In this episode of ‘Alongside’ we examine how global supply chain issues caused by the pandemic and the war in Ukraine have affected the wind farm sector.

With these challenges there are also opportunities, as we hear from two of the industry’s leading companies to explore this.

Stuart Keeble is a chartered civil engineer who is a commercial manager at Boskalis, a leading global dredging contractor and marine services provider to the offshore energy market.

Also on this episode is Fabian Hippe, Managing Director of Menck, a specialist in pile driving technology and services for oil and gas, wind and civil engineering projects around the world.

They discuss how it is not just supply of equipment and materials that is a challenge but the availability of staff and skills. But they also paint a positive picture for the renewables market, as demand for win increases in all parts of the world. We here how maximising this opportunity is key and what are the best ways to do that.

Hello and welcome to Alongside, the podcast from Standard Club for the shipping industry across the world. I'm Kait Borsay. In this episode we look at renewable energy, with a focus on the demand for more wind farms around the world.

As the pandemic and the subsequent war in Ukraine impacts supplies, we ask if the maritime sector is ready to meet these changing demands. Are there enough vessels? Is there a skill shortage? Is the infrastructure in place to meet the challenges? And more importantly, what are the opportunities for the sector that should be explored? To discuss all this we're joined by Stuart Keeble, a chartered civil engineer who's a commercial manager at Boskalis, a leading global dredging contractor and marine services provider to the offshore energy market. Hello to you Stuart.

Good afternoon, Kait.

And with me, too, is Fabian Hipper, Managing Director of Menck, a specialist in pile driving technology and services for oil and gas, wind and civil engineering projects around the world. Welcome to you, Fabian.

One more hello as well from my side Kait.

Let's begin then with a summary from you both about the impacts that you've seen firsthand of what's been happening in Eastern Europe this year. And with the global economy, how it's being affected, Stuart, let's start with you. Yeah,

Thank you. Certainly, you know, we what we've seen is changing plans. We work globally across different industries outside of renewables as well. And vessels, which were intended to go into Russia and into other countries have had to be diverted onto alternate works and purposes. And I think the second aspect that we've really seen is, you know, this inflationary environment has been driving prices up, which is unwelcome, of course to our customers and is something that we have to deal with as we adjust our own process.

And Fabian for you?

Menck is a manufacturer for pile driving hammers, which predominantly contains steel materials - iron ore is required to produce these. Ukraine is one of the largest producers of those materials, raw steel material that are subsequently used in our products. And as Stuart suggested, we see a massive price escalation coming our way. That certainly burden us on the new build of structures that we're putting into market, which applies to as well, contractors like Boskalis certainly for secondary steel used on developments.

So how have you had to accommodate for that Fabian?

Firstly, we see about a lead time increase in available products from our supply chain that is in the range of 60 to 80%, actually, which puts a different spin on the planning side for us to prepare for a globally growing marketplace. Second, our products become significantly more expensive in the production phase. So the uncertainty as well as the cost inflation, put quite a strain on us directly in terms of cash flow, and requirements set forth with suppliers. While we are talking about for production of a hammer, in excess of 12 months easy, we're looking rather at 18 to 24 months... investors seeking our equipment for purchase are certainly keen to realise return of investment as early as possible, though, that is the balance that we need to keep on one side in order to make ourselves happy, as well as our shareholders, on the other side, meet the market demand as well.

It's a difficult balance to strike. And Stuart has the demand for wind energy changed in the last year?

Massively, I think, you know, politically driven, we see energy prices surging, particularly here in the UK, we have an enormous wind resource that's been developed over the last 15, nearly 20 years. And you see other markets now internationally following suit. Europe is certainly leading. China has a huge wind energy market, Japan, the US, which is growing as well. And it's really in its infancy. So yeah, demand at home and abroad.

We hear a lot don't we about global supply chain issues. It's happening all over. Has that impacted your field, as well? Tell us what's been happening for you.

I think it's really interesting because although we use vessels to build these wind farms, and they are mobile, they can move all around the world and we do so. And because demand is so spread out and our clients are spread out and wind farms are built across different years. It creates a massive puzzle.

The challenge really is getting the people and the assets be at the installation vessels to the right place at the right time. When we're looking so far ahead as well. So usually we're looking at wind farms now in 25, 26, 27, even as far as 28, and 29, we're looking at where we can create a chain of opportunities, but minimise the downtime in between them. And that's quite difficult when you have to sail your vessels potentially between the Europe, the US and elsewhere in the world. And of course, we're only one player. There’s a competitive market where others are trying to do the same thing. In a perfect world, you might almost argue that one group of vessels should just stay in one region and build those wind farms. But the reality is it doesn't work like that, because it is a competitive market. So really trying to build that puzzle across different customers different regions, is really quite difficult.

Stuart, the work involved in these projects is extraordinary. Is that one of the major issues here?

The scale of these things is amazing. When you see them up close, I mean, 14 metres diameter is enormous, you know, it's the size of a house, you know, and these things are sort of 50, 60 metres long. But the scale of fixed wind is about to be eclipsed by floating wind, because that really is absolutely enormous. You know, these structures are... they're humongous! You know, we see great pictures of them being towed and the anchors being placed onto the seabed. But the scale of those things then prompts the question of "okay, where do you assemble them? How do you deal with the logistics of installing them?" You know, just the amount of change the number of anchors... It's like nothing we've ever seen before. And it it sort of leads then I suppose into the whole, how do you? Where do you build it? There's so many elements that go into building a wind farm, we've been talking at the moment about the pieces that you see above the water. And that's always you know, the glamorous interesting parts, I suppose that people see off in the horizon. I work for the subsea cables team, for example. And all of our work is never seen, the cables are installed onto the seabed, and they're buried below the ground. But it's absolutely essential to transmit power usually over quite long distances from those wind farms back to the shore where we want it. When it comes to floating, it differs again, because a lot of those structures are preassembled and then towed to site. So the facilities that you need to enable that sort of construction project basically are totally different from a fixed bottom scenario.

Fabian, let's circle back to you and sort of talk about some of those issues when we look at at fixed wind farms and floating wind farms and really what kind of conversations you have, not only about what's happening now but also how you then mitigate for a growing market.

Most conversations that Menck and our sales team have with suppliers around currently the increasing demand to meet installation capacity that is seen for the years 2025 and onward. Menck at this time is fully booked for 2024. We are booking projects into 25 and into 26 and we've got a lead time for building new equipment of two years almost - that certainly puts us on the spot to consider how do we cater to the market in that period. Though the decision needs to be made physically needs to be made today rather than tomorrow. Talking to developers, though, it's a different judgement and a difficult judgement even to call out the top diameter that we need in order to design the right components for the wind farm from our side. We are we are growing the market right now from a northern hemisphere into the southern hemisphere and having differences in ELA to to cater to and consider in the southern hemisphere. Southern Hemisphere this time is very much immature compared to the northern certainly, but that that again drives a different demand and different dynamics into the global supply chain. At the end, the regional supply chain for different countries needs to improve and need to grow on its own. So it's not sustainable for European contractors to always sail to the US just to do one fin farm and then say back home. It's rather counterproductive, I would say. And similarly for our tools, keeping them centrally in Europe out of Germany, is probably not economical overall, to get the most out of the installation season that you have. While we have the season, the wind farm sizes grow; with that the installation periods grow. Five years ago, we hardly saw one installation, one wind farm development extending over one year. Today, we installed wind farms over two, three years time, just one single wind farm. So it's a rollover effect on top of that, some is caused by delays, some is actually planned. But it just mirrors and resembles the size and scale that is permanently increasing to make it commercially viable. Smaller countries however, so development countries in terms of offshore wind, are certainly not going with the largest wind farms right from the beginning, but from the smaller ones and feeding to that it's less attractive for some of the players than that you're contracting a larger wind farm. So it's, it's that balance that needs to be received. And that drives them demand certainly to critical products like vessels Boskalis or pile installation equipment like Menck.

And you're fully booked for next year. Tell us tell us briefly where those projects are just so we can get an idea of the location.

Compliment to Boskalis, we're going to be working on a quite extensive sizable project in the US with Boskalis, which is after a long period of it will be the next wind farm after the first initial one Block Island that was driven in 2015. So USSC in 2015, the first offshore wind farm a very small one five turbines only. Now we're going back and having installation season there in 23, 24 into 25 for three different wind farms. But a commitment made an agreement made between Boskalis and Menck for these three wind farms in the US. We're working in Taiwan, we're working in Europe, on the world's largest wind farm to this day Dogger Bank, which is a very massive development consisting of three different farms with 95 monopiles and foundations to be installed per farm. So 270, odd, piles. So yeah, it's it's a lot of dynamics around a very diversified portfolio between sizes, needs. And one thing that touches us and is underestimated, the vessel certainly can sail the globe. But the hammer size actually is demanded by the soil conditions on site and the pile that you instal. So the hammer may not be used, the biggest hammer may not be used in Taiwan necessarily, but rather in Northern Europe, or the US just because of soil conditions. And understanding that, of course, it's critical for the installation, to have certainty of the right tools selected, sustainable installation overall. And at the lowest cost possible.

We're getting a sense here, aren't we Stuart of the intricacy involved in each project. And also, because of the transportation method, you just can't get it wrong. And if you get it wrong, it'll be very costly and cause a huge delay alongside that. And we've also had a sense there from Fabian about the scale of the projects, you know, Europe's largest wind farm, the USA is about to have a much larger wind farm than their first one back in 2015. All of that gives us a really good sense, doesn't it of of where the markets going at the moment. What else is there to add really, when we look at territories, or countries where the demand is more focused? Have we covered the different countries there in terms of Taiwan, the USA has been mentioned.... Where else are you getting inquiries from?

Yeah, I think it really is global. To be honest with you, we've got Asia, Europe, the US. You know, Europe is such also such a huge region, you know, you've got UK, main Europe, then you've got the Baltic states, which are also starting to develop wind. So almost anywhere where there's coastline, and the demand for power, and some wind yield to be had is a candidate for wind. I think one of the things just listening to what Fabian said, as well about the hammer and the suppliers, and you're right, the vessel can be on time. But if the hammer's not ready, it's really just a taxi. And you know, this, this intricacy and this, this reliance in this interconnectedness is so important. And what it also does is it begs the question of how do you build responsibly, because growth is fantastic. It represents opportunity. And, you know, companies can rush into scale up and try to seize as much of that growth as possible. But actually, if you fail to deliver, that's, that's where the real problem starts lying - you, you end up with this kind of domino effect of potential failure, which we all want to avoid. And I think really understanding the risk and the interconnectedness is going to be critical to delivering wind and the targets that have been set politically, you know, going into 2030 and beyond.

Let's talk about ports as well, something that we haven't discussed yet when we're talking about the supply chain and everything that's involved in getting an offshore wind farm upright, I suppose constructed. What are the challenges from your perspective, Fabian for ports and the infrastructure there?

I think the US Market was a pristine example for this with our transect applied to all offshore works. It has been set forth to certainly support local economy and favour local vessels, suppliers and local vessels. So US flag vessels into the market, though, the east coast has hardly any construction capacity on offshore vessels available. Firstly, most of the construction capacity, the US assets in the Gulf of Mexico where all the oil and gas assets were developed, and are still being developed. And then they certainly have not the bespoke insulation technology and platforms, vessels that are required for offshore wind. However, if European contractors wouldn't go across the ocean and actually take this up as an installation, to develop and ensure installability for those of us wind farms, probably nothing would happen right now. That's the that's the constraint for a very developed country like the US is. It's every so often a surprise that hits us. While Europe has been growing with the wind industry over two decades, physically, or even more than two decades and port facilities certainly have developed, we're now going into areas that have hardly any oil and gas infrastructure available in order to tap on that resources, port facilities as well, or into areas where certainly the majority of population lives like the East Coast of the US and it's always favourable to develop wind where people live rather than transport electricity over long distance.

Let's summarise then there's kind of a couple of ways that I want to tackle this - one is what is realistic, and achievable in terms of wind energy. And then the other facet to this, I suppose is, is if you as two representatives from the industry had a free hand to implement changes that are going to support the growth of offshore wind on a large scale, where would you start? So let's talk about what's achievable now, first of all, Fabian, let's start with you.

Firstly, I would call it The sky's the limit. We're growing in size and the bathwater to accommodate larger turbines and largest turbines in the market today are 15 megawatts that are being installed. Some 5, 6, 7 years ago, we were at six megawatts as the largest - massive growth curve with that. Sizes of wind farms are increasing as well, just to make it more economical, though they are moving away from the populated areas, rural areas more so just because of space availability at the time. It's a different challenge that we have in Europe, for example, with that than it is in Asia, just because of different regulations in place for almost no regulations in place in some of the countries. With that consideration, the challenge certainly is surrounding where does the market go? And are we ready for this change that we make that may come upon us? It's not that we need to be ready, necessarily, but we need to be aware that there's an ambition. And there's a growth trajectory set forth to meet this. The growth trajectory assumes a growth, annual growth of about 15, 16% per annum. That means in the next eight years, we find a quadruple in size of offshore wind energy available in the market. And that's a massive undertaking compared to last 20 years. And requires a step up of all sectors as a matter of fact. But one of the most critical items in that it's not necessarily the hammer or the vessel. It's actually the people.

Would that be your request, then Fabian, if we were to give you carte blanche , a free hand on a change that you'd like to implement, that's going to support the growth it would be to encourage development in, in skills, development of people and skills.

Fabian Hippe 17;45

Yeah, I think with the changes in work life balance that we've seen in the in the population in general and the younger generation, certainly compared to the older certainly, we need to be considerate about that and find new ways of working both onshore as well as offshore to make the entire industry appealing. Wind farm developments go over months and months and months. And not necessarily a person would like to stay offshore for an extended period of four, six or even eight weeks period in order to support that installation, their family at home and friends that want to cater to that as well and expect actually to have some of time in between working periods. The offshore industry is a wee bit different on that - it has come far but if we can actually accommodate different models on that, all of us in terms of supporting those installations, but giving the flexibility to the employees and new employees that need to come to the market, I think that would give us a headway in terms of the ambition that has been set for developments.

So Stuart. Let's ask that two sided question to you as well really what's realistic and achievable now in terms of wind energy? And let's give you a wish, something you think is really important really, if you had a free hand to implement changes so that the market can grow effectively and on a really large scale, where would you start?

I think broadly, I actually agree with Fabian, you know that the sky is the limit. That the constraints, I suppose, if we really look at it objectively are, is there enough steel? Is there other enough cables that can be produced? Can you marry that up with the vessel availability and location, year by year. But generally, I would say that a good portion of the projects which are in the pipeline globally, could be built. Some of the other softer constraints that maybe aren't immediately obvious would be things like making sure that the planning and the legal frameworks that sort of allow these developments to go ahead are also aligned with developers aspirations to deliver wind on the timelines, because these are things that are out of the control of both the contractors and the developers to some extent. So I think if I had a free hand, I'd be hoping that more resource can be applied in those areas to unify and get everybody pointing in the same direction to, you know, make this wind development happened over the next decade and beyond. Beyond that, I agree about the personnel as well, it's so important. We mentioned the value chain earlier, which is long, it's not just construction, you know, Fabian and I are both interested in building things and tools and bashing piles in the ground and connecting them up with cables. But actually, it starts way, way, way before that, you know, the development of a wind farm now can take easily a decade or more from conception to completion. And that really involves a huge amount of engineering, planning, legal financing. And these are strengths, which UK in particular has in spades. We don't have a huge construction fleet. Now. There are, you know, there are companies that do excellent work and provide excellent construction services. But a lot of our strength is in engineering. And I think that as people come into the industry, we need to encourage them to think beyond their hometowns beyond UK wind, and think maybe more internationally. And conversely, those people which are in the countries with wind, which is just emerging, again, think internationally, come to Europe, go to Asia, go to the US learn your trade and bring it home, if that's what you'd like to do. But I think this really is a global opportunity that requires global thinking.

Yeah, some really interesting points made there from you, Fabian, more people more skill, support with installing wind farms. And also the really interesting point there about a flexible workforce as well. How, how can you allow some flexibility within the workforce you use? And you know, Stuart you've echoed some of that as well, but also talked about planning and legal frameworks, how actually the industry could do with more support and maybe more thought in those areas to help it grow and expand. Well look it's been fascinating. Thank you both for joining us on this episode of Alongside. That's Stuart Keeble, commercial manager at Boskalis and Fabian Hippe, Managing Director of Menck. Thank you both for your insight. Join us next time on Alongside when we continue to explore key topics affecting the maritime industry and those who are part of it. Click subscribe on this podcast to ensure you don't miss an episode. Thank you again to both our guests - from me Kait Borsay thanks for listening