an insurable event occurs, regardless of who was responsible. As a result, the party that was not responsible for an accident/event could deem the knock-for-knock provision as being unfair. However, the main benefit of knock-for-knock is that it resolves the problem of insurance overlap / duplication of coverage between parties. It is furthermore advantageous vis-à-vis the vessel operator because it excludes them from consequential losses. Otherwise, vessel operators might be induced to scale back their activities in offshore wind if they are subjected to open-ended liability. Both BIMCO Supplytime and Windtime are based on knock-for-knock principles.11 Knock-for-knock is widely used in the oil & gas sector, although some entities, such as utilities (many of which come from an onshore civil construction background), are wary of knock-for-knock and tend to prefer fault-based regimes instead.

10 “EPC Contracts in the Power Sector” by DLA Piper. Link: http://www.dlapiper.com/files/Publication/18413b26-49b8-490e-acc6- 3ff54faa55d7/Presentation/PublicationAttachment/1205e08d-e585-479d-ac17-42135efaf044/epc-contracts-in-the-power-sector.pdf 11 https://www.bimco.org/en/News/2012/10/30_Insurance_liabilities.aspx

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f) Key Contractual Obligations: Insurance

The insurance market remains limited in the offshore wind industry. It is difficult to find insurers that are willing to provide coverage and in the volumes needed. Nevertheless, “projects with appropriate risk allocation between project and supplier will attain better insurability and financing.”12 There are only a handful of insurance providers that are willing to underwrite an industry where the lessons learned vary considerably from project-to-project. Major insurance providers involved in underwriting offshore include, but are not limited, to the following providers: AON, Marsh, Allianz, Delta Lloyd, Codan, GCube, and Zurich. A number of insurances need to be effected by the employer and/or contractor in order to gain comprehensive coverage. Most respondents indicated that the following insurances were essential in the context of vessel operations:

» Third Party Liability: amounts specified per incident and in the aggregate per annum; » Hull & Machinery: collision liability for all vessels provided by the contractor and its subcontractors; » Protection & Indemnity (P&I): for pollution and wreck/debris removal; and » Workmen’s Compensation: covering personal injury/death.

Effecting the above insurances should ideally provide comprehensive coverage in most circumstances. The marine warranty surveyor, as mentioned earlier, has a role that is of particular importance to insurers as that is the person who is auditing the installation process and ensuring that works are being executed in a proper manner. Insurance claims that occur as “a direct consequence of disregarding the reasonable recommendations of a warranty surveyor”13 will typically not be considered by the insurer.

At the same time, some respondents indicated there could be potential gaps and complexities in insurance coverage. There is some ambiguity in the industry with regards to subrogation, which is defined as the point in which an insurer pays the insured party for an event that was attributed to a third party. The insured then assigns the insured’s underlying claim to the insurer, who then pursues the third party on the subrogated claim. To put it plainly, there can be many different contractors doing different things and it is not always clear who is liable for the claim. This is likely to become more complicated if equipment is leased and/or subcontracted from other parties. It can be the case that the project owner arranges overall project insurance, but is nevertheless reluctant to cover minor items such as contractor equipment. This can be inefficient and such components should ideally be covered under one policy, to the extent possible. Hence, this is why contractual provisions are necessary which stipulates that the right to subrogation is waived. In particular, the insurance clause under LOGIC states that all underwriters shall waive any rights of recourse, including subrogation rights against the employer and its affiliates.

It was mentioned earlier that it is standard to have consequential loss exclusions. Needless to say, this is not reassuring vis-à-vis the project owner, and particularly in the eyes of those entities that are financing the project, given that they could be subjected to revenue loss in the event of delay or damage. In the event where damage or delay results in considerable revenue loss to the project, such risk can be mitigated by the project owner effecting “delay in start-up” and “business interruption” insurances. “Advanced loss of profit cover, also known as ‘delay in start-up’, will protect a project against the anticipated loss of revenue,

12 “Cable Risk Joint Industry Project.” By Marsh Germany, 19 February 2013. Link: http://www.offshoretage.de/OT02_20_F2__Marsh_Cable%20.pdf 13 “Cable Risk Joint Industry Project.” By Marsh Germany, 19 February 2013. Link: http://www.offshoretage.de/OT02_20_F2__Marsh_Cable%20.pdf

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if a project commissioning is delayed, perhaps due to a major component, such as a substation transformer suffering damage during installation works. The operational phase equivalent, business interruption cover, is also widely purchased and will protect the owner of a business whose revenue stream would be impaired or completely stopped due to damage to a facility or key component part.“14 The vessel owner should be co-insured under owners advanced loss of profit and business interruption coverage in order to avoid a recourse action from the insurance company. g) Key Considerations at the Operational Stage

Finally, although most of this chapter has been dedicated to outlining and understanding vessel contracting during construction, it is also necessary to understand some of the key considerations that should be taken into account at the operational stage. A standard maintenance set up involves the project owner signing a 5-10 year service agreement (on average) with the WTG manufacturer, who then subcontracts vessel related works during this period. Such maintenance works can be carried out on a regular “scheduled” basis per the service agreement in which the project owner pays the WTG manufacturer a fixed annual fee on a per MWh or on a per WTG basis in return for a standard service plus a warranted level of availability (usually 95% and higher). For such scheduled services, a crew transfer vessel (CTV) or a remote operated vehicle (ROV) could be used dependent on the works in question. Some form of surety, such as a warranty bond (as a percentage of contract price), is put into place to guarantee the service provider’s capacity to carry out its obligations and to finance its liabilities during this period.

At the same time, a comprehensive service agreement will also make provisions for “unforeseeable” circumstances where critical maintenance is also required. This includes occasions where, for example, a storm, collision, or serial defect inhibits the operability of the project and where the service provider needs to rectify the damages immediately. For damages pertaining to large components (e.g. exchange of a gearbox), it might be necessary to use a Jack-up Vessel, the responsibility of which usually falls upon the supplier to procure and/or subcontract. All of this effectively sums up the scope of vessel operations and obligations during the operational stage. Alternatively, a project owner such as a utility may choose to conduct its own service and maintenance, thus negating the need to outsource its service obligations to a third party. h) EPC versus Multi-Contracting

There are two principal contracting structures that have been employed during the construction stage in the industry thus far: Engineering, Procurement, & Construction (EPC) and the other being multi- contracting. Whether one is preferred over the other largely depends on the preferences of the project owner and/or lenders. Under an EPC setup a single contractor takes responsibility for the design, manufacture, construction, and installation of the project and bears a considerable degree liability throughout the lifecycle. The EPC contractor will subcontract various components of the project to other suppliers and will take overall responsibility for the realization of the project, including to an extent delays/errors on the part of their subcontractors. Under an EPC contract the contract price and completion date are fixed, thereby limiting the contractor’s ability to claim extra time and cost. On the other end of the spectrum, under a multi-contracting structure a number of contractors are employed that take responsibility for the manufacture and/or installation of an individual lot, thus creating a series of interfaces between parties that need to be managed carefully.

14http://www.dnv.com/industry/energy/publications/updates/wind_energy/2011/Windenergy_3_2011/Aninsuranceperspectiveonoffs horewindprojects.asp

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The number of interfaces can range anywhere from 1 to 40 contracts, dependent on whether project financing or balance sheet financing is employed. “The multi-contracting approach affords the project owner more flexibility in choosing the contractors that will construct the project, as well as the opportunity to replace them without starting from scratch. Multi-contracting gives owners more control, but the tradeoff is that there is also more room for error and missing out on mitigating/covering risks.”15 The overall structural differences between EPC and multi-contracting are illustrated in Figures 6-5 and 6-6.

Figure 6-5. Multi-Contracting Structure in which each Construction Package is Responsible for its Own Logistics

Figure 6-6. EPC Structure Where Single Contractor Handles All Major Works. In this Case EPC Contract is a Vessel Operator

Each approach has its advantages and disadvantages and while this report does not advocate the use of one versus the other, it nevertheless highlights the strengths and weaknesses of each approach, how they are perceived throughout the industry, and the conditions that warrant their use. The table below illustrates some of the key differences between multi-contracting and EPC.

15 SPR Contracting Report, Navigant, pg. 2.

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EPC Mul -contrac ng

Price 10-25% higher than Mul -contrac ng 10-25% lower than EPC Cost Transparency No Yes

# of Contracts 1 contract between employer & contractor 2-6 if banks involved, otherwise u li es and project developers have more than 10 Interface Mgt. Handled by contractor Handled by employer

Weather Risk Assumed by the contractor (mostly) Shared between par es Remarks • Good fit for a project developer that • Good fit for u li es, and other en es does not have the resources to manage with large project por olios, that do the project not want to pay 10-25% price premium • Good fit for employers that want to for each project they build. buildh 1-2 offsor e projects at most. • 2-6 interfaces on average if project • Banks favour this approach, but will financing is pursued. accept the alterna ve as well so long as • Requires more personnel and has interfaces are limited. higher administra ve costs, strong cost • T&C’s for offshore wind not as a rac ve controlling is needed. as oil & gas, more carve outs. • Interface risk taken by employer.

Figure 6-7. Comparative Analysis of EPC Versus Multi-Contracting

Among those who were surveyed, there was an overwhelming consensus that multi-contracting is at present the preferred option. They furthermore indicated that multi-contracting was acceptable to the extent where the number of interfaces was minimised. They generally accepted this approach due to the limitations of the EPC market, as only a handful of suppliers/operators are capable, or willing to undertake the burden of an EPC contract. The burden and risks undertaken by an EPC contractor include the following:

» Considerable liability for weather downtime, which gets even more complicated as projects are realised farther out to sea (50km+), in deeper water (40m+), and in rougher sea conditions (higher wave height). » Accepting responsibility for the actions of subcontractors and being liable for delays/defects on their part. A delay by even the smallest sub-contractor, or an insolvency, could delay the project. » Taking responsibility for actions that are beyond its core competency.

These conditions require an experienced and credit worthy EPC contractor that is backed by a strong parent company, in possession of a strong credit rating (usually A- / A3), thus having the cash flow and balance sheet to underwrite a risk volume that could easily amount to the double and triple digit millions for just one project in the event of delay (see liquidated damages). As such, some respondents indicated that various suppliers/operators do not want to be involved in EPC contracts unless they have to.

On the other hand there is also evidence of the opposite, in that vessel operators (particularly the larger ones) tend to be more open to EPC than other business segments. In fact, if one glances through their websites they openly advertise their EPC credentials. It is increasingly becoming the case that vessel operators are involving themselves in projects from an early stage. One of the potential benefits of vessel operators becoming involved from the development stage is that it can help identify the optimal combination of design, manufacture, and logistics, providing both parties with more time to optimise the project design in accordance with vessel capabilities. It also enables both parties to “lock-in” a viable project design from an early stage, rather than making a series of changes and modifications during contract negotiations and financial close. As such the expectations and understanding of contractor and

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employer are aligned from an early-stage. However this is unlikely to work with project owners that have in-house capabilities (e.g. utilities, project developers). Despite some enthusiasm from select vessel operators and banks, EPC remains a limited market due to its concentration of risk within one party limited the number of experienced parties out there that are willing to undertake that risk.

From the viewpoint of the employer, the primary advantage of having an EPC structure is the absence of interfaces, greater cost certainty, and a well defined project schedule. It is for these reasons why banks prefer this type of structure. At the same time, in return for these benefits there is a trade-off whereby the contractor is paid a price premium of roughly 10-25% compared to what it would have normally cost under a multi-contracting structure. This price premium is effectively overhead that has been priced into a contract’s bill of quantities and will usually include the following:

» Costs that are allocated towards additional human resources required for managing interfaces, requiring a larger project organization and/or additional due diligence costs (technical, legal, and financial) » Weather downtime risk, to be assumed fully by the EPC contractor, » Other contingencies that have been factored into the contractor’s scope.

Furthermore, under an EPC structure the employer will not have the cost transparency that they would normally have had under a multi-contracting structure, because the contractor will incorporate a lump- sum pricing structure that does not have a line-item cost breakdown. Although having an open book might not be important to project companies that are developing a standalone “one-off” project, a utility or project developer with a large project portfolio might desire an open book process to drive down costs over the long-term. This is particularly relevant in instances where employers and contractors have repeat business. Tennet is a good example of an entity that has large-scale obligations in the realm of offshore wind. In its shift towards multi-contracting, Tennet announced earlier this year that a “multi-contracting approach might offer better value for money” while indicating that “large EPC contractors with long- standing marine experience could offer strong project management and lower-priced bids.”16 Such an announcement is not surprising given the huge capital outlay required from Tennet as well as their long- term obligations, in the German offshore market.

Although banks tend to have a theoretical preference for EPC, they nevertheless accept the fact that the availability of such contracts remains limited in the market. In accepting multi-contracting, they are adamant in keeping the number of interfaces to a minimum and will pay particular consideration to whether or not the project entity is being run by an experienced and well-established project management team with a proven track record of realizing projects on time and on budget. Under a multi-contracting structure weather risk is to be shared between the contractor and employer (and in some cases, weather risk is assumed fully by the employer). Although cheaper in theory, some survey respondents indicated that there are a number of hidden costs associated with multi-contracting that should be taken into account (e.g. downtime due to unforeseen seabed conditions, adverse weather risk, etc.). Finally, under an EPC setup, since the contractor is responsible for the entire cycle, if major problems arise during construction the employer has little authority to intervene.

The key question remains whether the 10-25% price difference is worth the extra cost if it means avoiding potential risks that may result over the long-term. A multi-contracting structure could, as a pure example, be €10-50 million cheaper than EPC at the outset, however the employer could spend just as much over the

16 “Multi-contracting might allow TSO to bypass high-cost bids” by Erin Gill, Windpower Offshore, 21 February 2013. Link: http://www.windpoweroffshore.com/article/1189694/tennet-revisits-offshore-grid-procurement-strategy

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long-term in managing the added complexity and the associated risks. “The up-front price can be lower in a multi-contracting scenario, but downsides are likely to include retention of adverse weather risk and geotechnical risks. The owner is also often left to manage the interface between all the contractors, which can be a project in itself.”17 This is an important factor given that utilities and project development companies have very large organizations; the combination of high headcount and cost of labour per FTE (full-time equivalent) could make project management and administrative costs a major value driver in its own right. i) Risk Mitigation vs. Cost Reduction

Although there is a clear consensus behind multi-contracting, respondents nevertheless indicated that risk mitigation was more important than cost reduction. Of 11 parties that responded to this question, 54.5% indicated that risk mitigation was more important than cost reduction and the remaining 45.5% indicated that both were of equal importance (Figure 6-8). A number of respondents were keen to point out that cost reduction and risk mitigation are linked. For example, project finance requires risk mitigation on the basis that insufficient risk mitigation upfront will result in additional costs at a later stage. This is an interesting response because risk mitigation, at least in theory, is supposedly associated more closely with an EPC structure rather than multi-contracting.

Risk Mi gta on 45.5% Cost Reduc on 54.5% Equal Importance

0.0%

Figure 6-8. How Respondents Perceived the Importance of Risk Mitigation versus Cost Reduction

Furthermore, none of the respondents indicated that cost reduction by itself was more important than risk mitigation. This could perhaps be attributed to the fact that there is currently a “perception gap” between what EPC is supposed to offer in terms of risk mitigation versus what it actually delivers in the context of offshore wind. And as mentioned earlier, cost reduction could only mean reducing upfront, but not costs that could be incurred over the long-term due to unmitigated risks. Some respondents indicated that EPC is great in theory, but in reality the terms and conditions offered by EPC contractors for offshore projects tend to fall short of what is normally be offered in the oil & gas sector. In other words, the value proposition of EPC is put into question, as there are apparently various opt-outs, carve-outs, and exceptions that render EPC less attractive. Respondents indicated that some particular areas where EPC contractors tend to limit their obligations include the following:

17 “The Importance of Clear Allocation of Contractual Risks and Liabilities” by Mark de la Haye / Chris Kidd, Ince & Co. Link: http://incelaw.com/documents/pdf/strands/energy-and-offshore/renewables_contractual_risks_jan_13

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» Weather risk » Ground conditions » Relief events (which entitle the contractor to additional time and money) » Limitation on the contractor’s defects liability » Limitations on contractor’s design responsibility

Some respondents pointed out that, as an example, heavy lift operators will usually not agree to underwriting the liquidated damages of their sub-contractors (e.g. cranes, hydraulic tubes, etc.) To conclude, in cases where EPC is used it is often the case that the value proposition of such approach is cancelled out by an imbalance in risk allocation between parties. j) Key Criteria in Regards to Vessel Contracting

Respondents were asked to rate a number of criteria that they felt was important vis-à-vis the project owner. These criteria include price, liquidated damages, parent company guarantees, weather risk, and interfaces. When the survey was initially designed, it was assumed that these were the most critical areas of importance in negotiating a vessel contract. The respondents were asked to provide a ranking on a scale of 1 to 6 (1 being the most important, 6 being the least important) and to make an assessment based on current and future market conditions. The results are illustrated below.

Liquidated Parent Company Weather Price Interfaces Damages Guarantees Down me

2.00 2.44 3.44 2.44 2.78 Current 1.71 2.29 3.43 2.29 2.57 Future

Important to Very important, Logis cs-related banks, they will but some costs are the Capital intensive Key criteria, size their debt and risky logis cs consistently respondents second largest and financing works requires rated as a major indicated that Remark value driver in terms in part on strong balance risk that both project owners terms of CAPEX, the basis of sheet or par es pass on do not give it the cost reduc on sufficient LD guarantor. to each other. priority it remains key provisions. deserves.

Note: 1= most important, 6 = least important Figure 6-9. Key Contractual Criteria and Their Relative Importance to Survey Participants The respondents placed a high degree of importance in price, weather downtime, and liquidated damages. Needless to say there is considerable industry pressure to bring costs down for offshore wind, which is a stated goal of many governments. As the cost of offshore projects continues to increase, governments and utilities will pass these costs to the consumer (a case which has already been seen in Germany with regards to the grid liability issue). At the same time, liquidated damages and weather downtime reflect the importance of risk mitigation in this industry. Weather downtime risk by itself is a liability that can run well into the double digit millions given the limited weather window in the North Sea and given that vessel costs run into the hundreds of thousands of euros per day. Some of the respondents indicated that they place a high level of importance in the proper management of interfaces, but nevertheless gave a low ranking because they believed that project owners did not place enough emphasis in this area, or that they believed that project owners did not manage their interfaces properly.

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k) Contract Structure Evolution

At this stage it is difficult to predict how contracting structures will evolve in the future given highly fluid nature of the offshore industry. In particular, changes in legislation are all-too-frequent and the next round of projects will be more complex from a technical standpoint than previous projects. What can be said at this point is that there are currently 15 “next generation” vessels being built. They are specifically designed for offshore wind and have advanced capabilities including greater storage capacity, faster speed, improved jacking speed, and the ability to operate in deeper water. How these vessels are contracted in practice and how their services will be priced remains to be seen.

EPC contracts will likely continue to be offered infrequently and will be reserved for projects that are of strategic value to vessel operators (e.g. projects based in the home market of the vessel operator). They will likely be projects where the project owner and vessel operator had some form of collaboration at the project development stage and where the design and installation concept have been aligned early on. These can be projects where a vessel operator was involved early-on in the development process and where the project company delegates a greater degree of project development responsibility to the operator. These are companies that market “offshore solutions” as much as they do vessels. Beyond that, EPC requires financially robust, experienced vessel operators that are backed up by strong parent companies. Nevertheless, it does not mean that EPC should be completely overlooked as an option. The increasing involvement of the financial sector in offshore wind means that there will be some demand for EPC in the future, although providing that the EPC contractor is experienced and has an established track record. Furthermore, EPC contractors need to be prepared to offer a scope where “value for money” exists, and where they are capable of offering the comprehensive provisions that would normally be seen on oil & gas projects. In other words, it is essential that the risk-reward profile for EPC be adjusted if it is to be used more frequently. Over the long-term, the following questions need to be addressed:

» Whether or not there are enough qualified and robust contractors out there that are capable of meeting the risks and rigors of EPC within the 30GW+ offshore pipeline in the North Sea; » Whether the additional upfront costs associated with EPC are really worth it in an era where cost reduction is essential; and » Whether contractors can offer terms & conditions for EPC that are as comprehensive as what is typically offered in the oil & gas sector.

At the same time, where EPC contracts could be lacking in commitment on one end of the table, there is also evidence of the opposite in that vessel operators are willing to inject equity into projects during development/construction while at the same time rendering services as an EPC contractor. There are a number of occasions where this has happened. Most recently on the Gemini project (the Netherlands, 600MW), which is likely to be project financed, it was announced that Van Oord would play the dual role of EPC contractor and shareholder. Van Oord purchased a 10% stake in the project, which is forecasted to have a total construction cost of €2.8 billion (out of which equity capital amounts to €500 million).18 The EPC contract, with a total value of approximately €1.3 billion, involves supplying and installing the foundations, the entire electrical infrastructure, including the off- and onshore high voltage station, the cables, and installing the Siemens wind turbines.”19

18 Van Oord Press Release (2 Aug. 2013). cdn.vanoord.com/sites/default/files/press_release_gemini_2august2013.pdf 19 Van Oord Press Release (2 Aug. 2013). cdn.vanoord.com/sites/default/files/press_release_gemini_2august2013.pdf

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Multi-contracting is the contracting structure that has been most commonly used thus far and will continue to be so in the long-term. At the same time, this chapter has also highlighted the fact that the definition of “multi-contracting” cannot be simply limited to the existence of more than one contract. It involves the bundling/packaging of works, which can effectively be classified as “mini-EPC” where the logistics component has been sub-contracted and packaged under the main construction contracts (Figure 6-10). It can also be the case where we see full turn-key solutions where design, manufacture, and installation of both WTGs and foundation (and possibly cable laying) are carried out by a contractor that can carry those interface and attendant risks (Figure 6-11).

Figure 6-10. Multi-Contracting Structure in which Installation has been Bundled/Packaged under each Construction Contract, thus Illustrating “Mini-EPC” Effect

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Figure 6-11. Multi-Contracting Structure in which One Contractor Handles All WTG-Related Works while an EPC Contractor Handles All Works Pertaining to the Balance of Plant

Under the approach illustrated above, the works for the BOP is handed off to an EPC contractor who then manages the associated subcontracts. “Subcontracts for BOP work in the current market are the funders’ favourite route as they regard a good EPC contract as a risk transfer to the contractor with a spread of risk to subcontractors who are often better placed to manage that risk.”20 These “streamlined packages” should result in fewer interfaces that need to be actively managed by the owner. As such, this could be referred to as the middle ground between the reduced management of an EPC contract, but with the cost and quality advantages of the multi-contracting approach.

EPC and multi-contracting have been mentioned in this chapter as the two principal contracting structures that have been employed to date. A third structure is now being considered as an alternative, known as alliance contracting. This option was recommended by the U.K. Offshore Cost Reduction Task Force in 2012. “Its main advantage is that all members of the alliance share in the overall gain if the project is completed within budget, which creates an incentive for them to complete their element of the work on time and without wasted expenditure. The flip-side is that each alliance member must be prepared to share in the pain if the project is delayed by the failure of another member, or by external forces beyond the control of the other parties.”21 A number of respondents mentioned alliance contracting as a potential third option.

In securing supplies and services, framework agreements are commonly used in the offshore industry, although they can also be a mixed blessing. On one hand, a framework enables companies with a large portfolio of offshore projects to achieve economies of scale cost-wise and by having preferential access to

20 http://w3.windfair.net/wind-energy/news/13766-wind-energy-update-shifts-in-contracts-for-offshore-wind-raises-further-questions 21 “The Importance of Clear Allocation of Contractual Risks and Liabilities” by Mark de la Haye / Chris Kidd, Ince & Co. Link: http://incelaw.com/documents/pdf/strands/energy-and-offshore/renewables_contractual_risks_jan_13

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supply and services. On the other hand, the unpredictable nature of the market, fluctuations in supply and demand, and constantly changing priorities make it difficult to sustain framework agreements. For example, project delays could result in vessel under-utilisation and the vessel operator is often deprived of the opportunity to use their vessels on alternative projects.

Frameworks also place commitments on project owners to purchase a certain degree of supply and service within a designated timeframe, failure to meet the designated volume could result in penalties. All of these examples are occurring against the backdrop of considerable market uncertainty and changes in legislation, which force employers and contractors alike to shift their priorities constantly (e.g. what made sense in 2011 under today’s conditions). From the perspective of the vessel operator, even-though they have secured a certain amount of volume, they are nevertheless doing so under a lower profit margin (EBIT) than would normally be the case on a standalone project/employer. Where framework agreements are not possible, joint-ventures as presented as an alternative, the purchase of A2Sea by Dong and Siemens being a prime example. In sum, long-term commitments work well in theory, but changing market conditions can create just as many headaches.

BIMCO Windtime has recently been released.22 “Windtime mainly addresses the requirements of the small high-speed vessels or crew transfer vessels used to transfer technicians to and from shore and within the wind farms.”23 Although there is no track record at this time to evidence its performance, it nevertheless bears a number of similarities to its Supplytime predecessor, albeit with a number of modifications:

» Like Supplytime, Windtime is a time-charter based agreement, whereby the project owner contracts the vessel and the crew carries out orders at the behest of the charterer. » Windtime defines the timing on the basis of a “working day” and on defined operating hours. » Windtime places greater liability on the project owner. For example, in the event that the owner delivers the vessel late to the charterer, the owner is liable to paying liquidated damages. » Liability structure based on ”knock-for-knock”, while at the same time excluding consequential losses (although this is not an express right to be excluded from such losses suffered by the other party’s contractors).24 » Liability cap amounting to 20% of the total sum of hire due within the charter period.25

Irrespective of any potential differences, BIMCO Windtime has been introduced in response to industry concerns regarding the absence of a standardised contracting structure for offshore wind vessels. It is a crucial first-step in the effort to standardise offshore wind contracts, however its track record has yet to be established and furthermore it remains limited in use to transport and service related activities.

22 “BIMCO soon to release the Windtime” by the International Law Office, http://www.internationallawoffice.com/newsletters/Detail.aspx?g=e8a9a378-6d2c-43f2-86a7-bb739c22d7bd 23 http://www.offshorewind.biz/2013/08/13/german-renewables-shipbrokers-to-work-with-bimco-windtime/ 24 “BIMCO soon to release the Windtime” by the international law office, Link: http://www.internationallawoffice.com/newsletters/Detail.aspx?g=e8a9a378-6d2c-43f2-86a7-bb739c22d7bd 25 “BIMCO soon to release the Windtime” by the international law office, Link: http://www.internationallawoffice.com/newsletters/Detail.aspx?g=e8a9a378-6d2c-43f2-86a7-bb739c22d7bd

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6.4 Conclusions This chapter has addressed a number of complex issues that have been identified in the contracting of offshore vessels and where the lessons learned are still evolving. The conclusions that have been reached are the following:

» The industry uses a common formula based on FIDIC Yellow Book as the base contract and where marine-related elements are incorporated from LOGIC and BIMCO. Hence, bespoke and “customised” contracts commonly used. although there is the BIMCO Windtime contract, it does not apply to all aspects of offshore wind, which is natural since it is a very diverse segment. » Multi-contracting is overwhelmingly the preferred option in the market, it is sustainable as long as interfaces are kept to a minimum (2-6 contracts on average) and where the project company is capable of managing the associated administrative costs. » Full EPC (which is bankable) remains limited and is likely to remain so for the foreseeable future. Even the largest and most experienced EPC contractors can at most do 1-2 projects simultaneously on a full turn-key basis. » To the extent where there is merger and consolidation within the offshore vessel industry, and to the extent where there is greater collaboration between vessel providers and other parts of the supply chain, the likelihood of EPC being used will increase. » Even multi-contracting uses structures that package/bundle installation works, which can be referred to as “mini-EPC”. » Project financing by itself will not open up the EPC market; vessel operators need to be prepared to offer terms and conditions similar to what they would normally offer for oil & gas. In other words, if one pays a price premium then there should be fewer exceptions and carve- outs. » Strong preference for risk mitigation (54.5%) was exhibited in responses. Many respondents also weighed risk mitigation and cost reduction equally (45.5%). However, no respondents indicated that cost reduction was important on its own. The risk averse nature of the financial and legal sectors could explain this. » Respondents ranked the combination of price, liquidated damages, and weather downtime as being of particular importance. Although, some indicated that interface should ideally be ranked higher although in practice it was not. » Liability structure based on knock-for-knock has been commonly used to date and will remain so going forward. Consequential loss exclusion will remain effective. » While the industry can remain optimistic about the capabilities of “next generation” vessels, it remains to see how their services will be priced (and how they will be contracted).

The following recommendations can be made in the context of the information that has been gathered and analysed:

» To the extent where stakeholders feel that it is necessary to harmonise contractual formats and standards across different markets, a task force at an industry, national, or pan-European level should be created. Such a task force should contain industry clusters (e.g. utilities, banks, vessel operators, law firms) to identify areas in which standardisation can be introduced. There is some historical precedence for this type of approach. For example, the LOGIC contract was born out the Cost Reduction in New Era (CRINE) initiative during the 1990s, which was tasked with driving down industry costs by 30% and helping to simplify industry procedures.

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Furthermore, recent efforts by BIMCO in regards to Wind Time reflect the need for standardisation. » If it is the case that a sizeable portion of offshore wind projects are to be financed by multilateral institutions such as the European Investment Bank, Green Investment Bank, and KfW, then perhaps they should play a role in advising on how best to standardise contractually, where possible. » If vessel operators are hoping to use EPC in greater frequency, then they should be prepared to move away from the carve-outs and opt-outs that have been mentioned. » It is not uncommon for vessel companies to become shareholders in projects where they offer EPC. In doing so, they are standing by the quality of their product/services and furthermore, sharing in the priorities of the shareholders and banks to realise the project on time and on budget. » If project companies/utilities, etc. are employing multi-contracting to avoid the 10-25% EPC price premium, then they need to do so via effective cost controlling and project management. » There is something of a Belgian “miracle” in this industry, in that most of the projects being realised there have been done so on a timely and cost-effective basis and with relatively few claims. The Belgian model is based on a mixture of experienced EPC contracting, multi- contracting based on no more than 2-6 contracts (on average), and small project organisations.

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7. Appendix A. Profiles of Leading Operators by Vessel Type

This appendix contains profiles of two leading operators from each vessel segment. Each profile includes a short introduction of the operator, the availability of their vessels, the track record of its vessels, and its current market position in the offshore wind sector. Vessel operators are listed in order of English alphabet of vessel type.

7.1 Profiles of leading Accommodation Vessel operators

C-bed Floating Hotels

About the Company: Netherlands based C-bed Floating Hotels provides floating accommodation to offshore wind farm (OWF) construction projects. The floating hotels act as bases for engineers and technicians and the vessel’s many facilities include restaurants, lounges, conferences rooms, office space, cinemas, fitness rooms and gaming zones. The “floatels” also help reduce sea traffic to and from the wind farm; and the reduction in travel time increases productivity. The vessels have approximately 25 staff and upwards including, cabin staff, chefs and stewardesses. Services such as cleaning, bed linen and laundry services are also provided onboard.

Vessels: The vessels used by C-bed are former passenger Ro/Ro vessels. C-bed currently operates three single hulled accommodation vessels: Wind Ambition, Wind Perfection and Wind Solution; all of which operate under British flags.

Wind Ambition, source: http://www.c-bed.nl Vessel Flag Year Built Year of Re- Accommodatio Gross Build n Tonnage Wind U.K. 1974 2010 150 13,336 Ambition Wind U.K. 1982 2012 500 21,161 Perfection Wind Solution U.K. 1969 2008 80 8,893

Track Record: C-bed’s vessels have been used for a number of U.K. OWF projects including: Greater Gabbard (504 MW), London Array (630 MW) and Sheringham Shoal (317 MW). Wind Perfection also worked on the Danish OWF project Anholt (400 MW).

Total Capacity Vessel Turbines Period Track Record (MW) Wind 270 Siemens Mar-Sept 2012 Lincs Ambition 184 Siemens Aug ’10-Mar ‘11 Walney phase 1

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317 Siemens May ’11-Jan ‘12 Sheringham Shoal 630 Siemens Feb ‘12-Jan ‘13 London Array phase 1 Wind Anholt 400 Siemens Nov ’12-Aug ‘13 Perfection 576 Siemens June ’13-June ‘14 Gwynt y Môr Lynn & Inner 194 Siemens Mar-Dec 2008 Dowsing Wind Solution 209 Siemens Apr-Dec 2009 Horns Rev 2 504 Siemens May ’10-Mar ‘12 Greater Gabbard 270 Siemens Mar-Sept 2012 Lincs

Market Position: C-bed are unique in that they work solely within the offshore wind market. Other companies operating accommodation vessels for the offshore market are International Shipping Partners, P&O Ferries and SWE Offshore Marine Services Group.

Location: C-bed Floating Hotels: WTC Schiphol, Tower D 4th. Floor, Schiphol Boulevard 219, 1118 BH Schiphol - The Netherlands Tel.: +31 20 654 4030 www.c-bed.nl

International Shipping Partners

About the Company: USA based ISP are passenger shipping specialists. They have 10 years of experience of management within the passenger ship industry. ISP currently operates 23 vessels of which the majority are cruise vessels. In 2011 ISP signed an agreement with Danish firm Blue Water Shipping A/S to market ISP’s fleet of vessels as “floatels” for the offshore market using the name “Comfort at Sea”.

Vessels: Three of ISP’s vessels have been used as “floatels” in the offshore wind industry. Sea Discoverer is available for charter and ISP have responsibility for the vessel’s technical, commercial and administrative management. Sea Spirit and Ocean Atlantic are not available for charter and ISP have responsibility for various elements of their management involving technical, commercial and hotel Ocean Atlantic, source: http://www.isp- management and technical, commercial and administrative usa.com respectively. Ocean Atlantic and Sea Spirit are both currently chartered to Comfort at Sea. The table below provides a brief overview of the vessels’ specifications.

Vessel Flag Year Built Year of Re- Accommodatio Gross Build n Tonnage Ocean Atlantic Marshall 1986 2010 460 12,798 Islands Sea Discoverer Bahamas 2001 N/A 294 5,954 Sea Spirit Bahamas 1987 N/A 120 4,200

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Track Record: Of the 23 vessels operated by ISP, three have track record with offshore wind projects: Ocean Atlantic, Sea Discoverer and Sea Spirit. The table below gives an overview of the vessels’ respective track record.

Total Capacity Vessel Turbines Period Track Record (MW) Ocean Atlantic 400 Areva TBC (9 months) Global Tech 1 Sea Discoverer 630 Siemens 2012 London Array 183.6 Siemens Unknown Walney II 200 Areva TBC (6 months) Borkum Sea Spirit 183.6 Siemens May-Sept 2011 Walney II

Market Position: Other companies operating accommodation vessels for the offshore market are C-bed Floating Hotels, P&O Ferries and SWE Offshore Marine Services Group.

Location: The company are headquarter in Miami USA and also operate an office in Denmark.

4770 Biscayne Blvd., Penthouse A, Miami, Florida 33137 USA Tel: +1.305.573.6355 www.isp-usa.com www.comfortatsea.com

7.2 Profiles of leading Cable Laying Vessel operators

Global Marine Systems

About the Company: Global Marine Systems provides engineering and underwater services relating to cable installation, maintenance and burial. They have been part of the Bridgehouse Capital Group since August 2004.

Global Marine operate a number of ships, ROVs and trenching equipment. Of their fleet of ships they operate seven cable vessels and barges who undertake installation and support works.

Vessels: Global Marine’s seven vessels undertake a variety of tasks including cable burial and installation of inter-array and export cables.

Cable Enterprise was built specifically for the installation of power cables for offshore wind farms.

The table below shows the key specifications for the cable vessels under the operation of Global Marine Systems. Cable Innovator, source: www.globalmarinesystems.com

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Vessel Flag Year Built Accommodation Gross Tonnage Cable Singapor 2001 60 - Enterprise e Cable Panama unknown - 2,063 Networker Pacific Panama 2006 80 6,133 Guardian Sovereign Malta 1987 76 11,242 Wave Sentinel U.K. 1995 (converted in 64 12,330 1999) Singapor 1997 81 11,026 Cable Retriever e Cable U.K. 1995 80 14,277 Innovator

Track Record: Many of Global Marine’s vessels are based in the Far East and Asia. Cable Retriever is stationed in the Far East, Cable Innovator is stationed in Asia and Networker in South East Asia. Sovereign is based in the U.K. and demonstrates the most experience in the renewables market.

Of the seven vessels operated by Global Marine, the following have track record in offshore wind.

Total Capacity Vessel Turbines Period Track Record (MW) Cable 576 Siemens Gwynt y Môr 2013 Enterprise Cable Horns Rev 1 160 Vestas - Networker Sovereign Thornton Bank Phase 1- 30, 184.5, 110.7 REpower - 3 400 Areva 2013 Global Tech 1 165 Vestas - Belwind 209 Siemens 2009 Horns Rev 2 90 Vestas - Barrow 10 REpower - Beatrice Demo 120 Vestas Prinses 2007 Amaliawindpark 108 Vestas - Egmond aan Zee 630 Siemens 2011 London Array Phase 1 Wave Sentinel 108 Vestas 2008 Egmond aan Zee Cable Thornton Bank 2 & 3 184.5, 110.7 REpower 2011 Innovator

Market Position:

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Large vessel operators providing cable installation services to the offshore wind sector include Visser Smit Marine Contracting and Solstad Offshore ASA.

Locations: Global Marine Systems are a U.K. company with locations in England, Singapore, Indonesia, the Philippines and China.

Global Marine Systems Limited, New Saxon House, 1 Winsford Way, Boreham Interchange, Chelmsford, Essex CM2 5PD England Tel: +44 (0)1245 702000 www.globalmarinesystems.com

Peter Madsen A/S

About the Company: Peter Madsen has been operating since 1954 and is one of the leading Danish marine construction companies. Over the last 5 years Peter Madsen have worked extensively in the offshore wind sector.

Vessels: Peter Madsen operates six multi-purpose vessels that provide cable lay support services to the offshore wind industry such as dredging, scour protection, underwater foundation, pipe and cable works and piling.

There are two types of vessels in the fleet; those with hydraulic excavators and those with wire machines. Peter Madsen also offers dive support, survey vessels, barges and tugs where available.

Margrethe Fighter, source: www.peter- The table below illustrates the fleet operated by Peter Madsen. madsen.dk

Vessel Flag Year Built Year Accommodatio Gross Renovated n Tonnage Aase Madsen Denmark 1977 1986 10 174.98 Grete Fighter Denmark 1980 2010 12 299.99 John Madsen Denmark 1972 2010 4 125.52 Margrethe Denmark - 199.74 1988 5 Fighter Merete Chris Denmark 1966 1987 4 199.99 Peter Madsen Denmark 1968 1998/2001 4 159

Track Record: Peter Madsen has been extensively involved in the offshore wind industry for a number of years. Their most recent project is the Westermost Rough OWF in the U.K. where they are removing boulders from turbine positions and cable routes prior to installation.

Total Capacity Vessel Turbines Period Track Record (MW)

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48.3 Siemens 2010 (4 months) EnBW Baltic 1 Aase Madsen 90 Siemens 2007/8 (8 months) Rhyl Flats 180 Vestas 2009 Robin Rigg Grete Fighter 110.4 Siemens 2006 Lillgrund 288 Siemens 2012/13 Amrumbank West John Madsen 48.3 Siemens 2010 (4 months) EnBW Baltic 1 Margrethe 90 Siemens 2007/8 (8 months) Rhyl Flats Fighter 288 Siemens 2012/13 Amrumbank West Merete Chris 48.3 Siemens 2010 (4 months) EnBW Baltic 1 209 Siemens 2008 Horns Rev 2 Peter Madsen 210 Siemens 2013 Westermost Rough

Market Position: Other companies offering construction support to cable laying within the offshore wind industry include: Van Oord NV, Visser Smit Marine Contracting, Solstad Offshore ASA and Global Marine Systems.

Location: Peter Madsen A/S is based in Denmark.

Peter Madsen Rederi A/S, Søren Nymarks Vej 8, 8270 Højbjerg Denmark Tel: +45 86 29 01 00 www.peter-madsen.dk

7.3 Profiles of leading construction support vessel operators

Sealion

About the Company: Headquartered in the U.K., Sealion are an international ship management company. Sealion’s focus is on the oil and gas industry but their services extend to the offshore wind sector and include services such as installation and maintenance, accommodation support, cable lay and heavy lifting.

Vessels: Sealion operate around 28 vessels, they supply platform supply vessels /ROV support vessels (12), well testing vessels (1), dive support vessels (5), construction support vessels (4) and anchor handling tug supply vessels (6).

Their platform supply vessels are used for multiple roles in the offshore wind industry including the transport of foundations and equipment, commissioning works, foundation grouting and site exploration and safety services. Toisa Conqueror, source: An overview of their platform supply vessels can be found in www.sealionshipping.co.uk the table below.

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Vessel Accommodatio Flag Year Built Gross Tonnage n Toisa Conqueror Liberia 2001 40 2401 Toisa Coral U.K. 1999 40 2401 Toisa Crest U.K. 1999 40 2401 Toisa Independent U.K. 2003 24 3100 Toisa Intrepid Bahamas 1998 27 2990 Toisa Invincible Bahamas 1998 27 2990 Toisa R Class - Hull Bahamas 2012-13 60 4100 367 Toisa R Class - Hull Bahamas 2012-13 60 4100 369 Toisa Serenade Bahamas 2008 24 3665 Toisa Solitaire Bahamas 2009 24 3665 Toisa Sonata Bahamas 2009 24 3665 Toisa Valiant Bahamas 2005 60 3406 Toisa Vigilant Bahamas 2005 60 3404 Toisa Voyager Bahamas 2006 60 3406 Toisa Warrior Bahamas 2011 60 4801 Toisa Wave Bahamas 2011 60 4801

Track Record: Of Sealion’s 12 platform supply vessels 4 have experience in the offshore wind sector, the table below sets out each vessel’s project experience.

Total Capacity Vessel Turbines Period Track Record (MW) Toisa Sonata 317 Siemens 2010 Sheringham Shoal Dogger Bank Creyke Toisa Voyager 1,000-1,200 TBC Jun-Jul 2013 Beck B (Tranche A) Areva & Toisa Valiant 60 May-Jun 2009 Alpha Ventus REpower Toisa Vigilant 219 Vestas 2013 Humber Gateway

Market Position: Those companies operating platform supply vessels within the offshore industry include Maersk Supply Services, Siem Offshore and Ugland Offshore, however, Sealion are able to demonstrate the most experience within the offshore wind sector.

Location: Sealion are based in the U.K. and have an office in Singapore operating under Toisa Pte Limited.

Sealion Shipping Limited, Gostrey House, Union Road, Farnham, Surrey, GU9 7PT

U.K. Tel: +44 (0)1252 737 773 www.sealionshipping.co.uk

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Ugland Construction A/S

About the Company: Ugland Construction A/S are part of the J.J. Ugland Companies. Ugland Construction are responsible for the commercial operation of a number of flat top barges and one heavy lift crane vessel called HLV Uglen.

Ugland Marine Services are responsible for the commercial operation of supramax bulk carriers; wholly owned tankers; and the technical operation of the barges and HLV Uglen.

Vessels: The J.J. Ugland Companies fleet totals 46 units (as of August 2013) and includes 2 new build vessels. Of these vessels 21 are barges and operated by Ugland Construction. Barges range in size from 10,000 to 16,000 dwt with high deck strengths. They are used for transportation and installations for offshore projects.

A brief overview of these vessels can be found in the table UR-101, source: www.jjuc.no below.

Vessel Flag Year Built Accommodation Gross Tonnage UR 1 Norway 1994 - 9,750 UR 2 Norway 1995 - 9,750 UR 3 Norway 1995 - 9,750 UR 5 Norway 1996 - 9,750 UR 6 Norway 1997 - 9,750 UR 7 Norway 1999 - 9,750 UR 8 Norway 1999 - 9,750 UR 93 Norway 2001 - 9,040 UR 94 Norway 2001 - 9,040 UR 95 Norway 2001 - 9,025 UR 96 Norway 2008 - 9,025 UR 97 Norway 2008 - 9,025 UR 98 Norway 2011 - 9,025 UR 99 Norway 2011 - 9,025 UR 101 Norway 1993 48 10,094 UR 108 Norway 1985 - 9,694 UR 111 Norway 1976 - 11,285 UR 141 Norway 1993 - 14,011 UR 171 Norway 2011 - 16,800 UR 901 Norway 2013 - 9,019 UR 902 Norway 2013 - 9,019

Track Record:

Global Evaluation Of Offshore Wind Shipping Opportunity Page 116

Although these barges can be used within the offshore wind industry the following vessels have a demonstrable track record on offshore wind farm projects.

Total Capacity Vessel Turbines Period Track Record (MW) UR 101 194 Siemens 2007 Lynn & Inner Dowsing 270 Siemens 2012 Lincs 180 Vestas 2011 Robin Rigg 300 Vestas 2009 Thanet 317 Siemens 2010 Sheringham Shoal UR 108 288 Siemens 2012 Meerwind UR 94 62.1 Siemens - Teesside UR 96 317 Siemens - Sheringham Shoal UR 97 317 Siemens - Sheringham Shoal UR 99 576 Siemens 2012 Gwynt y Môr 160 Vestas, 2008 Homs Rev 1 UR 6 209 Siemens 2008 Horns Rev 2 UR 7 576 Siemens - Gwynt y Môr UR 3 576 Siemens - Gwynt y Môr

Market Position: Other companies operating in the supply of construction support barges are Otto Wulf GmbH & Co. KG and Stemat Marine Services. Both of which have offshore wind sector experience.

Location: Based in Stavanger, Norway with a Canadian subsidiary dealing with tankers in St. John’s, Newfoundland.

Haakon VII's gt. 8, 4005 Stavanger Norway Tel: +47 51 56 43 00 www.jjuc.no

7.4 Profiles of leading safety support vessel operators

Safety Boat Services

About the Company: Safety Boat Services are a U.K. based company supplying ships, class A guard vessels, safety boats, multicats and work boats for security services on offshore construction projects including offshore wind. Their vessels are available with crew or for bareboat charter.

Vessels: Safety Boat Services operate 8 vessels of which 3 provide guard vessel services. Guard vessels can also undertake additional roles to guarding including surveying and security.

Global Evaluation Of Offshore Wind Shipping Opportunity Page 117

S.B. Seaguard, source: www.safetyboatservices.co.uk

The table below provides an overview of the guard vessels operated by Safety Boat Services. Vessel Flag Year Built Year of Re- Accommodatio Gross Build n Tonnage S.B. Guardian U.K. - - - - S.B. Seaguard U.K. 1973 1986, 1988 8 75 Vanguard Australia - - 4 -

Track Record: The following vessels have provided guard services to offshore wind projects. S.B. Seaguard also provided bird surveying services for the Walney Extension project. Both the SB Seaguard and the SB Guardian provided guard services to the London Array OWF project. Further details of the projects can be found in the table below.

Total Capacity Vessel Turbines Period Track Record (MW) S.B. Guardian 630 Siemens 2011 London Array 630 Siemens 2011 London Array S.B. Seaguard 183.6 Siemens 2011 Walney Extension

Market Position: Other companies providing guard services in the offshore wind sector include: Choice Marine Services; Danbrit Shipping Ltd; Fastnet Shipping; Northern Viking; and Offshore Marine Support Ltd.

Location: Safety Boat Services, The Old Carrot Wash, New Farm, Warham Road, Wells-next-the-Sea NR23 1NE U.K. Tel: 01328 888123 www.safetyboatservices.co.uk

7.5 Profiles of leading Heavy-lift Vessel operators

Heerema Marine Contractors

About the Company: Heerema Marine Contractors is a marine contractor working across the offshore oil and gas industry. Their experience in this sector has been applied to the offshore wind sector. Heerema’s vessels offer transportation, installation and removal services for all types of offshore facilities.

Vessels: Heerema own and operate 4 Heavy-lift Vessels with lift capacities of up to 14,200 tonnes. DCV Aegir is the newest vessel to join the fleet; it will be used for infrastructure and pipeline projects and will have the ability to install fixed platforms in shallow water. Heerema also operates anchor handling tugs, Cargo Barges and cargo/launch barges. Heerema’s vessel Thialf is the largest crane vessel in the world. Balder, Hermond and Thialf are semi-

Thialf, source: http://hmc.heerema.com/

Global Evaluation Of Offshore Wind Shipping Opportunity Page 118

submersible Heavy-lift Vessels whereas AEGIR is self-propelled monohull crane vessel.

The table below lists Heerema’s Heavy-lift Vessels and provides a brief overview of their specifications.

Vessel Flag Year Built Year of Re- Accommodatio Gross Build n Tonnage AEGIR Panama 2012 - 305 50,228 Antigua & 1978 2002 392 48,511 Balder Barbuda Hermod Panama 1978 - 336 73,877 Thialf Panama 1985 - 736 136,709

Track Record: Heerema’s vessels are predominantly engaged in the offshore oil and gas industry but Thialf has been engaged on the Alpha Ventus project where it installed the world’s highest-voltage offshore converter station, DolWin 1.

Total Capacity Vessel Turbines Period Track Record (MW) Thialf 60 Areva & REpower 2009 Alpha Ventus

Market Position: Other companies operating Heavy-lift Vessels in the offshore wind sector include: Seaway Heavy Lifting; Jumbo; Kahn Scheepvaart BV; Scaldis Salvage and Marine Contractors NV; and Bonn & Mees.

Location: Heerema are based in the Netherlands with offices in the U.K., Angola, Nigeria, Australia, Singapore, the USA, Mexico and Brazil. They have shipyards in Angola, the Netherlands and the USA.

Heerema Marine Contractors Nederland SE, Vondellaan 55, 2332 AA Leiden The Netherlands Tel.: 31 (0)71 579 9000 http://hmc.heerema.com

Seaway Heavy Lifting

About the Company: Seaway Heavy Lifting work across the oil & gas, renewables and decommissioning sectors. They provide transportation and installation services and operate a fleet of two vessels. Both vessels are highly experienced in the offshore wind sector. The company also operates the following equipment: set of hydraulic (under water) piling hammers; Levelling tools; Internal pile lifting tools; and Wirth Pile top drill rig.

Seaway Heavy Lifting’s parent company Subsea 7’s renewable energy business was consolidated into Seaway Heavy Lifting in January 2013. The move was to enable Seaway Heavy Lifting to broaden their offer and target larger projects whilst simplifying Subsea 7’s renewable energy services offer.

Vessels:

Global Evaluation Of Offshore Wind Shipping Opportunity Page 119 Oleg Strashnov, source: http://www.seawayheavylifting.com.cy/

Seaway Heavy Lifting’s vessels Stanislav Yudin and Oleg Strashnov are fully owned and equipped with hydraulic pile hammers, pile lifting tools and levelling devices.

Stanislav Yudin has a crane with a 2,500 tonne capacity, 500 tonne aux. hook and 30 tonne trolley hoist. The Oleg Strashnov has a 5,000 tonne revolving crane, 800 and 200 tonne aux. hooks and a 30 tonne trolley hoist.

Both vessels are self-propelled. Further details of these vessels can be found in the table below.

Vessel Flag Year Built Accommodation Gross Tonnage Stanislav Cyprus 1985 143 24,822 Yudin Oleg Strashnov Cyprus 2011 220

Track Record: Seaway Heavy Lifting has been involved in a great number of offshore wind farm construction projects, both vessels having been involved with wind turbine generator and substation installations. Details of these projects can be found below.

Total Capacity Vessel Turbines Period Track Record (MW) Stanislav 576 Siemens 2012 Gwynt y Môr Yudin 504 Siemens 2009-10 Greater Gabbard 300 Vestas 2010 Thanet 2013 Borkum Phase 1 200 Areva 2013 Borkum Phase 2 400 Siemens 2012 Anholt 2013 East Anglia One 1,200 TBC 2013 East Anglia Two Oleg Strashnov 317 Siemens 2011 Sheringham Shoal 108 Siemens 2012 Riffgat 288 Siemens 2013 Meerwind Ost/Sud 200 Areva 2013 Borkum Phase 1 504 Siemens Aug. 2011 Greater Gabbard, East 2012 East Anglia One 1,200 TBC 2012 East Anglia Two 288 Siemens 2013 DanTysk

Market Position: Other companies operating Heavy-lift Vessels in the offshore wind sector include: Heerema Marine Contractors; Jumbo; Kahn Scheepvaart BV; Scaldis Salvage and Marine Contractors NV; and Bonn & Mees.

Location: Seaway Heavy Lifting are based in Cyprus and have offices in Cyprus, The Netherlands, Germany, France and Scotland.

Global Evaluation Of Offshore Wind Shipping Opportunity Page 120

Seaway Heavy Lifting Contracting Ltd., Lophitis Business Centre II, 237, 28th October Street, 3035 Limassol Cyprus Tel: + 357 25 029 090 www.seawayheavylifting.com.cy

7.6 Profiles of leading Jack-up Vessel operators

A2SEA

About the Company: A2SEA are world leaders in installation services for the offshore wind sector. They provide installation services for foundations and turbines and provide transportation services through a fleet of 6 Jack-up Vessels and 7 crew boats. They also provide operations and maintenance logistics.

Vessels: A2SEA’s Jack-up Vessels have been listed in the table below. A2SEA maintains, mans and operates its fleet of vessels; all the vessels are involved in offshore wind installations and operations. Sea Jack, source: www.a2sea.com

All vessels are 4 legged and can accommodate between 16 and 35 crew. The newer vessels; Sea Challenger and Sea Installer are equipped with a DP-2 class dynamic positioning system. All vessels with the exception of the Sea Worker and Sea Jack are self-propelled.

Vessel Flag Year Built Year of Re- Accommodatio Gross Build n Tonnage Sea Challenger Denmark 2014 - 35 6,418 Sea Jack Denmark 2003 - 23 6,558 Sea Worker Denmark 2008 - 22 170 Sea Energy Denmark 1990 2002 16 3,332 Sea Installer Denmark 2012 - 35 15,996 Sea Power Denmark 1991 2002 16 718

Track Record: The table below demonstrates A2SEA’s extensive involvement in the offshore wind industry; each vessel having been involved in a significant number of projects. The Sea Worker and Sea Jack are currently involved in the Gwynt Y Môr OWF transporting and installing 160 Siemens wind turbines. The Sea Installer is currently working on the West of Duddon Sands OWF transporting and installing 33 monopiles and transition pieces and 108 Siemens wind turbines.

Total Capacity Vessel Turbines Period Track Record (MW) Sea Challenger 210 Siemens 2013 Westermost Rough Sea Jack 576 Siemens 2013 Gwynt y Môr 317 Siemens 2011-12 Sheringham Shoal 209 Siemens 2008 Horns Rev 2 150 REpower 2011 Ormonde

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25.2 GE Energy 2003-2004 Arklow Bank 120 Vestas 2007-2008 Prinses Amaliawindpark 300 Vestas 2008-10 Thanet 90 Siemens 2006 Burbo Bank 60 Vestas 2003-04 Scroby Sands 630 Siemens Aug-Nov 2012 London Array 62.1 Siemens 2012 Teesside 150 REpower 2011 Ormonde 504 Siemens Jul ’10-Jan ‘11 Greater Gabbard Sea Worker 576 Siemens 2013 Gwynt y Môr 630 Siemens 2011-2012 London Array 400 Siemens 2012-13 Anholt 183.6 REpower 2010 Walney 1 172.8 Siemens Aug ‘09-Jan ‘10 Gunfleet Sands 180 Vestas 2008-09 Robin Rigg 48.3 Siemens 2010 EnBW Baltic 1 Sea Energy 21 Vestas Oct. 2009 Sprogø 160 Vestas 2010 Horns Rev 1-2 209 Siemens 165.6 Bonus 2003 Nysted 480 TBC - Arkona 108 Vestas Jun-Aug 2006 Egmond aan Zee 180 Vestas 2008-09 Robin Rigg 120 Vestas 2007-08 Prinses Amalia 90 Vestas 2005 Kentish Flats 60 Vestas 2004 Scroby Sands 48.3 Siemens - EnBW Baltic 1 Sea Installer COSCO (Qidong) - - 2012 Offshore base 400 Siemens 2013 Anholt 389 Siemens - West of Duddon Sands Sea Power 400 Siemens 2012-13 Anholt 160 Vestas - Horns Rev 1-2 209 Siemens 207 Siemens 2010 Rødsand 2 48.3 Siemens 2010 EnBW Baltic 1 Nordex, 7.6 2003 Fredrikshavn Bonus 25.2 GE Energy 2003 Arklow Bank 110.4 Siemens 2007 Lillgrunden 108 Vestas Apr-May 2006 Egmond aan Zee

Market Position:

Global Evaluation Of Offshore Wind Shipping Opportunity Page 122

Other large companies operating Jack-Up vessels to the offshore wind industry include Jack-Up Barge BV, MPI Offshore, Seajacks and Geosea.

Location: A2SEA are based in Denmark and have offices in Germany and the U.K.

A2SEA A/S, Kongens Kvarter 51, 7000 Fredericia Denmark Tel. +45 7592 8211 www.a2sea.com

Jack-Up Barge BV

About the Company: Netherlands based Jack-Up Barge BV is one of the leading providers of self-elevating platforms for the offshore markets and heavy civil construction market. Their offshore expertise extends across the gas, oil and renewables markets.

Jack-Up Barge BV is part of the Van Es Group, the group also consists of Dieseko (vibro's and power units); PVE Cranes & Services (crawler cranes, piling end drilling rigs); and World Wide Equipment (construction and marine equipment).

Vessels: Jack-Up Barge BV offer a range of 4 leg Jack-up Vessels for the offshore wind industry. Their self-elevating monohull range include 5 vessels and their modular Jack-up Barges include 3 vessels. Jack-Up barge BV also offer transportation services. The platforms can handle loads of up to 2000 tonnes and can operate in water depths up to 50 metres.

Jack-Up Barge BV also operate crane barges, flat top barges, Tugboats, anchors, winches, piling templates, hydraulic pile driving hammers and vibrators and crawler cranes and pile JB-109/110, source: driving rigs. http://www.jackupbarge.com/

The table below provides a brief overview of the Jack-up Vessels.

Vessel Flag Year Accommodatio Gross Tonnage Built n JB-104 - 2003 - - JB-108 - - - - JB-116 Netherlands 2010 160 - Sea Spider St Vincent & the Grenadines 1999 40 - JB-114 Bahamas 2009 160 - JB-115 Bahamas 2009 160 - JB-117 Bahamas 2011 350 - JB-112 - - - -

Track Record:

Global Evaluation Of Offshore Wind Shipping Opportunity Page 123

Of the Jack-up Vessels operated by Jack-Up Barge BV the following vessels have experience in the offshore wind industry.

Total Capacity Vessel Turbines Period Track Record (MW) JB-104 317 Siemens Oct. 2010 Sheringham Shoal JB-108 30 REpower - Thornton Bank Phase I JB-114 165 Vestas 2010 Belwind Phase I Areva & 60 2009 Alpha Ventus REpower 576 Siemens 2013 Gwynt y Mor 270 Siemens 2012 Lincs 62.1 Siemens 2012 Teesside Hornsea Project One - 498 Siemens 2011 Njord JB-115 400 BARD 2011-13 BARD Offshore 1 Areva & 60 2009 Alpha Ventus REpower JB-117 400 BARD 2012-13 BARD Offshore 1

Market Position: Other large companies operating Jack-Up vessels to the offshore wind industry include A2SEA, MPI Offshore, Seajacks and Geosea.

Location: Jack-Up Barge, Krausstraat 14-16, 3364 AD Sliedrecht The Netherlands Tel: +31(0)184 42 00 91 www.jackupbarge.com

7.7 Profiles of leading multi-purpose project vessel operators

Esvagt

About the Company: Esvagt was established in Denmark in 1981 and operates within the offshore industry. Its fleet includes Emergency Response and Rescue Vessels (ERRV) and Anchor Handling Tug Supply (AHTS) vessels, it also offers safety training and oil spill contingency services.

Vessels: Esvagt operate 8 multi-role anchor handling tug supply vessels. The vessels are capable of providing the following services:

 Anchor Handling and towing  Tanker/FPSO assistance  Supply vessel service  ROV/survey vessel operations

Esvagt Observer, source: Global Evaluation Of Offshore Wind Shipping Opportunity Page 124 http://www.esvagt.dk/

 First line oil spill contingency response  Standby vessel services

The table below sets out an overview of the vessels’ specifications.

Vessel Flag Year Built No. Passengers Gross Tonnage Esvagt Aurora Denmark 2012 320 4,462 Esvagt Bergen Denmark 2011 370 3,676 Esvagt Connector Denmark 2000 300 1,890 Esvagt DEE Denmark 2000 300 1,863 Esvagt DON Denmark 2000 300 1,863 Esvagt GAMMA Denmark 1985 140 1,361 Esvagt Observer Denmark 1999 300 1,863 Esvagt OMEGA Denmark 1975 140 1,380 Esvagt Server Denmark * * * Esvagt Stavanger Denmark * * * * data not available

Track Record: All of the vessels are suitable for use in the offshore wind market, however, only one of those vessels has offshore wind related experience.

Market Position: Other vessel operators supply AHTS vessels to the offshore wind industry include DSB Offshore, Harms Bergung, Maersk, Seacontractors BV and URAG.

Location: ESVAGT A/S, Adgangsvejen 1, DK-6700 Esbjerg Denmark Tel. +45 33 98 77 00 www.esvagt.dk

URAG

About the Company: URAG has been involved in towage since 1890. Their services are provided to vessels in ports, terminals and offshore. They operate a fleet of around 19 vessels. They operate in the offshore oil & gas, offshore wind, salvage, emergency towage and port & terminal towage. Their services to the offshore wind market include:  Towing assistance of offshore construction and crane vessels in port and offshore  Barge transportation of windmill components  Guard vessels / Emergency Towage  Crew transfer  Support of cable laying units, dredgers and other special vessels Bremen Fighter, source:  Provision of tow masters und runner crews http://www.urag.de/

Vessels:

Global Evaluation Of Offshore Wind Shipping Opportunity Page 125

URAG operate a fleet of 6 vessels of either AHTS or multi-role AHTs. They have bollard pull capacities from 70 to 120 tonnes. The table below provides a brief overview of URAG’s AHTS fleet.

Vessel Flag Year Built Accommodation Gross Tonnage Antigua & - 1,262 Bremen Fighter 2005 Barbuda Antigua & - 1,367 Bremen Hunter 1982 Barbuda Elbe Germany 2006 - 2,462 Ems Germany 2006 - 3,995 Jade Germany 2000 - 25,400 Weser Germany 2000 - 40,605

Track Record: The fleet are able to work across the offshore wind sector; the vessels the Bremen Fighter and the Bremen Hunter have project experience of OWF projects.

Total Capacity Vessel Turbines Period Track Record (MW) 576 Siemens 2012/2013 Gwynt y Môr Bremen Fighter East Anglia Offshore 1,200 TBC May 2013 Wind Zone Bremen Hunter 288 Siemens 2013 DanTysk

Market Position: Other vessel operators supply AHTS vessels to the offshore wind industry include DSB Offshore, Harms Bergung, Maersk, Seacontractors BV and Esvagt.

Location: Unterweser Reederei GmbH, Barkhausenstr. 6, 27568 Bremerhaven Germany Tel.: +49 471 94 819 0 www.urag.de

Delta Marine

About the Company: Delta Marine are a U.K. company and have been trading since 1985. They operate a fleet of tugs and workboats that are used in dredging and marine civil engineering. They operate in the U.K., Scandinavia, Baltics, Caspian and Mediterranean seas.

Delta Marine works across the offshore wind industry and specialise in wave & tidal energy installations.

Vessels: Delta Marine operates 6 vessels, 5 of which are multicat vessels capable of undertaking coastal construction, anchor handling and towing contracts. All multicats are suitable for shallow draughts.

Global Evaluation Of Offshore Wind Shipping Opportunity Page 126 Voe Venture, source: www.delta- marine.co.uk

The table below provides a brief overview of the vessels in the multicat fleet. Vessel Flag Year Built Accommodation Gross Tonnage Voe Earl U.K. 2012 8 200 Voe Jarl U.K. 2007 6 255 Voe Venture U.K. 1994 6 121 Voe Viking U.K. 2005 6 161 Whalsa Lass U.K. 2011 6 255

Track Record: Delta Marine’s entire fleet has been extensively involved in the offshore wind industry. A list of the track record of each vessel can be found in the table below.

Total Capacity Vessel Turbines Period Track Record (MW) Voe Earl Thornton Bank Phase 184.5 REpower 2012 II 504 Siemens - Greater Gabbard 630 Siemens Jun-Jul 2012 London Array Phase 1 300 Vestas 2012 Thanet Voe Jarl 504 Siemens - Greater Gabbard Lynn & Inner 194.4 Siemens - Dowsing 180 Vestas - Robin Rigg 317 Siemens Sep-Oct 2010 Sheringham Shoal 300 Vestas 2009 Thanet Voe Venture 40 Bonus - Middelgrunden 90 Siemens - Burbo Bank Lynn & Inner 194.4 Siemens - Dowsing 180 Vestas - Robbin Rigg 4 Vestas - Blyth Voe Viking 504 Siemens - Greater Gabbard Lynn & Inner 194.4 Siemens - Dowsing 180 Vestas 2013 Robin Rigg 300 Vestas - Thanet 4 Vestas - Blyth Beatrice 10 REpower - Demonstration Whalsa Lass 504 Siemens Feb-Mar 2012 Great Gabbard 576 Siemens 2013 Gwynt y Mor

Market Position: Other providers of project vessels operating multicat type vessels in the offshore wind sector include Acta Marine, Briggs Marine & Environmental Services, Maritime Craft Services and Stemat Marine Services.

Global Evaluation Of Offshore Wind Shipping Opportunity Page 127

Location: Delta Marine Ltd, 2/2 Mounthooly Street, Lerwick, Shetland, ZE1 0BJ United Kingdom Tel: +44 (0)1595 694799 www.delta-marine.co.uk

7.8 Profiles of leading multi-purpose vessel operators

K/S Combi Lift

About the Company: Headquartered in Denmark, Combi Lift participate in worldwide ocean transportation and installation activities for heavy lift, project and break bulk cargoes.

Vessels: Combi Lift operate around 18 vessels. The vessels provide a combination of roll on/roll off (Ro/Ro), lift-on/lift-off (Lo/Lo), and float-on/float-off (flo/flo) services. The majority of the vessels have their own cranes capable of lifting between 120 and 900 tonnes.

The table below provides a brief overview of Combi Lift’s vessels. EIT Palmina, source: http://www.kestrelmaritime.com/ Vessel Flag Year Built Accommodatio Gross Tonnage n Palessa Antigua & Barbuda 2001 - 6,274 Combi Dock I Antigua & Barbuda 2008 - 17,341 Combi Dock III Antigua & Barbuda 2009 - 17,341 Palmerton Antigua & Barbuda 2009 - 11,473 Palabora Antigua & Barbuda 2010 - 11,473 Palembang Antigua & Barbuda 2010 - 11,473 Palau Malta 2010 - 11,473 Palanpur Antigua & Barbuda 2010 - 11,473 Palmarola Antigua & Barbuda 2011 - 11,473 EIT Palmina Antigua & Barbuda 2009 - 12,679 EIT Paloma Antigua & Barbuda 2010 - 12,679 Panagia Antigua & Barbuda 2004 - 7,002 Pantanal Antigua & Barbuda 2004 - 7,002 Pangani Antigua & Barbuda 2004 - 7,002 Pancaldo Antigua & Barbuda 2000 - 6,272 Panthera Antigua & Barbuda 2001 - 6,274 Patria Antigua & Barbuda 1999 - 2,210 Parida Antigua & Barbuda 1999 - 5,801

Global Evaluation Of Offshore Wind Shipping Opportunity Page 128

Track Record: Combi Lift operate within the offshore wind industry and an example of their project experience is the EIT Palmina’s transported transition pieces and monopiles for the West of Duddon Sands wind farm project in the Irish Sea. The project involved 22 consecutive voyages.

Total Capacity Vessel Turbines Period Track Record (MW) 389 Siemens West of Duddon EIT Palmina 2013 Sands

Market Position: Other larger operators of multi-purpose vessels in the offshore wind sector are BBC Chartering, Hansa Heavy Lift GmbH and SAL Heavy Lift.

Location: Based in Denmark with offices in Denmark, Germany, the USA, Singapore, China and Australia.

K/S COMBI LIFT, Batterivej 7, 4220 Korsoer Denmark Tel: +45 5816 2030 www.combi-lift.eu

BBC Chartering About the Company: BBC Chartering is an international business serving the oil & gas, renewable energy, heavy industry, mining industry, vehicles and yachts, bulk cargo and metals sectors. They operate a large fleet of vessels for a variety of cargo requirements.

Vessels: BBC Chartering operate more than 150 vessels. The fleet has an average age of 5 years and can provide a solution to a variety of breakbulk, heavy lift, project cargo and bulk requirements. BBC Chartering describe themselves “as the largest windmill carrier in the world”. The fleet’s carrying capacity ranges from 3,500 to 37,300 tonnes with crane capacities up to 800 tonnes.

The table below provides a brief overview of a selection of multi- purpose vessels operated by BBC Chartering. BBC Germany, source: http://www.vesseltracker.com Vessel Flag Year Built Accommodation Gross Tonnage BBC Elbe Germany 2006 - 12,936 Antigua & 2003 - 7,004 BBC Germany Barbuda BBC Konan Liberia 2000 - 8,831 BBC Kusan Liberia 2000 - 8,831 Antigua & 2007 - 12,936 BBC Amazon Barbuda

Global Evaluation Of Offshore Wind Shipping Opportunity Page 129

Track Record: Although described as a major windmill carrier, project references could only be found for two vessels: BBC Germany and BBC Konan.

Total Capacity Vessel Turbines Period Track Record (MW) BBC Germany 288 Siemens 2012 Meerwind BBC Konan 504 Siemens Aug ’09-Sep ‘10 Greater Gabbard

Market Position: Other larger operators of multi-purpose vessels in the offshore wind sector are K/S Combi Lift, Hansa Heavy Lift GmbH and SAL Heavy Lift.

Location: BBC Chartering is based in Leer Germany but operate around 28 offices across the world.

BBC Chartering & Logistic GmbH & Co.KG, Hafenstr. 10b, 26789 Leer Germany Tel: +49 491 9252090 www.bbc-chartering.com

7.9 Profiles of Leading Service Crew Boat Operators

Turbine Transfers

About the Company: Turbine Transfers is a wholly owned subsidiary of Holyhead Towing Company Ltd. They operate a modern fleet of high speed vessels for personnel transfer, transportation of equipment, transfers of fuel and cargo, dive support, surveys and subsea equipment deployment.

Vessels: Turbine Transfers operate 26 vessels used for transferring personnel and equipment between offshore wind turbine sites and the shore. The fleet of vessels, all built by South Boats, include 12, 15, 16, 18 and 20 metre types. There are currently 6 vessels under construction which will bring the fleet to a total of 34.

The table below lists the vessels in Turbine Transfers current fleet and provides a brief overview of their specifications. RRV Audrey, source: www.turbinetransfers.co.uk Vessel Flag Year Built Accommodation Aberffraw Bay UK 2012 12 Abersoch Bay UK 2012 12 Cable Bay UK 2013 - Caernarfon Bay UK 2012 12 Carmel Head UK 2008 14 Cemaes Bay UK 2009 12

Global Evaluation Of Offshore Wind Shipping Opportunity Page 130

Colwyn Bay UK 2010 14 Conwy Bay UK 2010 14 Cymyran Bay UK 2013 - Foryd Bay UK 2012 12 Kinmel Bay UK 2011 14 Llandudno Bay UK 2011 14 Lynas Point UK 2010 15 Malltraeth Bay UK 2012 12 Penmon Point UK 2010 14 Penrhos Bay UK 2010 14 Penrhyn Bay UK 2010 14 Porth Cadlan UK 2011 15 Porth Dafarch UK 2011 15 Porth Diana UK 2011 15 Porth Dinllaen UK 2011 15 Porth Wen UK 2011 15 Rhoscolyn UK 2009 14 Head RRV Audrey UK 2009 12 South Stack UK 2008 15 Themadoc Bay UK - - Towyn Bay UK 2010 14 Wylfa Head UK 2009 14

Track Record: Clients of Turbine Transfers include Siemens, RWE NPower, Van Oord, Dong Energy, EnBW and Boskalis. Turbine Transfers have worked on the following OWF projects. The table below shows the list of OWF projects Turbine Transfers has serviced.

Total Capacity Turbines Track Record (MW) 25.2 GE Energy Arklow Bank 48.3 Siemens EnBW Baltic 1 400 BARD BARD Offshore 165 Vestas Belwind 504 Siemens Greater Gabbard 172.8 Siemens Gunfleet Sands 90 Vestas Kentish Flats 270 Siemens Lincs 630 Siemens London Array 194 Siemens Lynn & Inner Dowsing 60 Vestas North Hoyle 150 REpower Ormonde 90 Siemens Rhyl Flats

Global Evaluation Of Offshore Wind Shipping Opportunity Page 131

180 Vestas Robin Rigg 207 Siemens Rødsand 300 Vestas Thanet 183.6 Siemens Walney 1

Market Position: Companies operating crew transfer vessels with significant offshore wind experience include Gardline Environmental, MPI Offshore, Seacat Service and Workships Contractors B.V. & Doeksen.

Location: Turbine Transfers Ltd, Newry Beach Yard, Holyhead, Anglesey, U.K., LL65 1YB United Kingdom Tel: +44 (0)1407 760111 www.turbinetransfers.co.uk

MPI Offshore

About the Company: MPI Offshore provides vessel solutions for wind installation operations and services and services the offshore wind and oil & gas markets.

MPI Offshore started with the vessel MPI Resolution which began operating in 2004, since then the fleet grew to include the Adventure and Discovery and the workboats followed.

The MPI Resolution and associated equipment became part of a company jointly owned by the Vroon Group BV on the 31st of March 2006.

Vessels: MPI Offshore operate three Jack-up Vessels (MPI Resolution, MPI Adventure and MPI Discovery), eight workboats and a remotely operated vehicle. There are also four new workboats under construction.

The workboats range in size and are available at 15, 17, 19, 20 metres. They undertake roles including passenger transfer, surveys, dive support, construction and operation and maintenance roles.

MPI Sancho Panza, The table below provides a brief overview of the workboat vessels. source: www.mpi-offshore.com

Vessel Flag Year Built Passengers Gross Tonnage MPI Cardenio UK 2012 12 - MPI Crevantes UK 2012 12 3,675 MPI Don Quixote UK 2009 12 - MPI Dorothea UK 2011 12 - MPI Dulcinea UK 2011 12 - MPI Rosinante UK 2009 12 - MPI Rucio UK 2009 12 - MPI Sancho Panza UK 2008 12 - MPI Workboat 1 UK 2013 12 -

Global Evaluation Of Offshore Wind Shipping Opportunity Page 132

MPI Workboat 2 UK 2013 12 - MPI Workboat 3 UK 2013 12 - MPI Workboat 4 UK 2013 12 -

Track Record: MPI Offshore workboats have been involved in a number of offshore wind projects. Their clients’ include Siemens, Npower and EON. The table below outlines the projects undertaken by some of the fleet.

Total Capacity Vessel Turbines Period Track Record (MW) MPI Don Quixote Lynn & Inner 194 Siemens - Dowsing 317 Siemens Apr-May 2012 Sheringham Shoal 180 Vestas - Robin Rigg 216 Vestas 2013 Northwind MPI Dorothea 317 Siemens 2012 Sheringham Shoal MPI Rosinante 216 Vestas 2013 Northwind MPI Rucio 172.8 Siemens Mar-Dec 2010 Gunfleet Sands MPI Sancho 90 Siemens - Rhyl Flats Panza 90 Siemens - Burbo Bank 216 Vestas 2013 Northwind

Market Position: Companies operating crew transfer vessels and workboats with significant offshore wind experience include Gardline Environmental, Turbine Transfers, Seacat Service and Workships Contractors B.V. & Doeksen.

Location: MPI Offshore, First Floor, Resolution House, 18 Ellerbeck Court, Stokesley Business Park, Stokesley, TS9 5PT United Kingdom Tel: +44(0)1642 742200 http://www.mpi-offshore.com

Northern Offshore Services

About the Company: Northern Offshore Services is a Swedish based crew transfer vessel owner and operator specialising in the offshore wind industry and provides a variety of services including: crew and cargo transportation; survey and ROV work; VIP, diver and stand-by vessels; specialised solutions including bunker operations; and heavy cargo transportation.

Vessels: Northern Offshore Services own and operate a fleet of 19 vessels for the offshore wind industry. The vessels range in length from 11m (M/V Server) to 27m (M/V Developer), they are capable of taking between 6 and 12 passengers plus crew. Vessels are designed to be available for service 365 days a year.

Global Evaluation Of Offshore Wind Shipping Opportunity Page 133 M/V Achiever, source: http://www.n-o-s.eu/

Vessel Flag Year Built Accommodation Gross Tonnage M/V Denmark 2012 12 131.5 Accomplisher M/V Achiever Denmark 2011 12 101 M/V Advancer Denmark 2013 12 131.5 M/V Arriver Denmark 2012 12 131.5 M/V Assister Denmark 2012 12 119 M/V Attender Denmark 2012 12 131.5 M/V Carrier Denmark 2013 12 167 M/V Deliverer Denmark 2005 12 21.9 M/V Developer Denmark 2014 12 179 M/V Distributor Denmark 1994 12 31.3 M/V Performer Denmark 2010 12 32 M/V Preceder Denmark 1975 12 27 M/V Provider Denmark 2007 12 21.5 M/V Server Denmark 1999 6 12 M/V Supplier Denmark 2005 12 55.9 M/V Supporter Denmark 2009 12 31.8 M/V Tender Denmark 2008 12 21.3 M/V Transporter Denmark 2009 12 30.1 M/V Voyager Denmark 2008 12 30.1

Track Record: All of the vessels are designed for the offshore wind industry, some offshore wind project examples have been listed below (see attached track record).

Vessel Total Capacity Turbines Period Track Record (MW) M/V 400 Siemens Sep ’12-Mar ‘13 Anholt Accomplisher 207 Siemens - Rødsand 2 M/V Achiever 48.3 Siemens - EnBW Baltic 1 M/V Assister 400 Siemens - Anholt M/V Attender 400 Siemens - Anholt M/V Distributor 630 Siemens - London Array Phase 1 M/V Performer 400 Siemens Oct ’12-Jul ’13 Anholt

Market Competition: Companies operating crew transfer vessels with significant offshore wind experience include Gardline Environmental, Turbine Transfers, MPI Offshore, Seacat Service and Workships Contractors B.V. & Doeksen.

Location: Northern Offshore Services have offices in Gothenburg, Sweden and Esbjerg, Denmark.

Northern Offshore Services AB, Saltholmsgatan 44, SE-426 76 Västra Frölunda

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Sweden Tel: +46 (0)31 97 37 00

Northern Offshore Service A/S, Nordre Dokkaj 7, DK-6700 Esbjerg Denmark Tel: +45 78 78 80 00 www.n-o-s.eu

7.10 Profiles of leading survey vessel operators

Fugro

About the Company: Fugro’s main service offers fall under geotechnical, surveys, subsea services and geoscience. They work across the oil and gas, construction, mining and government sectors. Within the offshore wind sector they offer the following services:

 Construction Survey Support  Marine Survey Services  Offshore Positioning Services  Fugro Satellite Positioning  Subsea Services  Laboratory Testing Services  Offshore Geotechnical Investigations  Offshore Foundation Installation Services  Offshore Geophysical Surveys  Nearshore and Overwater Services  Meteorology & Oceanography  GeoConsulting Services  Marine Environmental Services

Vessels: The vessels below are operated by Fugro, Fugro Brazil, Fugro EMU, Fugro Survey Ltd and Fugro Geoservices. Fugro operate 16 offshore survey vessels and their subsidiaries across the world operate many vessels so a selection of their vessels can be found in the table below

The vessels in the table below have been classified as multi- purpose survey vessels and 9 have been classified as geophysical survey vessels. The multi-purpose survey vessels provide a Fugro Enterprise, source: variety of tasks including ROV inspection, pipeline and cable www.shipspotting.com route surveys, high resolution seismic acquisition surveys, geotechnical and environmental surveys.

Vessel Flag Year Built Accommodation Gross Tonnage Fugro Enterprise USA 2007 14 874 Fugro Discovery Panama 1997 23 1,991 Fugro Equator Bahamas 2012 42 1,929

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Fugro Galaxy Bahamas 2011 42 1,929 Fugro Gauss Gibraltar 1980 12 1,684 Fugro Gemini Panama 1987 38 865 Fugro Meridian Bahamas 1982 26 2,255 Fugro Navigator Panama 1988 33 738 Geo Endeavour Panama 1985 25 514 Geo Prospector Panama 1970 26 1,417 Southern Supporter Australia 1993 47 2,065 Fugro Odyssey Brazil 1963 14 403 EMU Surveyor U.K. - - - RV Discovery U.K. 1997 12 113 Geodetic Surveyor USA 1985 16 329 Universal Surveyor USA 1980 12 329 Fugro Searcher Panama 2010 42 1,929 Meridian Gibraltar 2003 18 1,251

Track Record: The table below demonstrates a sample of Fugro’s survey vessels’ experience within the offshore wind market.

Vessel Total Turbines Period Track Record Capacity (MW) EMU Surveyor 630 Siemens Apr-Nov 2010 London Array RV Discovery 630 Siemens Jun ’10-Mar ‘11 London Array

Market Position: Other companies operating survey vessels in the offshore market include CT Offshore, Harkand and Gardline Environmental.

Location: Fugro are located across the world in around 60 countries and operate under various names. The company was founded in the Netherlands and the head office is located at the address below.

Fugro, Veurse Achterweg 10, 2264 SG, Leidschendam The Netherlands Tel: +31 (0)70 311 1422 http://www.fugro.com/

Gardline

About the Company: The Gardline Group of companies contains more than 35 companies operating across many business areas. Gardline Marine Sciences undertake offshore geotechnical, geophysical and environmental surveys. Gardline’s coastal survey vessels are operated by Gardline Environmental.

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Within the offshore wind sector Gardline provide environmental services such as surveys; oceanographic surveys, hydrographic and geophysical surveys, geotechnical site investigations and operate a fleet of crew transfer vessels.

Vessels: Gardline’s fleet of vessels undertake a range of services including site survey work, bird and mammal surveys, environmental surveys, geophysical and geotechnical surveys.

Gardline operate 3 coastal vessels that undertake survey work; 9 windfarm support vessels undertaking crew transfer services; and 12 offshore vessels undertaking multi roles for offshore windfarm projects.

Sea Surveyor, source: The table below gives an overview of some of Gardline’s fleet of www.gardlinemarinesciences.com/ vessels involved in survey work.

Vessel Flag Year Built Accommodation Gross Tonnage Confidante U.K. 1991 - 208 George D U.K. 1991 - 47.64 Meriel D U.K. 2008 - N/A Vigilant Netherlands 1982 - 1,365 Sea Surveyor Bahamas 1979 30 1,275 Sea Profiler Panama 1955 - 1,082

Track Record: Meriel D undertook site survey work, including the export cable route and array cables on the London Array OWF in 2013. Vigilant and Sea Profiler undertook bird and mammal surveys on Dogger Bank Tranche D and Dogger Bank Creyke Beck B (Tranche A). An overview of some of the projects Gardline have been involved in for survey work are listed in the table below.

Vessel Total Capacity Turbines Period Track Record (MW) Confidante 183.6 Siemens 2012 Walney Extension Meriel D 630 Siemens 2013 London Array Vigilant Sep-Dec 2010 Dogger Bank, Tranche 1,000-1,200 Sept-Oct 2012 A, TBC TBC April 2013 Tranche C 2,400 Tranche D Sea Surveyor April 2013 Dogger Bank, Tranche TBC TBC C Sea Profiler Sep-Dec 2010 Dogger Bank, Tranche 1,000-1,200 TBC A 2,400 Tranche D

Market Position:

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Other companies operating survey vessels in the offshore market include CT Offshore, Harkand and Fugro.

Location: Gardline are based in the U.K. with offices in the USA, Brazil, Australia, Singapore, Malaysia, the UAE, Egypt and Nigeria. All of Gardline’s European operations are located in the U.K.

Gardline Marine Sciences Ltd , Endeavour House, Admiralty Road, Great Yarmouth, Norfolk, NR30 3NG U.K. Tel: +44 (0)1493 845 600 www.gardlinemarinesciences.com

7.11 Profiles of leading Tugboat operators

Maritime Craft Services

About the Company: U.K. company Maritime Craft Services have been in business for 30 years and operate an international fleet of tugboats, shoal busters, multicats, crew transfer vessels and dive support vessels.

Vessels: There are 21 vessels in the fleet which includes 5 new twin axe fast crew supplier vessels from Damen. The fleet includes tugboats (6) and shoalbusters (3) multicats and workboats (7) plus the 5 new crew transfer vessels. All vessels operate under a U.K. flag.

The tugboat and shoalbusters fulfil multiple roles on offshore Alix, source: www.maritimecraft.co.uk wind projects including towage of foundations and supporting the larger vessels with anchor handling, crew changes, equipment supply, towage and buoy positioning.

Vessel Flag Year Built Accommodation Gross Tonnage Alix UK 2011 6 - Lenie UK 2008 7 - Anie UK 2006 6 - Heather UK 2005 6 - Iris UK 2006 6 - Kim UK 2010 6 - Marlene UK 2005 6 - Nikki UK 2004 6 - Zara UK 2011 6 -

Track Record: The 5 new vessels that arrived in 2013 were ordered as a result of the increase in demand in the offshore wind sector. Maritime Craft Services have been involved in a number of offshore wind projects and have provided their tugboats and shoalbusters to Belwind, BARD Offshore and Sheringham Shoal projects.

Vessel Total Capacity Turbines Period Track Record

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(MW) Alix 165 Vestas Oct 2009 Belwind Phase I 400 BARD 2010-2012 BARD Offshore 1 Lenie 317 Siemens Oct-Nov 2010 Sheringham Shoal

Market Position: Other companies operating tugboats within the offshore wind sector include Felixarc, Seacontractors BV and Otto Wulf GmbH & Co. KG.

Location: Maritime Craft Services (Clyde) Ltd, Largs Yacht Haven, Irvine Road, Largs, Ayrshire KA30 8EZ United Kingdom Tel: +44(0)1475 675338 www.maritimecraft.co.uk

Seacontractors BV

About the Company: Dutch company Seacontractors BV operate a fleet of vessels for the towage and heavy lift industries. They are able to provide chartering services, personnel and the sale of marine equipment.

Within the chartering division Seacontractors offer the following services: towage, offshore brokerage, heavy lift shipping, sale and purchase and ship management. Within the ship management sector Seacontractors represent the following companies: Rederij Driemast B.V., V.O.F. Sleepboot ISA, Viegers & Zn Tugboat-Services and Koerts International Towing Services.

Vessels: The fleet contains 19 vessels and are made up of anchor handling tugs, multicats and one survey and crew transfer vessel. The vessels below are anchor handling tug, shallow draught workboats.

The vessel Dancing Water is suitable for dredging support, ploughing and seabed levelling, stable work platform, anchor handling, surveys and passenger transport. Bever, source: www.seacontractors.com

Vessel Flag Year Built Accommodation Gross Tonnage Dancing Water Netherlands 1993 12 68 Dutch Pearl Netherlands 2010 - 254 Sea Alfa Netherlands 2008 7 5,041 Bever Netherlands 2010 - 607 Sea Bravo Netherlands 2008 7 327 Sea Echo Netherlands 2007 5 123

Track Record: The tugboats have been involved in many offshore wind projects and the experience of each vessel has been listed below.

Vessel Total Capacity Turbines Period Track Record

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(MW) Dancing Water 120 Vestas Mar-Oct 2011 Prinses Amaliawindpark 108 Vestas Aug. 2011 Egmond aan Zee Dutch Pearl 317 Siemens Apr-Nov 2010 Sheringham Shoal Sea Alfa 630 Siemens Mar-Oct 2011 London Array Phase 1 Sea Bever 576 Siemens - Gwynt y Mor 630 Siemens Aug-Nov 2012 London Array Phase 1 Sea Bravo 317 Siemens - Sheringham Shoal Sea Echo 630 Siemens Mar-Oct 2011 London Array Phase 1

Market Position: Other companies operating tugboats within the offshore wind sector include Felixarc Marine, Maritime Craft Services and Otto Wulf GmbH & Co. KG.

Location: Seaconstractors BV are based in the Netherlands. Associated companies SFG Engineering (PTY) Ltd are based in South Africa and Seacontractors Middle East are located in the UAE.

Seacontractors, Bellamypark 50-52, 4381 CK Vlissingen The Netherlands Tel: +31 (0) 118 410 206 www.seacontractors.com

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Appendix B. Vessel Demand by Country and Year

Table B-1. Jack-up Vessel Demand – Middle Scenario Vessels Required 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 U.K. 6.2 4.2 3.5 4.8 5.5 6.8 9.2 9.8 9.5 8.3 Denmark 2.5 0.0 1.5 1.0 1.6 1.4 1.7 1.4 0.0 0.0 Netherlands 0.0 0.9 1.4 1.7 1.5 0.0 1.1 1.7 1.2 0.0 Germany 4.2 4.5 4.4 4.1 5.4 5.3 4.9 5.1 4.7 4.2 Ireland 0.0 0.0 0.0 0.0 0.0 0.0 2.0 1.7 0.0 0.0 Belgium 1.0 1.6 1.3 0.0 2.0 2.3 1.0 0.9 0.0 0.0 Sweden 0.7 0.0 0.9 1.0 1.5 2.3 1.6 2.0 1.8 1.1 Norway 0.5 0.0 0.5 0.6 0.0 0.0 0.7 0.8 0.7 0.7 France 0.0 0.0 0.0 1.3 3.2 3.2 2.3 2.0 1.8 2.1 Finland 0.5 0.0 0.0 0.0 1.1 1.4 1.6 1.5 2.1 1.6 China 1.2 3.5 8.7 9.4 10.3 10.9 10.9 11.5 11.8 12.1 South Korea 0.6 1.2 1.3 1.4 1.9 2.0 2.6 2.0 2.0 2.1 Japan 0.6 0.5 0.6 2.8 0.0 0.0 1.1 0.9 0.8 1.0 Taiwan 0.0 0.5 0.6 0.8 1.0 1.0 0.9 0.9 1.0 1.0 Canada 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.6 0.6 US 0.5 0.8 2.1 1.1 1.0 4.5 3.9 2.4 2.9 2.7 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TOTAL WORLD 18.8 17.7 26.9 29.9 36.1 41.0 45.5 44.4 40.7 37.5

Table B-2. Heavy Lift Vessel Demand – Middle Scenario Vessels Required 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 U.K. 1.2 0.8 0.9 1.3 1.7 2.5 4.0 4.6 4.4 3.6 Denmark 0.4 0.0 0.2 0.1 0.3 0.2 0.3 0.2 0.0 0.0 Netherlands 0.0 0.1 0.2 0.3 0.2 0.0 0.1 0.3 0.2 0.0 Germany 0.8 0.8 1.2 1.2 1.7 1.7 1.5 1.5 1.4 1.3 Ireland 0.0 0.0 0.0 0.0 0.0 0.0 0.4 0.3 0.0 0.0 Belgium 0.1 0.2 0.2 0.0 0.4 0.5 0.1 0.1 0.0 0.0 Sweden 0.0 0.0 0.1 0.1 0.3 0.5 0.3 0.4 0.4 0.2 Norway 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1 France 0.0 0.0 0.0 0.2 0.8 0.8 0.5 0.4 0.4 0.5 Finland 0.0 0.0 0.0 0.0 0.1 0.2 0.3 0.2 0.4 0.3 China 0.2 0.6 3.3 3.8 4.4 4.9 5.1 5.6 5.9 6.3 South Korea 0.0 0.1 0.2 0.2 0.3 0.4 0.6 0.4 0.4 0.5 Japan 0.0 0.0 0.0 0.5 0.0 0.0 0.1 0.1 0.1 0.1 Taiwan 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.1 Canada 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 US 0.0 0.1 0.4 0.2 0.1 1.3 1.0 0.5 0.7 0.7 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TOTAL WORLD 2.7 2.7 6.8 7.9 10.5 13.0 14.5 14.7 14.6 13.6

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Table B-3. Total Cable Lay Vessel Demand – Middle Scenario Vessels Required 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 U.K. 0.0 0.0 0.6 1.2 1.9 3.1 5.9 7.1 6.8 5.4 Denmark 0.0 0.0 0.1 0.0 0.1 0.1 0.1 0.1 0.0 0.0 Netherlands 0.0 0.0 0.1 0.1 0.1 0.0 0.0 0.1 0.1 0.0 Germany 0.0 0.0 1.1 1.0 1.9 1.7 1.5 1.7 1.5 1.2 Ireland 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.0 0.0 Belgium 0.0 0.0 0.1 0.0 0.2 0.2 0.0 0.0 0.0 0.0 Sweden 0.0 0.0 0.0 0.0 0.1 0.3 0.1 0.2 0.2 0.0 Norway 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 France 0.0 0.0 0.0 0.1 0.6 0.6 0.3 0.2 0.2 0.2 Finland 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.2 0.1 China 0.0 0.0 4.1 4.9 6.0 7.0 7.2 8.4 8.8 9.7 South Korea 0.0 0.0 0.0 0.1 0.2 0.2 0.4 0.2 0.3 0.3 Japan 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Taiwan 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Canada 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 US 0.0 0.0 0.2 0.0 0.0 1.1 0.8 0.3 0.6 0.5 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TOTAL WORLD 0.0 0.0 6.2 7.4 11.1 14.4 16.8 18.6 18.6 17.7

Table B-4. Diving Support Vessel Demand – Middle Scenario Vessels Required 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 U.K. 0.5 1.0 0.0 0.5 3.0 7.5 6.5 0.0 0.0 0.0 Denmark 0.5 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 0.0 Netherlands 0.0 0.0 0.0 0.5 0.5 0.0 0.0 0.0 0.0 0.0 Germany 0.0 0.0 0.5 1.0 3.0 6.0 7.0 0.0 0.0 0.0 Ireland 0.0 0.0 0.0 0.0 0.0 1.0 1.0 0.0 0.0 0.0 Belgium 0.0 0.0 0.0 0.0 0.0 1.0 1.0 0.0 0.0 0.0 Sweden 0.0 0.0 0.0 0.0 0.5 0.5 0.5 0.0 0.0 0.0 Norway 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 France 0.0 0.0 0.0 0.0 0.5 1.5 0.0 0.0 0.0 0.0 Finland 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 China 0.0 0.0 2.5 0.5 3.5 1.0 0.0 0.0 0.0 0.0 South Korea 0.0 0.0 0.0 0.5 0.5 1.0 1.0 0.0 0.0 0.0 Japan 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 Taiwan 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.0 0.0 0.0 Canada 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 US 0.0 0.0 0.5 0.0 0.0 1.0 1.0 0.0 0.0 0.0 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TOTAL WORLD 1.0 1.0 3.5 3.0 11.5 21.0 19.0 0.0 0.0 0.0

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Table B-5. Multi-Purpose Project Vessel Demand – Middle Scenario Vessels Required 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 U.K. 1.3 2.5 3.9 5.9 8.6 12.2 17.5 23.8 30.7 37.8 Denmark 0.4 0.5 0.9 1.2 1.8 2.4 3.2 4.0 4.3 4.6 Netherlands 0.0 0.1 0.4 0.8 1.3 1.5 1.9 2.7 3.4 3.6 Germany 0.8 2.1 3.6 5.3 7.8 10.7 13.9 17.5 21.3 25.2 Ireland 0.0 0.0 0.0 0.0 0.0 0.0 0.7 1.4 1.5 1.6 Belgium 0.1 0.4 0.8 0.9 1.6 2.5 3.0 3.4 3.7 4.0 Sweden 0.1 0.1 0.2 0.4 0.8 1.7 2.4 3.3 4.4 5.2 Norway 0.0 0.0 0.0 0.1 0.1 0.1 0.2 0.3 0.5 0.8 France 0.0 0.0 0.0 0.3 1.3 2.6 3.7 4.8 6.0 7.5 Finland 0.0 0.0 0.0 0.0 0.2 0.6 1.2 1.8 2.9 3.9 China 0.2 1.0 3.7 7.3 12.0 17.8 24.5 32.4 41.4 51.5 South Korea 0.0 0.2 0.5 0.9 1.5 2.3 3.5 4.6 5.9 7.4 Japan 0.0 0.0 0.1 0.9 0.0 0.0 0.0 0.0 0.0 0.0 Taiwan 0.0 0.0 0.0 0.1 0.3 0.6 0.8 1.1 1.5 2.0 Canada 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.3 US 0.0 0.1 0.6 0.9 1.2 3.0 4.9 6.3 8.2 10.3 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TOTAL WORLD 3.0 7.1 14.6 24.9 38.6 58.1 81.5 107.6 135.9 165.5

Table B-6. Platform Supply Vessel Demand – Middle Scenario

Vessels Required 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 U.K. 31.9 20.8 16.4 23.1 26.6 33.6 46.1 49.2 47.8 41.7 Denmark 11.1 0.0 5.6 2.8 5.7 4.7 6.6 4.8 0.0 0.0 Netherlands 0.0 2.2 4.6 6.3 5.6 0.0 3.3 6.1 4.3 0.0 Germany 20.8 22.2 20.8 19.0 26.0 25.4 23.3 24.2 22.6 20.3 Ireland 0.0 0.0 0.0 0.0 0.0 0.0 8.1 6.6 0.0 0.0 Belgium 3.1 6.0 4.6 0.0 8.3 9.5 2.4 2.0 0.0 0.0 Sweden 1.3 0.0 2.4 2.5 5.3 9.5 5.8 7.9 7.7 3.6 Norway 0.1 0.0 0.2 0.7 0.0 0.0 1.0 1.6 1.6 1.8 France 0.0 0.0 0.0 4.2 14.2 14.1 9.7 7.9 7.7 9.0 Finland 0.1 0.0 0.0 0.0 3.3 4.7 5.8 5.1 9.0 6.7 China 4.2 16.7 44.4 48.2 53.0 56.3 55.9 59.3 59.7 61.7 South Korea 0.8 4.0 4.2 4.6 7.3 8.0 11.4 7.8 8.6 9.2 Japan 0.6 0.2 0.8 12.5 0.0 0.0 3.1 2.3 2.5 3.2 Taiwan 0.0 0.2 0.4 1.4 2.8 2.6 2.2 2.1 3.1 3.3 Canada 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.2 1.1 US 0.0 1.5 8.6 3.5 2.8 21.5 18.3 10.1 13.2 12.5 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TOTAL WORLD 74.1 73.8 112.9 128.7 160.9 189.7 203.0 196.9 188.9 174.0

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Table B-7. Environmental Survey Vessel Demand – Middle Scenario Vessels Required 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 U.K. 1.1 0.7 0.5 0.7 0.7 0.9 1.1 1.1 0.9 0.7 Denmark 0.4 0.0 0.2 0.1 0.2 0.1 0.2 0.1 0.0 0.0 Netherlands 0.0 0.1 0.1 0.2 0.2 0.0 0.1 0.1 0.1 0.0 Germany 0.7 0.7 0.7 0.6 0.7 0.7 0.6 0.5 0.4 0.4 Ireland 0.0 0.0 0.0 0.0 0.0 0.0 0.2 0.1 0.0 0.0 Belgium 0.1 0.2 0.1 0.0 0.2 0.2 0.1 0.0 0.0 0.0 Sweden 0.0 0.0 0.1 0.1 0.1 0.2 0.1 0.2 0.2 0.1 Norway 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 France 0.0 0.0 0.0 0.1 0.4 0.4 0.2 0.2 0.2 0.2 Finland 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.2 0.1 China 0.1 0.6 1.4 1.5 1.5 1.5 1.3 1.3 1.2 1.1 South Korea 0.0 0.1 0.1 0.1 0.2 0.2 0.3 0.2 0.2 0.2 Japan 0.0 0.0 0.0 0.4 0.0 0.0 0.1 0.0 0.0 0.1 Taiwan 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.0 0.1 0.1 Canada 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 US 0.0 0.0 0.3 0.1 0.1 0.6 0.4 0.2 0.3 0.2 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TOTAL WORLD 2.6 2.4 3.6 3.9 4.5 4.9 4.8 4.3 3.7 3.1

Table B-8. Geophysical Survey Vessel Demand – Middle Scenario

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Table B-9. Geotechnical Survey Vessel Demand – Middle Scenario Vessels Required 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 U.K. 0.9 0.5 0.4 0.5 0.5 0.6 0.7 0.7 0.6 0.5 Denmark 0.3 0.0 0.1 0.1 0.1 0.1 0.1 0.1 0.0 0.0 Netherlands 0.0 0.1 0.1 0.1 0.1 0.0 0.0 0.1 0.1 0.0 Germany 0.6 0.6 0.5 0.4 0.5 0.4 0.3 0.3 0.3 0.2 Ireland 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 0.0 0.0 Belgium 0.1 0.2 0.1 0.0 0.2 0.2 0.0 0.0 0.0 0.0 Sweden 0.0 0.0 0.1 0.1 0.1 0.2 0.1 0.1 0.1 0.0 Norway 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 France 0.0 0.0 0.0 0.1 0.3 0.2 0.1 0.1 0.1 0.1 Finland 0.0 0.0 0.0 0.0 0.1 0.1 0.1 0.1 0.1 0.1 China 0.1 0.4 1.1 1.1 1.0 1.0 0.8 0.8 0.8 0.7 South Korea 0.0 0.1 0.1 0.1 0.1 0.1 0.2 0.1 0.1 0.1 Japan 0.0 0.0 0.0 0.3 0.0 0.0 0.0 0.0 0.0 0.0 Taiwan 0.0 0.0 0.0 0.0 0.1 0.0 0.0 0.0 0.0 0.0 Canada 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 US 0.0 0.0 0.2 0.1 0.1 0.4 0.3 0.1 0.2 0.1 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TOTAL WORLD 2.1 1.9 2.7 2.8 3.1 3.3 3.0 2.7 2.4 2.0

Table B-10. Multi-Purpose Survey Vessel Demand – Middle Scenario Vessels Required 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 U.K. 1.8 1.3 1.2 1.8 2.3 3.1 4.5 5.1 5.2 4.7 Denmark 0.6 0.0 0.4 0.2 0.5 0.4 0.6 0.5 0.0 0.0 Netherlands 0.0 0.1 0.3 0.5 0.5 0.0 0.3 0.6 0.5 0.0 Germany 1.2 1.4 1.5 1.5 2.2 2.3 2.3 2.5 2.5 2.3 Ireland 0.0 0.0 0.0 0.0 0.0 0.0 0.8 0.7 0.0 0.0 Belgium 0.2 0.4 0.3 0.0 0.7 0.9 0.2 0.2 0.0 0.0 Sweden 0.1 0.0 0.2 0.2 0.5 0.9 0.6 0.8 0.8 0.4 Norway 0.0 0.0 0.0 0.1 0.0 0.0 0.1 0.2 0.2 0.2 France 0.0 0.0 0.0 0.3 1.2 1.3 0.9 0.8 0.8 1.0 Finland 0.0 0.0 0.0 0.0 0.3 0.4 0.6 0.5 1.0 0.8 China 0.2 1.1 3.2 3.8 4.5 5.2 5.5 6.1 6.5 7.0 South Korea 0.0 0.3 0.3 0.4 0.6 0.7 1.1 0.8 0.9 1.0 Japan 0.0 0.0 0.1 1.0 0.0 0.0 0.3 0.2 0.3 0.4 Taiwan 0.0 0.0 0.0 0.1 0.2 0.2 0.2 0.2 0.3 0.4 Canada 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.1 0.1 US 0.0 0.1 0.6 0.3 0.2 2.0 1.8 1.0 1.4 1.4 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TOTAL WORLD 4.3 4.7 8.2 10.2 13.7 17.4 19.9 20.4 20.5 19.8

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Table B-11. Barge Demand – Middle Scenario Vessels Required 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 U.K. 6.2 4.2 3.5 4.8 5.5 6.8 9.2 9.8 8.2 6.7 Denmark 2.5 0.0 1.5 1.0 1.6 1.4 1.7 1.4 0.0 0.0 Netherlands 0.0 0.9 1.4 1.7 1.5 0.0 1.1 1.7 1.0 0.0 Germany 4.2 4.5 4.4 4.1 5.4 5.3 4.9 5.1 4.0 3.4 Ireland 0.0 0.0 0.0 0.0 0.0 0.0 2.0 1.7 0.0 0.0 Belgium 1.0 1.6 1.3 0.0 2.0 2.3 1.0 0.9 0.0 0.0 Sweden 0.7 0.0 0.9 1.0 1.5 2.3 1.6 2.0 1.6 0.8 Norway 0.5 0.0 0.5 0.6 0.0 0.0 0.7 0.8 0.5 0.6 France 0.0 0.0 0.0 1.3 3.2 3.2 2.3 2.0 1.6 1.7 Finland 0.5 0.0 0.0 0.0 1.1 1.4 1.6 1.5 1.8 1.3 China 1.2 3.5 8.7 9.4 10.3 10.9 10.9 11.5 10.3 9.9 South Korea 0.6 1.2 1.3 1.4 1.9 2.0 2.6 2.0 1.7 1.7 Japan 0.6 0.5 0.6 2.8 0.0 0.0 1.1 0.9 0.7 0.8 Taiwan 0.0 0.5 0.6 0.8 1.0 1.0 0.9 0.9 0.8 0.8 Canada 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.5 0.4 US 0.5 0.8 2.1 1.1 1.0 4.5 3.9 2.4 2.5 2.2 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TOTAL WORLD 18.8 17.7 26.9 29.9 36.1 41.0 45.5 44.4 35.1 30.4

Table B-12. Tugboat Demand – Middle Scenario Vessels Required 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 U.K. 6.1 4.1 3.7 5.1 6.1 7.7 11.2 12.4 11.3 9.0 Denmark 2.4 0.0 1.5 0.9 1.5 1.2 1.6 1.2 0.0 0.0 Netherlands 0.0 0.8 1.3 1.5 1.4 0.0 1.0 1.5 1.0 0.0 Germany 4.1 4.4 4.8 4.3 6.0 5.6 5.2 5.4 4.6 3.8 Ireland 0.0 0.0 0.0 0.0 0.0 0.0 1.8 1.6 0.0 0.0 Belgium 0.9 1.5 1.3 0.0 2.0 2.1 0.8 0.7 0.0 0.0 Sweden 0.6 0.0 0.8 0.9 1.4 2.1 1.4 1.8 1.6 0.8 Norway 0.4 0.0 0.4 0.5 0.0 0.0 0.6 0.7 0.5 0.5 France 0.0 0.0 0.0 1.2 3.2 3.1 2.2 1.8 1.6 1.7 Finland 0.4 0.0 0.0 0.0 1.0 1.2 1.4 1.3 1.8 1.3 China 1.1 3.4 10.7 11.4 12.8 13.3 13.4 14.5 14.2 14.1 South Korea 0.5 1.1 1.2 1.3 1.8 1.9 2.5 1.8 1.7 1.7 Japan 0.5 0.4 0.6 2.5 0.0 0.0 0.9 0.8 0.7 0.7 Taiwan 0.0 0.4 0.5 0.6 0.9 0.8 0.8 0.8 0.8 0.8 Canada 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.4 0.4 US 0.4 0.7 2.1 1.0 0.9 4.6 3.9 2.3 2.6 2.3 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TOTAL WORLD 17.7 16.8 28.8 31.2 39.0 43.7 48.7 48.6 42.8 37.0

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Table B-13. Safety Vessel Demand – Middle Scenario Vessels Required 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 U.K. 0.5 1.5 1.5 2.0 5.0 12.5 19.0 25.5 30.5 35.5 Denmark 0.5 0.5 0.5 0.5 0.5 1.0 1.0 1.0 1.0 1.0 Netherlands 0.0 0.0 0.0 0.5 1.0 1.0 1.0 1.5 1.5 1.5 Germany 0.0 0.0 0.5 1.0 3.0 6.0 7.0 8.5 10.5 11.5 Ireland 0.0 0.0 0.0 0.0 0.0 1.0 1.0 1.0 1.0 1.0 Belgium 0.0 0.0 0.0 0.0 0.0 1.0 1.0 1.0 1.0 1.0 Sweden 0.0 0.0 0.0 0.0 0.5 1.0 1.5 2.0 2.5 2.5 Norway 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 France 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 4.0 Finland 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 1.0 1.5 China 0.0 0.0 2.5 3.0 6.5 7.5 7.5 7.5 7.5 7.5 South Korea 0.0 0.0 0.0 0.5 1.0 2.0 3.0 3.0 3.0 3.0 Japan 0.0 0.0 0.0 0.0 0.0 0.0 0.5 1.0 1.5 2.0 Taiwan 0.0 0.0 0.0 0.0 0.0 0.0 0.5 1.0 1.5 2.0 Canada 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 US 0.0 0.0 0.5 0.5 0.5 1.5 2.5 3.5 4.5 5.5 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TOTAL WORLD 1.0 2.0 5.5 8.0 18.0 34.5 45.5 57.5 67.0 79.5

Table B-14. Service Crew Boat Demand – Middle Scenario Vessels Required 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 U.K. 11.5 18.6 23.8 31.0 39.0 48.8 62.0 75.4 87.5 97.2 Denmark 4.0 3.9 5.7 6.5 8.2 9.6 11.4 12.5 12.2 11.9 Netherlands 0.0 0.8 2.3 4.4 6.1 6.0 6.8 8.5 9.6 9.3 Germany 7.5 15.2 22.0 27.9 35.7 43.0 49.2 55.3 60.5 64.7 Ireland 0.0 0.0 0.0 0.0 0.0 0.0 2.5 4.5 4.3 4.2 Belgium 1.1 3.2 4.7 4.6 7.2 10.1 10.6 10.9 10.6 10.3 Sweden 0.5 0.5 1.3 2.1 3.8 6.7 8.4 10.6 12.6 13.2 Norway 0.0 0.0 0.1 0.3 0.3 0.3 0.6 1.1 1.5 2.0 France 0.0 0.0 0.0 1.4 6.0 10.4 13.1 15.2 17.1 19.2 Finland 0.0 0.0 0.0 0.0 1.1 2.6 4.3 5.8 8.3 10.0 China 1.5 7.3 22.4 38.1 54.6 71.3 86.9 102.7 117.7 132.3 South Korea 0.3 1.7 3.1 4.6 6.9 9.2 12.6 14.6 16.8 19.0 Japan 0.2 0.3 0.6 4.7 0.0 0.0 0.0 0.0 0.0 0.0 Taiwan 0.0 0.1 0.2 0.7 1.6 2.4 3.0 3.5 4.4 5.2 Canada 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.3 0.6 US 0.0 0.5 3.5 4.6 5.4 12.1 17.5 20.1 23.5 26.4 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TOTAL WORLD 26.7 52.0 89.7 130.9 175.9 232.3 288.9 340.6 386.9 425.6

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Table B-15. Tailormade O&M Vessel Demand – Middle Scenario Vessels Required 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 U.K. 1.0 1.0 2.0 3.0 5.0 7.0 9.0 13.0 16.0 19.0 Denmark 0.0 0.0 0.0 0.0 1.0 1.0 1.0 1.0 1.0 1.0 Netherlands 0.0 0.0 0.0 0.0 0.0 0.0 1.0 1.0 1.0 1.0 Germany 0.0 1.0 2.0 3.0 5.0 6.0 7.0 9.0 10.0 12.0 Ireland 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Belgium 0.0 0.0 0.0 0.0 0.0 1.0 1.0 1.0 1.0 1.0 Sweden 0.0 0.0 0.0 0.0 0.0 1.0 1.0 1.0 2.0 2.0 Norway 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 France 0.0 0.0 0.0 0.0 1.0 1.0 2.0 3.0 3.0 4.0 Finland 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 1.0 1.0 China 0.0 0.0 2.0 4.0 6.0 8.0 11.0 14.0 17.0 20.0 South Korea 0.0 0.0 0.0 0.0 1.0 1.0 2.0 3.0 3.0 4.0 Japan 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 1.0 1.0 Taiwan 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Canada 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 US 0.0 0.0 0.0 0.0 0.0 1.0 2.0 3.0 4.0 5.0 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TOTAL WORLD 1.0 2.0 6.0 10.0 19.0 27.0 37.0 51.0 60.0 71.0

Table B-16. Accommodation Vessel Demand – Middle Scenario

Vessels Required 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 U.K. 1.0 1.0 1.0 4.0 12.0 12.0 12.0 12.0 12.0 12.0 Denmark 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Netherlands 0.0 0.0 1.0 2.0 2.0 2.0 2.0 2.0 2.0 2.0 Germany 1.0 2.0 3.0 7.0 11.0 11.0 11.0 11.0 11.0 11.0 Ireland 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Belgium 0.0 0.0 0.0 0.0 2.0 2.0 2.0 2.0 2.0 2.0 Sweden 0.0 0.0 0.0 0.0 1.0 1.0 1.0 1.0 1.0 1.0 Norway 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 France 0.0 0.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 1.0 Finland 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 China 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 South Korea 0.0 0.0 0.0 0.0 1.0 1.0 1.0 1.0 1.0 1.0 Japan 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Taiwan 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Canada 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 US 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TOTAL WORLD 2.0 3.0 6.0 14.0 30.0 30.0 30.0 30.0 30.0 30.0

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Table B-17. SOV Type 2 Vessel Demand – Middle Scenario

Vessels Required 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 U.K. 0.0 0.0 0.0 0.0 0.0 6.0 15.0 26.0 37.0 50.0 Denmark 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Netherlands 0.0 0.0 0.0 0.0 0.0 0.0 1.0 1.0 1.0 1.0 Germany 0.0 0.0 0.0 0.0 0.0 2.0 5.0 9.0 11.0 13.0 Ireland 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Belgium 0.0 0.0 0.0 0.0 0.0 0.0 1.0 1.0 1.0 1.0 Sweden 0.0 0.0 0.0 0.0 0.0 1.0 2.0 3.0 4.0 4.0 Norway 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 France 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Finland 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 China 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 1.0 2.0 South Korea 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 2.0 4.0 Japan 0.0 0.0 0.0 0.0 0.0 1.0 1.0 1.0 1.0 1.0 Taiwan 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Canada 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 US 0.0 0.0 0.0 0.0 0.0 1.0 2.0 2.0 4.0 6.0 Other 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 TOTAL WORLD 0.0 0.0 0.0 0.0 0.0 11.0 27.0 43.0 62.0 82.0

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Appendix C. Summary of Contracts Review Questionnaire

Navigant conducted a survey regarding offshore wind vessel contracting practices. The following is a copy of the survey followed by a summary of the responses.

QUESTIONNAIRE

Offshore Wind Vessel Contracting Survey

INSTRUCTIONS

This survey, sponsored by the Danish Shipowners’ Association and the Shipowners’ Association of 2010 (collectively, the Associations), is aimed at providing insight into the general trends and practices that are employed with regards to the contractual structures for offshore wind vessels. Please answer these questions to the best of your ability, although we realise that not all of the questions below might be applicable to your case. Where possible, please expand on your answers by providing some justification behind your response. Finally, where some questions require a numerical response, you can use rough estimates and ranges.

All responses will be held confidential within the Associations and Navigant; aggregated results (without company names) will be made available to survey participants. Please respond to the survey by August 6, 2013. Thank you for your cooperation.

GENERAL INFORMATION

Name:______Date:______

Company:______Phone:______e-mail address:______

Type of Business (e.g. utility, bank, OEM, etc.): ______

Number of offshore wind projects in which your company has participated/facilitated to date: ______

Types of offshore wind vessels that your company has used (or assisted in contracting): Yes/no/don’t know Wind turbine installation vessel Heavy lift vessel Cable laying vessel Transport vessel Survey vessel Crew boat Support tugboat Hotel vessel*

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Other (specify type below) * including special purpose ships that have hoteling

Comments (including types of other vessels):______

What are your company’s focus markets (countries)? Please rank in order of priority: 1 ______4______2______5______3______

QUESTIONS

1. To what extent does your company employ Engineering, Procurement, Construction, & Installation (EPCI) versus multicontracting in your overall strategy?

a. What is the typical difference in cost between EPCI and Multicontracting (cost to the project owner, in percentage terms)?______b. What is more important from your point of view: cost reduction or risk mitigation?______c. Where multicontracting is employed, how are contractual interfaces managed?______

2. Within the overall structure of a vessel contract, please rank the following criteria in order of importance to wind project owners, both now and 5 years in the future. 1=most important (“deal breaker”), 6=least important. Expected Future Criteria Current Ranking Ranking Price Liquidated damages Parent company guarantees Weather downtime risk Interfaces Other (please specify)

Comments (including other criteria):______

3. What contracting structures does your company typically employ (e.g. FIDIC, NEC3, LOGIC, BIMCO, Supply Time, Wind Time)? Please list the pros and cons of these structures in the table below.

Used by your company Contracting Structure Pros Cons (yes/no/don’t know) FIDIC NEC3 LOGIC BIMCO Supply Time Wind Time Other (please specify)

Comments (including other contracting structures):______

4. What are the most common offshore wind vessel contracting structures for each country, and why?

FIDIC, NEC3, LOGIC, BIMCO, Supply Why are these structures popular in Country Time, Wind Time, or other each country?

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U.K. Germany Denmark Other (please specify)

5. What are the responsibilities, roles, risks, interface and penalties for the contracting structure that your company employs?

Contracting structure (FIDIC, NEC3, etc.)______Country(ies) where you typically use this structure______

Question Response What are responsibilities of the contractor(s)? What are responsibilities of the owner? What risks are retained by the owner? What owner position handles contractor interface? What are typical penalties for late completion? Whom does the contract generally favour or protect (owner or contractor)?

6. What types of insurance need to be held by an offshore vessel provider during construction and operational phases?______

7. Are there any insurance shortfalls (e.g. liability for when workers step off vessels before beginning turbine work)? If so, how are they addressed?______

8. What types of contractual provisions are typically required with regards to weather downtime? How is weather risk distributed between the parties (contractor and employer) under an EPCI versus multicontracting structure? What is the process for invoicing weather downtime once construction begins?______

9. To what extent are the contractual structures and standards between offshore wind and oil & gas the same? To what extent are they different? What can we learn from oil & gas contracting? (primarily for vessel operators & utilities)______

10. What are the benefits of having a charter party agreement? What are the downsides?______

11. Roughly what percentage of a vessel contract is paid upfront, how much is paid during the execution of the works, and how much is paid upon completion? Does this vary by vessel type? ______

12. What trends do you see emerging in the contracting structure of offshore wind vessels in the coming years? Do these trends vary between vessel types and regions?______

13. What factors determine the costs for vessel mobilisation & demobilisation?______

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14. To what extent do local content requirements drive investment decisions and procurement decisions? In other words, how necessary is it that a vessel operator be based locally and/or employ local labour? Does this vary by region?______

SUMMARY

A total of 13 companies responded to the survey, either in writing or verbally. The following is a summary of the responses:

This study identifies and analyses the prevailing contractual structures that are employed in regards to offshore vessels. The issues that are addressed include the following (in descending order of importance):

» How different stakeholders, including utilities and banks, view offshore vessel contracts and their particular provisions; » Whether EPC or multi-contracting is the way forward; » Whether cost reduction or risk mitigation is of greater importance; and » What types of contracting standards (e.g. FIDIC, BIMCO) are being used, for what purposes, and in which countries.

In gathering such information, we solicited responses the following business segments: finance, legal, power generation, vessel operators, and others (e.g. technical advisors, etc.). In particular, 31% of respondents came from the legal sector, 23% from finance, 23% from power generation, 15% were vessel operators, and 8% were other. Responses were received in the form of completed surveys or through a series of questions answered via email, from 13 parties across 6 different countries.

Virtually all respondents indicated that they used FIDIC and many of them made direct reference to the Yellow Book. The FIDIC Yellow Book is used primarily for electrical and mechanical works and for building and engineering works designed by the contractor. At the same time, FIDIC is primarily an onshore civil engineering contract and is not particularly suited to offshore wind farm installation work. Therefore, considerable time needs to be spent on making such contracts “fit-for-purpose” thereby resulting in additional costs at the negotiation stage. This is perhaps why respondents also indicated that they relied heavily on LOGIC and BIMCO Supplytime as well. Both of these contracts are primarily marine contracts with a long track record of use in the oil & gas business. The general formula seems to be that FIDIC Yellow Book is used as the base template and that marine-related elements from LOGIC/BIMCO are then fed into this base contract. Where turn-key solutions are employed, parts of FIDIC Silver will be incorporated into the FIDIC Yellow (although it will remain closer to Yellow than Silver). The end result is a usually a bespoke or customised contract which many utilities and major vessel operators have created on an in-house/individual basis.

What effectively determines whether or not one contract standard is used versus another, is dependent on the country in question. LOGIC has prevalence in the U.K., because of that country’s long-term experience with oil & gas. On the other hand countries such as Germany, that lack an oil & gas history, might be inclined to use FIDIC and then proceed to modify that contract considerably to make it compatible for marine works. Given Denmark’s strong background in international shipping, there is perhaps more comfort with the transport-oriented BIMCO. At the same time, none of these contracts on their own meet the full requirements of offshore-works.

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There are a number of key contractual considerations that should be taken into account when negotiating vessel contracts. First it is essential to ensure that there is sufficient planning and that the timing between various milestones will be sufficient to account for unforeseen risks. There should be adequate weather downtime incorporated into the planning and on a P90 basis. The overall time planning should be conservative and flexible by, for example, incorporating an extension period or time buffer to cater for weather downtime and/or vessel delays. Vessel availability is also essential. If a vessel is unable to execute the works, then vessel operators need to allocate alternative time slots and vessels. Since many vessels are currently under construction, contracts need to make provisions to ensure that the construction of the vessel is well under way and that a substitute vessel will be on hand in the event of delay. In instances where vessels are being built and where the vessel operator becomes insolvent, it is essential that contracts establish that the entity financing the construction of the vessel (e.g. banks) will have access to revenues generated through vessel operation.

Furthermore, contracts need to give due consideration towards the management of interfaces. There are dependencies between contractors and sub-contractors, where it is essential that all parties fully comprehend their contractual obligations and the consequences for failing to do so on a timely manner. Interface risk tends to be contractually managed through a responsibility matrix, but some respondents have indicated that it has often been the case that the responsibility matrix has not been fully aligned with the language of the contract, thus creating a series of contradictions. One way of managing interfaces is to keep the number of contracts to a minimum (2-6 in total) and to ensure that installation works are bundled under each main construction contract.

The overall liability structure is based on the “knock-for-knock” principle in that each party shall hold the other harmless and attempt to handle potential claims via insurance. The benefit of this approach is that it prevents the duplication of insurance coverage, thus ensuring that there is no overlap between parties. At the same time, the overall limitation of liability under the contract could amount up to the full value of the contract and will be dependent on the size/stability of the contractor, the duration and value of the contract, board requirements, and the respective bargaining positions of both parties.

Insurance coverage should be comprehensive and involves effecting the following forms of coverage: third party liability, hull and machinery, protection and indemnity, as well as workmen’s compensation. Most claims (80-90%) are associated with cable laying and this is why both parties tend to pass off seabed risk to the other side during negotiations. Where occurrences are not insurable, liabilities are enforced via liquidated damages (LDs), to the extent that they were contemplated from an early stage and where such damages do not act as a penalty. Such LDs need to be commercially viable and consequential losses should furthermore be excluded. As such the burden of proof rests with the employer. The LD cap for delays typically amounts to 15-25% of contract price. The higher the LD cap, the higher the contract price and vice-versa. In some instances, a grace period can be put into effect and where some level of delay on the part of the contractor is tolerated before LDs come into effect. At the same time, banks could be wary of such provisions.

The study then draws a comparison between two principle contracting structures: Engineering, Procurement, and Construction (EPC) and multi-contracting. The industry consensus has for the moment rallied around multi-contracting as the preferred option, because there are few experienced (and financially robust) contractors willing to carry out EPC on a bankable/viable basis. Although EPC is theoretically preferable vis-à-vis banks, they nevertheless accept a multi-contracting approach insofar as the number of contracts/interfaces remains limited. The price difference between an EPC versus multi- contracting setup is roughly 10-25% and this price different reflects having a larger project management team, greater risk allocation, as well as associated overhead. At the same time, multi-contracting places

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interface risk squarely on the employer and considerable resources (costs) have to be dedicated towards managing these interfaces, which can be a project in itself. One reason why EPC is not used more commonly in the offshore industry is attributed to the fact that there are few experienced and financially robust contractors willing/capable to undertake such an endeavor. It is also the case that contractors often impose a series of limitations and carve-outs for offshore projects that they would not normally impose for oil & gas projects, which erode the value proposition of EPC. For example, some respondents pointed out that heavy lift operators will usually not agree to underwriting the liquidated damages of their subcontractors (e.g. cranes, hydraulic tubes, etc.). Under EPC, the project owners will be wary of the contractor’s ability to claim additional time or to pass risks off to their subcontractors. Table 7-1 provides a comparison of the features of EPC versus multi-contracting.

Table 7-1. Comparative Analysis of EPC versus Multi-contracting

EPC Mul -contrac ng

Price 10-25% higher than Mul -contrac ng 10-25% lower than EPC Cost Transparency No Yes

No. of Contracts 1 contract between employer & contractor 2-6 if banks involved, otherwise u li es and project developers have more than 10 Interface Mgt. Handled by contractor Handled by employer

Weather Risk Assumed by the contractor (mostly) Shared between par es Remarks • Good fit for a project owner that does • Good fit for u li es, and other en es not have the resources to manage the with large project por olios, that do project not want to pay 10-25% price premium • Good fit for employers that want to for each project they build. buildh 1-2 offsor e projects at most. • 2-6 interfaces on average if project • Banks favour this approach, but will financing is pursued. accept the alterna ve as well so long as • Requires more personnel and has interfaces are limited. higher administra ve costs, strong cost • T&C’s for offshore wind not as a rac ve controlling is needed. as oil & gas, more carve outs. • Interface risk taken by employer.

Survey participants were then asked to rank the importance of cost reduction versus risk mitigation. 58% of respondents indicated that risk mitigation was more important, whereas 42% said that both were equally important. However, none of the respondents indicated that cost reduction by itself was more important. This is a somewhat surprising result given the public pronouncements emphasizing the importance of lowering the cost of offshore wind. At the same time, the result could be attributed to the fact that the industry remains risk averse and that cost reduction upfront could potentially mean greater risks and thereby additional costs over the long-term. Survey participants were furthermore asked to rank the key contractual considerations that are important in their decision-making. Price, LDs, and weather risk were ranked as the most important criteria. A “bankable” contract will, among other things, typically involve a fixed lump-sum price, with sufficient LD provisions, and where weather risk is shared between parties.

Over the long-term there are a number of factors that will determine whether the industry heads one way versus the other. The first factor is whether or not projects are increasingly realised on a project finance versus balance sheet basis. To the extent where there is greater dependency on the former, then EPC should in theory be used with greater frequency. This also holds true if there is consolidation and merger

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among vessel operators. Even then, if the EPC trend does not catch on then there will still be a strong emphasis towards bundling/packaging installation-related works within construction contracts as can be seen under the current multi-contracting approach. Other factors that are important are the number of credit-worthy vessel operators that are in existence, as offshore wind requires a large balance sheet to underwrite the risks involved. Furthermore, a large balance sheet is essential because it can also be the case that the vessel operator injects equity into the project, thereby becoming a sponsor. EPC will likely be more commonly used on projects that are of strategic importance to the contractor (e.g. projects that are based in the home market of the contractor) or where the contractor was involved from an early-stage in the development process (a number of vessel operators already engage in project development activities).

The following is a summary of responses to quantitative questions (1-4):

Question 1b: What is more important from your point of view: cost reduction or risk mitigation?

Equal Importance 42% Risk Mi gta on 58%

Cost Reduc on 0%

Question 2: Within the overall structure of a vessel contract, please rank the following criteria in order of importance to wind project owners, both now and 5 years in the future. 1=most important (“deal breaker”), 6=least important.

Liquidated Parent Company Weather Price Interfaces Damages Guarantees Down me

Current 2.00 2.50 3.20 2.60 3.00

Future 1.63 2.25 3.38 2.63 2.75

Very important, Important to but some Logis cs-related banks, they will Remark costs are the Capital intensive Key criteria, respondents size their debt and risky logis cs consistently second largest indicated that and financing works requires rated as a major value driver in project owners terms in part on strong balance risk that both terms of CAPEX, do not give the basis of sheet or par es pass on cost reduc on enough priority sufficient LD guarantor. to each other. remains key towards its provisions. management.

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Question 3: What contracting structures does your company typically employ (e.g. FIDIC, NEC3, LOGIC, BIMCO, Supply Time, Wind Time)?

FIDIC NEC3 LOGIC BIMCO BESPOKE

Used mostly for Used mostly for jack- Used mostly for CTV, VESSEL construc on vessels, N/A up, heavy-li vessels ROV, support vessels, N/A heavy-li , jack-up, in the UK and transport

% 100% 10% 70% 80% 70%

Question 4: What are the most common offshore wind vessel contracting structures for each country?

FIDIC NEC3 LOGIC BIMCO

UK 75% 25% 63% 75%

GER 88% 13% 38% 75%

DEN 50% 13% 38% 63%

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Appendix D. Summary Results of the Associations Survey

An on-line survey was conducted of the members of the Associations. The following is a copy of the survey followed by a summary of the responses.

1. How many ships are operated by your company?

2013 2012 2011 2010 2009 2008 Wind turbine installation vessel Heavy lift vessel Cable laying vessel Transport vessel Survey vessel Crew boat Support tugboat Hotel vessel* Other (specify type below) Total * including special purpose ships that have hoteling Comments (including types of other vessels):______

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2. Vessel data

% of time in a typical year # of vessels Annual capacity of Vessel Vessel that are used wind turbines Vessel used in used Vessel for both (either in number of used in Europe outside not offshore wind turbines or MW)* Denmark outside of of used and oil & gas Denmark Europe Wind turbine installation vessel Heavy lift vessel Cable laying vessel Transport vessel Survey vessel Crew boat Support tugboat Hotel vessels Other (specify type below) Total * taking into account weather and scheduling delays Comments (including types of other vessels):______

3. How many people does your company employ?

Most Frequent Location 2013 2012 2011 2010 2009 2008 At sea On land Total

4. Other company data

2013 2012 2011 2010 2009 2008 Annual turnover (€) # of wind turbines that your company helped to erect # of wind turbines that your company helped to provide O&M services for

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5. Hiring

Yes, No, or Don’t Know Is your company currently hiring offshore workers? Does your company have difficulties finding qualified personnel?

Approximately how many people will your company likely hire in the next 5 years?______

6. Criteria that ship service procurers consider

Please rank the following criteria in order of importance to your customers, both now and 5 years in the future (1=most important, 7=least important):

Criteria Current Future Ranking Ranking Functionality of vessel (max working depth, deck space, max deck load, etc.) Price Experience of operator (years or MW) Timely availability of vessels Size of fleet Access to multiple vessel types through single operator Access to ports near planned wind farms

Comments (including other criteria not mentioned above):______

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7. Danish competitiveness

Please evaluate Danish companies as a group by checking one box in each row:

Danish Danish Danish companies companies companies Criteria worse than equal to better than competition competition competition Functionality of vessel (max working depth, deck space, max deck load, etc.) Price Experience of operator (years or MW) Timely availability of vessels Size of fleet Access to multiple vessel types through single operator Access to ports near planned wind farms

Comments (including other criteria not mentioned above):______

8. What are the greatest challenges in the offshore wind industry that Danish shipowners are facing?

9. What types of companies or specific companies do you consider to be leaders and why?

Vessel Type Companies or Company Types Why? Wind turbine installation vessel Heavy lift vessel Cable laying vessel Transport vessel Survey vessel Crew boat Support tugboat Hotel vessels Other (specify type below)

Comments (including types of other vessels):______

10. Do you believe Denmark is the leader in the offshore wind vessel sector? If not, who do you believe is leading and why?

A total of seven companies responded to the survey. The following is a summary of the survey responses:

Key Survey Findings » Vessel Procurement Criteria: Respondents indicated that the top three criteria vessel service procurers currently consider are 1) functionality of vessel 2) timely availability of vessels and 3) experience of operator.

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» Danish Competitive Positioning: Survey respondents overwhelmingly agreed that Danish vessel companies were better positioned than their competitors with respect to experience (years or MW) – a high-ranked criterion. For most other criteria, Danish companies were considered to be on par with their competition – no better, no worse. The only area where at least half of respondents believed Danish companies lagged their competitors was in terms of fleet size. This criterion, however, was considered to be the least important of all. » Danish Leadership: Respondents believe that Denmark was once the leader in the offshore wind vessel sector but times are changing. Half of respondents mentioned the U.K. as an up-and-comer. 25% of respondents named, in addition to the U.K., the Netherlands and Belgium as countries that are moving aggressively. » Challenges: 1) increased competition from outside Denmark 2) Lack of supply of qualified personnel 3) Lack of a common cross-border approach to energy sector and maritime regulations. » Personnel: Most Danish vessel companies are currently hiring offshore workers. However, a majority of companies have had difficulties finding qualified personnel.

Vessel Procurement Criteria

Survey respondents indicated that the top three criteria vessel service procurers currently consider are 1) functionality of vessel 2) timely availability of vessels and 3) experience of operator. For the highest and lowest rankings, respondents were in firm agreement. For example, all respondents ranked “functionality of vessel” as first or second. Similarly, all respondents but one ranked “size of fleet” and “access to multiple vessel types through single operator” as fifth or sixth. In the middle, however, respondents varied greatly in their ranking. For instance, two respondents rated “timely availability of vessels” as first while another rated it fourth. Similarly, two respondents ranked “access to ports near planned wind farms” second while three ranked it seventh.

Criteria Currently In 5 Years Functionality of vessel 1 1 Timely availability of vessels T2 2 Experience of operator T2 3 Price 4 4 Access to ports near planned wind farms T5 T5 Access to multiple vessel types through single operator T5 T5 Size of fleet 7 7

Danish Competitive Positioning

Respondents overwhelmingly agreed (100%) that Danish vessel companies were better positioned than their competitors with respect to experience (years or MW). However, in no other respect (e.g. price, vessel functionality, etc.) did more than one respondent believe that Danish companies were better positioned than their competition. The weakest aspect for Danish vessel companies appears to be fleet size. Less than half (43%) of respondents believed that Danish companies were worse than their competition in this regard. Three (43%) felt Danish companies were on par with their competition while only one respondent (14%) believed Danish companies held a more favorable position in terms of fleet size.

In general, survey respondents indicated that Danish vessel companies were on par with their competition in terms of other purchasing criteria. 80% or more of respondents believed that Danish companies were on par with their competition in terms of 1) timely availability of vessels 2) access to multiple vessel types

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through single operator, and 3) access to ports near planned wind farms. In terms of vessel functionality, a slightly smaller majority (71%) of respondents felt that Danish companies were on par with their competition. Similarly, two-thirds of respondents indicated that Danish companies were competitive in terms of price.

Better than Equal to Worse than Criteria competition competition competition Experience of operator 100% Access to multiple vessel types through single operator 86% 14% Access to ports near planned wind farms 83% 17% Timely availability of vessels 83% 17% Functionality of vessel 14% 71% 14% Price 67% 33% Size of fleet 14% 43% 43%

Danish Leadership

Respondents believe that Denmark was once the leader in the offshore wind vessel sector but times are changing. Half of respondents mentioned the U.K. as an up-and-comer. 25% of respondents named, in addition to the U.K., the Netherlands and Belgium as countries that are moving aggressively.

Industry Challenges

In terms of offshore wind challenges facing Danish shipowners, respondents cited (in no order): 1) increased competition from outside Denmark and the lack of Danish offshore wind projects compared to the U.K., Germany, France, and Belgium 2) Lack of supply of qualified personnel who want to work in the offshore wind sector 3) Lack of a common cross-border approach to energy sector and maritime regulations (e.g. safety, education).

Personnel

Of the eight companies responding, six (75%) indicated that they are currently hiring offshore workers. In terms of the number of workers they plan to hire in the next five years, the answers ranged from 10-100 with an average of about 40. A slight majority (63%) indicated that they have difficulties finding qualified personnel.

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8. Appendix E. Offshore Wind Ports Review

This appendix provides an overview of the relevance/importance of ports in the offshore wind vessels market; delivers high-level outcomes from ports databases; and provide profiles for three major installation ports: Port of Esbjerg; Bremerhaven; and Belfast Harbor.

8.1 Overview of Ports for Offshore Wind This section summarises the Ports Database that has been presented to the Associations in MS Excel format. Using BTM’s internal offshore wind port data as a foundation, desktop research and interviews were undertaken to build this database. This research has scanned all major ports in Europe, Asia and North America that have been involved in the offshore wind business or have the potential to provide such service. In our database we mainly focus on ports that can support the construction of offshore wind farms and the manufacturing of major components.

In the Ports Database, the following features of ports and harbours are included:

» Country » Existing Crane Facilities Suitable for Offshore Wind » Port name » Tidal constraints/ restrictions » Port Owner » Manufacturers / developers (on site) » Infrastructure links » Offshore Wind Project references » Port Depth (metres) » Project Phase (i.e., Construction, O&M, Manufacturing etc.) » Entrance Width (metres) » Announced Investments such as expansion plans » Port features - Dimensions » Port’s Weblink » Port features - Other

8.1.1 Global Distribution The ports database holds information on 78 ports that have had involvement in the offshore wind industry. As it shown in Figure 8-1, the majority of these ports (over 85%) are located in Europe, followed by the U.S. and China.

30 Europe

Asia 25 25 North Amrica

15 15 12

10 6 5 6 4 5 3 1 1 0

Figure 8-1. Global Distribution of Offshore Wind Ports as of 2013

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Source: BTM Consult, A part of Navigant – September 2013

8.1.2 Port types and general requirements Whilst the focus of the database was on ports that provide installation/construction services to offshore wind farms, other ports were found that provided services such as manufacturing, O&M and storage and have been included in the analysis.

There are 78 ports involved in the offshore wind business, but this does not necessarily mean that each port can provide the same services to the offshore wind sector. In fact, their roles or functions are quite different mainly due to the different geographical locations, port features, infrastructure and established facilities like cranes, warehouse, etc. According to the main functions and services that a port can provide to offshore wind sector, offshore wind ports have been categorised into different types, see Table 8-1. It is interesting to note that many ports especially in Europe are eager to be involved in the global offshore wind business despite their roles not being clear in some cases. Those ports either in the process of having specialist offshore wind docks/zones constructed or are linked to or closely associated with a future project have been grouped as potential offshore wind port.

Table 8-1. Port types in the offshore wind sector

Port Type Functions Construction The wind turbine can be pre-assembled on site. Capable of providing services during the entire construction process of offshore wind farm. With enough space and routs for the traffic of different offshore wind vessels. Manufacturing Involved in the manufacturing of wind turbine, components and BOP items such as foundations and substation platform. Operation & Capable of being a base for offshore project developers to provide operation Maintenance and maintenance services to the wind farms. Services include the deployment of vessels, provision of spare parts for maintenance and etc. Logistic Mainly involved in the offshore wind construction phase. It plays a role as a strategic logistic port to facilitate the construction work. Storage It can be used for storage of nacelles, major components and BOP items. Source: BTM Consult – A part of Navigant – September 2013

8.2 Port by type with track record The following section lists the ports according to their main role within the offshore wind industry and their respective track records. It is necessary to mention that many ports play a multi-role in reality.

8.2.1 Construction Phase Ports Ports involved in the construction stage of offshore wind farms are listed in table below along with their relative offshore wind experience. Construction ports are mainly located in North Europe especially Denmark, Germany and the U.K.

Since the beginning of offshore wind industry, Danish port Esbjerg has become the most important offshore wind port to support offshore wind project construction. While large ports like Esbjerg and Bremerhaven continue to play the key role in offshore wind sector, more construction ports have been established around North Sea mainly due to the recent deployment of offshore wind turbine in the U.K. and Germany. At present, more than ten offshore wind construction ports have been identified in the U.K.,

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followed by Denmark and Germany. Out of Europe, two construction ports were recorded in China and four in the U.S.

Table 8-2. Construction Phase Ports

Country Port Name Offshore Wind Project Experience Europe Belgium Oostende Thornton Bank I,II, & III, Belwind Alstom Haliade Demonstration

Aarhus Havn Samsø Denmark Esbjerg North Hoyle, Horns Rev I & II, London Array, DanTysk, (Amrumbank West - when

commences) Frederikshavn Havn Frederikshavn Grenaa Anholt Nyborg EnBW Baltic1, Rødsand ll, Lillgrund and Nysted Havmøllepark. Onsevig Havn Vindeby, Smålandsfarvandet France Dunkirk Thanet (unloading, storage, preassembly) Le Havre Saint Brieuc, Fécamp

Saint Nazaire (Nantes) Saint-Nazaire, Courseulles-sur-Mer and Fécamp Germany Bremerhaven Nordsee Ost, Innogy Nordsee 1 Brunsbüttel Alpha Ventus, Thornton Bank

Cuxhaven BARD Offshore 1, Alpha Ventus, Meerwind Ost (New T2 area) Emden BARD Offshore 1 (manufacturing), ENOVA Offshore Project Ems Emden (installation) Rostock EnBW Baltic 1, Kriegers Flak, Breitling nearshore plant Sassnitz (Offshore Terminal) EnBW Baltic 2, Wikinger Wilhelmshaven Alpha Ventus Netherlands Eemshaven Alpha Ventus, BARD 1, Borkum. Ijmuiden (Ijmondhaven Egmond aan Zee, the Princess Amalia (Q7)

Harbour) Norway Dusavik Hywind Statoil Kollsnes SWAY 1:6

UK Barrow Wallney 1 & 2 (monopiles and transition pieces), Barrow, Robin Rigg & Ormonde (substations), Ormonde (assembly/construction). Belfast Harbour Barrow, Robin Rigg and Ormonde, West of Duddon Sands Cammell Laird Gwynt y Môr (load and fit out of foundations) Great Yarmouth (EastPort U.K.) Scroby Sands, Thanet, Sheringham Shoal, Greater Gabbard, and Lincs. In the future, likely to serve East Anglia Offshore Wind Farm Site). Hartlepool Teesside (installation and maintenance)

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Harwich International Port Gunfleet Sands, Greater Gabbard,Thanet , London Array Ph I. Hull Lincs Lowestoft Greater Gabbard, Scroby Sands. Mostyn North Hoyle (construction and O&M), Burbo Bank, Robin Rigg, Rhyl Flat (construction and O&M), Walney I & II. In future likely to be involved in: Gwynt Y Mor, Burbo Bank Ext., and Walney Ext. Shoreham Port Rampion Offshore Wind Farm (Construction & O&M) Teesport Teesside Wells Harbour London Array, Greater Gabbard, Thanet, Riffgat (storage) Sheringham Shoal (construction base) Workington Robin Rigg (construction and O&M) Asia Pacific China Longyuan Rudong 30MW intertidal trial Nantong project, Longyuan Rudong 150MW Intertidal demonstration project Donghai Bridge offshore wind phase 1 and Shanghai Changxing Island phase 2 North America USA DeepCwind Consortium - VolturnUS - Dyces Brewer Head Test Site

New Bedford Cape Wind (2013-2016) Offshore Wind Power Systems of Texas Titan Corpus Christi Platform Port of Camden (Beckett Street Fishermen's Atlantic City Windfarm Phase I Terminal)

8.2.2 Manufacturing ports Ports in this category have either turbine manufacturers on site to assemble the wind turbine or components suppliers on site to produce turbine components or BOP items. There are seven examples of ports that provide manufacturing facilities to the offshore wind sector in the database, and we have listed them in the table below.

Table 8-3. Manufacturing Ports Country Port Name Manufacturers/ Developers Offshore Wind Project Experience Denmark Aalborg Havn Siemens wind power Rødsand 2, Anholt, Walney I & II, (blades), Bladt industries London Array (steel structures). Lindø Bladt industries EnBW Baltic 2 ( steel structures) Germany Nordenham Rhenus Midgard (cable Anholt logistics) and on-site

prototype construction

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Papenburg Robert Nyblad GmbH (bed plate, transition piece) Stade PN Rotorblades, Areva Alpha Ventus Blades Lubmin Bladt industries EnBW Baltic 2 (steel structures) Netherlands Rotterdam JV Strukton-Hollandia Global Tech 1 (transformer (Offshore Transformer substation - mobilisation) Substations) VDS Staal-en VDS Staal-en Machinebouw Machinebouw BV (steel structures)

8.2.3 Operation & Maintenance Ports Ports involved in operation and maintenance or O&M normally have a strategic location to certain offshore wind farms. This kind of port does not need enormous space like the construction port, but it needs enough space for the storage of spare parts and for O&M supply vessel or Service Crew Boat to provide O&M routine or turbine overhaul services. Four examples of ports that have provided O&M services to offshore wind projects are provided below.

Table 8-4. O&M Ports

Country Port Name Manufacturers/ Developers Offshore Wind Project Experience Norway Skudeneshavn Hywind Statoil

U.K. Dundee Only caters to onshore wind SSE's offshore projects so far. Forth Ports est. JV in

June 2008 with SSE ("Forth Energy") to develop renewables (incl. wind) in and around Scotland. Grimsby Centrica, Siemens, RES, Lynn & Inner Dowsing (O&M for a EWE, E.ON, Vattenfall and number of round 1&2 wind farms REpower, linked to Dong in the north sea), Lincs (O&M). Linked to Westermost Rough. Ramsgate London Array Group (Dong London Array, Thanet (local Energy, E.ON, and Masdar). maintenance facility)

8.2.4 Storage and Logistics Ports These ports provide storage services to the offshore wind industry. Large storage space and easy logistics for turbine installation vessels and construction support vessels to access are the basic requirements for being a storage ports. We present two examples of ports that have provided storage and logistics services to offshore wind projects below.

Table 8-5. Storage and Logistics Ports

Country Port Name Manufacturers/ Developers Offshore Wind Project Experience

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Netherlands Vlissingen Statoil, Seaway Heavylift Sheringham Shoal, Lincs, London (BOW (handling, transshipment Array, MORL, Teesside, South Terminal) and storage of project cargo) Arne and Ekofisk Verbrugge London Array, Greater Gabbard, Terminals Sheringham Shoal, Thanet, Riffgat (Vlissingen (all storage) and Terneuzen)

8.2.5 Potential Offshore Wind Ports The ports listed below have the potential to service the offshore wind industry. They are either in construction or have been linked to future offshore wind projects. Normally those ports can provide very affordable policies and tax rates to welcome the offshore wind business.

Table 8-6. Potential Offshore Wind Ports Manufacturers/ Country Port Name Offshore Wind Project Experience Developers China Dafeng Goldwind Potential to Longyuan Dafeng Intertidal Project Shanghai Lingang Potential to Shanghai Lingang Offshore wind project Yancheng Sinovel Potential to Binhai Offshore wind project, Sheyang offshore wind project. Denmark Rømø Havn WPD Offshore Butendiek (Service O&M when constructed) Rønne Havn Potential to offshore projects in Baltic sea

Skagen Potential to provide logistics support France Bordeaux Port Potential to provide logistics support Atlantique

Germany Brake J. Müller WIND Potential to provide construction support Services & Logistics (transshipment and storage concepts) Helgoland WindMW and Potentially servicing: Meerwind, Amrumbank REpower seeking West and Nordsee Ost (O&M) to use Helgoland as an O&M service port. Rendsburg- Osterrönfeld (New Kiel Canal Port) Wismar Potential to provide logistics support Ireland Dublin Port Potential capacity for installation

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U.K. Able Humber Smartwind Potential to Hornsea Zone (Marine Energy Park) Able Seaton Hornsea Zone - Potential to provide manufacturing, storage and O&M services to offshore wind projects Blyth Potential capacity for installation London Potential for manufacturing, pre-cast Thamesport construction, storage and assembly for offshore wind projects. Methil Port Samsung Heavy Industry Newhaven none Proposed Rampion Offshore Wind Farm (O&M) Sunderland Tilbury SSE Renewables Potential to provide logistics support (onshore - Port of Tilbury Wind Farm) Tyne Undergoing development USA Wilmington Currently handle with onshore wind business, (Delaware) there is potential to offer logistic support and construction for offshore

8.3 Profiles of Major Installation Ports

8.3.1 Port of Esbjerg, Denmark

The Port of Esbjerg is considered to be the heart of the Danish offshore energy sector since the production of oil in the 1970s. Esbjerg is home to Head Office: 8,000 of Denmark’s 13,000 offshore sector jobs (2,000 of which are in Port of Esbjerg offshore wind) and some 270 businesses are located on the waterfront. Hulvejen 1 Over recent years the port has invested in providing facilities to cater to DK-6700 Esbjerg the offshore wind industry; it is now estimated that 65% of all Danish wind turbines are shipped from the port. Esbjerg has very large roll- Denmark on/roll-off cargo facilities and handles in excess of 250,000 containers and trailers a year.

The extensive knowledge developed in the offshore oil and gas industry has been a strong foundation for the offshore wind industry and significant knowledge share is achieved through the collaboration of these industries.

Another key feature supporting Esbjerg’s importance in the offshore industry and establishing it as Denmark’s offshore capital is that now all offshore related education is based in Esbjerg including four institutions focused solely on the offshore sector plus several private and Government funded institutions.

Map of Port of Ebsjerg

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City Airport City Esbjerg Strand Esbjerg

Development site

Nordhavn Sydhavn

Trafikhavn Esbjerg Harbours

Rail Network Rail Dokhavn

“South Harbour” Transport Hub

Ferry Terminal Ferry

Ø sthavn Østhavn “East Harbour”

Port History Established in 1868, the port was built to replace the former harbour in Altona, at that time Esbjerg was home to just 30 people. By the late 1800s Esbjerg was one of Denmark’s fastest growing towns; by 1911 it was the seventh largest in Denmark and has been fifth largest since 1965. The port along, with the railway, were essential to this rapid development. Over the years the port has been the largest fishing port in the country although now offshore activities account for the majority of its business.

Offshore Wind at Esbjerg

Esbjerg is ideally placed to support offshore wind projects. It is within close proximity to the North Sea based offshore wind market, has an established supply chain and an experienced workforce. The port has shipped 3GW of the total 4GW of installed offshore wind turbines in Europe.

The Port of Esbjerg has undertaken considerable investment to improve its offer to this market. Phase 1, completed in June 2013 was the development of the Østhavn or “East Harbour”. It measures 650,000m2 which is roughly equivalent to 100 football pitches. The development was built over 2 years at a cost of around DKK 500 million. Facilities at Østhavn include a testing facility, pre-assembly area and shipping area all specifically for offshore wind turbines.

The Østhavn project represents phase 1 of Esbjerg’s expansion programme, Phase 2 (South Harbour), is a 1 million m2 expansion and is scheduled to be completed by 2015.

South Harbour will be capable of receiving ships up to 225m in length and 9.5m in draught.

Port – Key Features Area 3,420,180 m2, 2,055,000 m2 (rented), 1,365,180 m2 (infrastructure) Water depth Range from 3.9m (1st Basin) to 11.5m (Tværkaj) Quays and wharves 21 quays totalling 10km Quay lengths Range from 120m (Østre Forhavnskaj) to 1,050m (Dokhavnen) Cranes Liebherr LHM 500 (140t) Liebherr LHM 400 (104t) Liebherr LHM 280 (84t) Liebherr 1081VG

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Gantry Crane Tidal restrictions - Development Space 3.6 million m2 industrial zone for “green” companies Storage - Offshore wind Transports &Logistics, Manufacturing, Construction, O&M, applications Service, knowledge and innovation

Wind Industry Port Tenants Company Role Activity in Port Vestas Manufacturer Assembly and export facility Siemens Wind Power Manufacturer Assembly and export facility DONG Energy Developer Office for Oil & Gas and Renewables Vattenfall Wind Power Developer Office for offshore wind project construction and O&M A2SEA Contractor Transport and Logistics ESVAGT Vessel operator Delivering safety and spport at sea by operating ERRV and AHTS vessels and safety training Blue Water Shipping Wind logistics Providing one-stop-shop solutions for turbines and foundations transport Offshoreenergy.dk Industry organisation Official national knowledge center and innovation network for Danish offshore O&G and offshore wind industry

Port Track Record Project Size Developer(s) Official Start Port of Esbjerg (MW) Function Horns Rev 1 160 + DONG Energy and 2002 & 2009 Shipping components, & 2 209.3 Vanttenfall O&M base for DONG Lynn & Inner 194 GLID Wind 2008 Load out port: Siemens Dowsing (Centrica and EIG) turbines Gunfleet 172 DONG and 2010 Load out port: Siemens Sands Marubeni Corp. turbines Greater 504 SSE Renewables 2012 - Gabbard and RWE Power Sheringham 315 Scira Offshore 2012 Load out port: Siemens Shoal Energy (Statoil and turbines Statkraft) London 630 2012 Shipping nacelles and Array towers (Siemens) Lincs 270 Centrica Energy, 2012 Construction base DONG Energy and Siemens Meerwind 288 2013 Load out port: Siemens turbines

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Project Size Developer(s) Official Start Port of Esbjerg (MW) Function DanTysk 288 Vattenfall & 2014 Base port: (storage of Stadtwerke nacelles, pre-assembly Munchen of Siemens turbines) Riffgatt 108 EWE & Enova - Load out port: Siemens turbines Kårehamn 48 E.ON - Pre-assembly of turbines (Vestas)

Siemens’ nacelles and towers for London Array The newly opened Østhavn

8.3.2 Port of Bremerhaven, Germany

Bremenports GmbH & Co. currently manage Bremen and Bremerhaven ports on behalf of the Free Hanseatic Head Office: City of Bremen. The Port of Bremerhaven is one of the Hansestadt Bremisches Hafenamt largest in Europe. The port is located amidst a cluster District Bremerhaven, Der Hafenkapitaen of over 300 manufacturers, suppliers and service providers for wind industry making it an important Steubenstrasse 7a hub for the sector. Bremerhaven 27568 Germany

The Port of Bremerhaven is well equipped with infrastructure (direct access to A27 motorway and rail network and the Weser estuary), storage facilities, repair yards, deepwater channels, reinforced quays, heavy load terminals capable of withstanding 50 tonnes per square metre and cranes suitable for heavy loads. It has an established supply chain including Areva Wind GmbH, REpower Systems, PowerBlades GmbH, WeserWind GmbH and WindMW GmbH. Wind Energy Agency Bremerhaven also has its headquarters in the port. The port also has excellent educational and training facilities located including the University of Applied Sciences who have a maritime focus and Offshore Safety Training Centre.

Map of Port of Bremerhaven

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1. Offshore Terminal Bremerhaven Bremerhaven Wind Terminals

Transport Hub 5 2

1 4

3 2. Labradorhafen

Offshore Terminal Bremerhaven Terminal Offshore

Containerterminal

ABC

Rail Network Rail

Ferry Terminal Ferry

Halbinsel Werfthafen

3. Werfthafen

Labradorhafen Airport

4. ABC-Halbinsel

5. Containerterminal 1

Port History

The port of Bremerhaven is the seaport for the state of Bremen. In Saxon times (888 AD) a port was used to service Bremen’s market, the port was also used by merchants travelling to the Netherlands, England and Baltics. Bremen became a city in the fourteenth century and a de facto capital of the lower Weser region during the fifteenth century. In the early 1400’s marine traffic began to be directed which marked the true beginnings of the port. Harbours began to be constructed to manage the increasing quantities of traded goods that travelled along the Weser. Sweden captured the area in 1653 and developed plans to fortify the town, this fortification was to become the Port of Bremerhaven. Over the years new harbours were added to accommodate steam ships; it became integral to trade and emigration and became a base for the Navy. A 120 metre wide, 2,000 metre long harbour basin was opened in 1888, it had a depth of 5 metres to handle sea vessels. Various other construction projects were completed over the following century and the Port became part of the federal state of Bremen in 1947. In 1958 a second passenger facility was added and a riverside quay and container terminal opened in 1971. The third container terminal began construction in 1994, a new industrial park opened 1998 and the fourth container terminal began construction in 2004. Bremen’s ports handled 14 million tonnes of goods in the 1960’s and now handle up to 75 million.

Offshore Wind at Bremerhaven

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Bremerhaven Port has been servicing the wind industry for over 10 years following an aggressive Government led investment programme in offshore wind in 2000. Bremerhaven is now known as a “Wind City”. The Port plays an instrumental role.

Luneort industrial park is a base to important manufacturers such as AREVA Wind, PowerBlades and REpower Systems; it lies over 80 hectares and caters to both the offshore and onshore wind markets. The Ports four key areas relating to the Offshore Wind sector are: Labradorhafen, the Offshore Terminal Bremerhaven (OTB), Werthafen and ABC-Halbinsel. The Containerterminal 1 is being used as a temporary solution as the base port for the Nordsee Ost Wind Farm until 2013.

Labradorhafen: This area is the heavy load area where manufacturers handle nacelles, rotor blades and turbines. It is equipped with a 1,600m2 heavy load area that can bear up to 50 t/m2.

OTB: This area is currently under construction and due for completion in 2016. The construction project is being managed by Bremenports and is costing EUR 180 million. When complete the OTB will be used to handle, pre-assemble and store offshore wind turbines. It will also be used for the exporting of components and as a logistics centre for transporting large industrial components.

Werfthafen: SchichauSeebeck’s old shipyard area has been re-developed to become the Seebeck offshore industrial park. It holds offices, storage areas and berths.

ABC-Halbinsel: This port serves as a buffer zone; the area is used for storage, mooring and stacking. It can be accessed via the Kaiserschleuse.

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Key Features of Ports Labradorhafen OTB Werfthafen ABC-Halbinsel Area 1,600m2 250,000m2 - 100,000m2 Water depth 7.6 m 10.5 m 7.1 m 10.5 m Berths 2 – 3 2 – 3 2 – 3 2 (8 nearby) Quay length 1,132 m 500 m 380 m 900 m Cranes - Crawler cranes, - Mobile cranes – working radius 30-400t up to 30 m Development - 200 hectares - - Space Capacity - 160 units per - - season (turbines and foundations)

Wind Industry Port Tenants Company Role Activity in Port Areva Wind GmbH Manufacturer Production facility (turbines) BLG Logistics Wind Wind Logistics Coordinates and manages wind Energy energy facility supply chains DOC German Offshore Wind Logistics Operational and project management Consult expertise for offshore wind sector EnergieKontor AG Developer Project developer Energy & Meteo Systems Wind Logistics Energy meteorology GmbH EOPS - Evers GmbH Wind Logistics Project management and logistics for Offshore Project offshore wind interface.group GmbH Wind Logistics Interface group – efficiency of wind farms PowerBlades Manufacturer (blades) Production facility REpower Systems AG Manufacturer Production facility (turbines) Rolf Luebbe Lifting and Wind Logistics Crane supplier Lashing Systems eK SWB CREA GmbH Wind Logistics Plans, develops, builds and operates offshore wind farms Technologiekontor Wind Logistics Construction and engineering services Bremerhaven F&E for offshore wind farms Gesellschaft für die Nutzung regenerativer Energien mbH

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THERMAL WIND & Wind Logistics Thermography services Safety Supply GmbH WeserWind GmbH Manufacturer Production facility (foundations) Wind Power GmbH Manufacturers Produces wind energy converters (converters) WindMW GmbH Wind Logistics Planning, construction and operation of Meerwind Süd and Meerwind Ost

Port Track Record Project Size (MW) Developer(s) Start Port Function Date Nordsee Ost 295.2 RWE Innogy 2014 Base port Innogy Nordsee 332.1 RWE Innogy 2015 Base port 1

Foundations, rotor blades and tower segments for Nordsee Ost Offshore Wind Farm

Rotor blades for Innogy Nordsee 1 offshore wind farm at the Container Terminal Bremerhaven

8.3.3 Port of Belfast Harbour, U.K.

Belfast Harbour offers windfarm developers and wind component manufacturers a compelling location including: development space with water front access; access to academic and vocational training through world Head Office: class universities and further education colleges; a thriving Belfast Harbour Commissioners

Harbour Office, Corporation Square Global Evaluation Of Offshore Wind Shipping Opportunity Belfast , Northern Ireland Page 177 United Kingdom, BT1 3AL

commercial environment; excellent port infrastructure including Ireland’s longest deepwater quay; no tidal restrictions; and 12 offshore wind project sites within 150 km. Belfast Harbour is already home to DONG Energy and ScottishPower Renewables who lease a 50 acre offshore wind installation and pre-assembly harbour. As a result the harbour is attracting further interest, employment opportunities and further inward investment.

The Board of the Belfast Harbour Commissioners is responsible for the operation, maintenance and improvement of the Port of Belfast, as such the Port is known as a ‘Trust Port’.

Belfast Harbour Location

D1 Offshore Wind Terminal Wind Offshore D1

Development Site Development

Ferry Terminal Ferry

City Airport City Rail Network Rail D1 Offshore Wind Terminal

Development site

D1 Offshore Wind Terminal

Transport Hub

Port History

The Port in Belfast has been operational for over 400 years. Its origins began in 1613 when under the reign of James I Belfast was incorporated by Royal Charter and a wharf was established. Within 50 years the town’s 29 vessels used the port with a total tonnage of 1,110 tonnes and trade continued through the centuries. The port was expanded with privately owned wharves, reclaimed land to accommodate new quays and the formation of a new channel to eliminate bends and the natural shallow water restrictions. Now the estate covers 2,000 acres, handles over 80% of Northern Ireland’s petrol and oil imports and 50% of Northern Ireland’s ferry and container traffic. The port handled over 16.5 million tonnes of cargo on 2010.

The Offshore Wind Terminal Construction Project

Due to the port’s excellent position both commercially and geographically; in February 2011 DONG Energy and ScottishPower Renewables signed a letter of intent with Belfast Harbour to establish an Offshore Wind Terminal. The 50 acre Offshore Wind Terminal was constructed by Farrans (Construction). The Terminal is the first purpose-built offshore wind installation and pre-assembly harbour in the U.K. or Ireland. The development was funded solely by Belfast Harbour for £50 million.

The project, which took 15-months to complete, was delivered in Q4 2012 on time and on budget. The project used one million tonnes of stones and 30,000 tonnes of concrete. The terminal was handed over to DONG Energy and ScottishPower Renewables in February 2013.

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The 200,000 m2 facility is big enough to accommodate 30 football pitches. There is a 480m deep-water quayside with berthing facilities to accommodate up to three vessels simultaneously; the lack of draught and depth restrictions means the port will be accessible to a future generation of construction vessels. The terminal will be subdivided into areas specific to components. The terminal will be accessible 24 hours a day, 7 days a week offering right of passage for vessels.

It is expected that up to 300 jobs will be created for a variety of occupations including welders, electricians and engineers.

Belfast Harbour – Key Features Area 2,000 acres Water depth up to 11m HD with a maintained channel depth of 9.1m Quays and wharves 8km total Quay lengths Quays and wharfs range in lengths from 78m to over 1km Cranes 2 x permanent heavy lift cranes (800t capacity) Tidal restrictions None Development Space Site 1 - 46 acres, Site 2 - 51 acres, Offshore Wind Terminal – 50 acres Storage 2,000,000ft² warehousing for businesses 100,000ft2 provided by Harland & Wolff Offshore wind Logistics, Manufacturing, Construction and O&M applications

Port Tenants Company Role Activity in Port DONG Energy Developer Investor and Irish Sea base ScottishPower Developer Investor (JV with DONG Energy) Renewables Siemens Manufacturer Traffic Solutions Harland & Wolff Manufacturer Construction, assembly & storage: Robin Rigg – (Logistics & assembly: monopiles, transition pieces, towers, hubs, nacelles, blades, grout, infield and export cables and miscellaneous outfit) BARD Offshore 1 – (Transformer platform and jacket assembly and erection) Ormonde – (Logistics & assembly: towers and turbines)

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Port Track Record Project Size Developer(s) Official Belfast Harbour (MW Start Function ) Barrow 90 DONG Energy and 2006 Storage and pre- Centrica assembly of Vestas turbines Robin Rigg 180 E.ON Climate & 2010 Storage and pre- Renewables U.K. assembly of Vestas turbines Ormonde 150 Vattenfall 2012 Storage and pre- assembly of REpower turbines West of 389 DONG Energy and 2014 Steel monopiles and Duddon ScottishPower transition pieces (Bladt) Sands Renewables BARD 400 BARD Engineering 2014 Transformer platform Offshore 1 GmbH and jacket assembly and erection (H&W were commissioned by Weserwind GmbH)

Harland & Wolff, Robin Rigg, Dry Dock 2 Harland & Wolff, Belfast Harbour facilities

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