From Targets to Turbines: Can Vessels Keep Up with Offshore Wind’s Boom?

Dan Wiseman (00:22)

Hello and welcome to another episode of PowerPod. In today's episode, we'll be listening to our principal analyst Rameeza, as she's joined by our vessels champion Ben and port analyst Luke, and talking about the vessel supply and demand issues that are facing the industry at the moment. They'll be delving into turbine failures, as well as bottlenecks that the industry is facing. So, there's quite a lot to cover, of course, so let's join them and just see what they had to say.

Luke Rushbrook (00:50)

So Rameeza, let's start at the top. Offshore wind targets are everywhere. We see them in government speeches, in sustainability reports, in infrastructure plans, and offshore wind targets are growing rapidly. But how do targets differ from forecasts and what's really driving the market today? Is the main catalyst policy, net zero commitments, or maybe energy security?

Rameeza Haq Duggal (01:14)

I think energy security has become the biggest accelerator, though it's really a combination of three forces coming together. Recent geopolitical tensions have strengthened the need for homegrown and secure energy sources. Many governments now also see offshore wind not only as a decarbonization tool but also as a way to reduce dependence on imported energy.

Net-zero commitments are still important, and government policy remain essential because offshore wind is such a capital-intensive industry. Since the energy crisis, many countries have started viewing offshore not just as a climate solution but as a strategic energy asset. That shift has made the conversation much more urgent. It is also important to distinguish targets and forecasts.

If we look at the scale of the mission, offshore wind targets now add up more to more than 700 gigawatts globally. Roughly, eight times today's operating capacity. So, the question is off course, how much of that ambition is actually turning into reality.

When we look at the actual project pipeline, we have eighty-seven gigawatts already operating. About thirty-five gigawatts are under construction and another 11 gigawatts have reached final investment decisions. And roughly 350 gigawatts is at various stages of planning.

Based on that pipeline and our forecasting, we expect global installed offshore wind capacity to reach around 480 gigawatts by 2040. So, even if not every target is achieved we are still looking at a market that's more than five times larger than it is today.

Ben Swarbrick (03:02)

So, Rameeza, let's talk about the turbines themselves. We've seen turbine sizes increase dramatically over the past decade. How have turbine components evolved so far and what turbine sizes do you expect to see dominate by 2030 and 2040?

Rameeza Haq Duggal (03:20)

So, when you look at turbine technology, the defining trend is scale. The industry has pushed turbine sizes up at an extraordinary pace over the last decade. Today, around 120 gigawatts of offshore wind turbine capacity is either installed or under construction globally. So, to put that in perspective, offshore wind capacity has grown from around 40 gigawatts in 2019 to nearly 120 gigawatts by 2025. So, the acceleration has been very clear.

The biggest change has been turbine size. Before 2010, most offshore turbines were 5 megawatts or less. From around 2017, the 5 to 10-megawatt range became the industry standard. Since 2021, we have seen a clear move into 10-to-15-megawatt class. And now the market is preparing for the next step, turbines in the 15-to-20-megawatt range.

So, looking ahead, we expect around 19,500 offshore wind turbines to be installed globally between 2026 and 2040. The forecast shows a very strong shift towards larger machines. Up to around early 2030s, turbines below 20 megawatts will still dominate new installations, but from mid 2030s onwards, we expect turbines above 20 megawatts to become much more common.

Ben Swarbrick (04:46)

So, are we approaching a practical ceiling, or could 20-to-25-megawatt turbines become more commercially viable?

Rameeza Haq Duggal (04:53)

I would say we are approaching a practical ceiling, but not a hard technical ceiling. Turbines of 20 to 25 megawatt could become commercially viable, especially in China. But the question is not only whether manufacturers can build them. It is whether ports, vessels, foundations, cranes, installation methods, and maintenance strategies can scale up with them.

Well, in terms of the turbine installation vessels, there are currently under 20 vessels that can install 15 to 20 megawatt turbines, with more on the way in the next few years. And if we look back, just six years to 2020, that number was zero. So, vessel operators have been able to meet the current demand. But as demand for turbines increases in the early 2030s, the supply of available vessels is likely to become tighter. We may see vessels from other sectors such as oil and gas operating in the offshore wind space, or vessel operators may look to acquire or charter vessels from other geo-regions to meet the future demands.

Luke Rushbrook (05:31)

Well in terms of the turbine installation vessels, there are currently under twenty vessels that can install fifteen-to-twenty-megawatt turbines, with more on the way in the next few years. And if we look back just six years to 2020, that number was zero. So, vessel operators have been able to meet the current demand. But as demand for turbines increases in the early twenty thirties, the supply of available vessels is likely to become tighter.

We may see vessels from other sectors such as oil and gas operating in offshore offshore wind space, or vessel operators may look to acquire or charter vessels from other georegions to meet the future demands. So, I think this is a lesson in the supply chain being forthcoming and working together in providing vessels fit for purpose in the future to adapt to larger turbines.

Rameeza Haq Duggal (06:36)
Ben, offshore wind originally relied heavily on vessels from the oil and gas sector. How much of today's market still depends on those assets? And how far has the industry moved towards purpose-built wind turbine installation vessels designed specifically for modern offshore wind projects?

Ben Swarbrick (06:54)

Yeah, of course. In—in the past, when offshore wind was, more of a novice in the industry, a lot of the vessels were used for oil and gas and other sectors, and only partly used for offshore wind. But now we can see, for instance, a lot of vessels are being purpose-built for offshore wind. Large operators are investing solely in vessels for offshore wind, turbine installation, and this is likely to continue being the case as—the work stays there, for—in the market. And this is evident among turbine installation and foundation installation fleets.

Rameeza Haq Duggal (07:31)

Ben and Luke, you have recently completed a detailed vessel supply and demand assessment. So, what's the headline finding when you compare projected offshore wind activity with the available vessel fleet through 2040? What stands out most, and what surprised you when you ran the numbers?

Ben Swarbrick (07:50):

Well, looking at the second half of 2025, one of the clearest trends in offshore wind is the industry's move towards larger and more capable vessels. This is what we call optimal vessels. Rather than the pressure emerging in an isolated segment, we're seeing it build across the market and contribute to a broader global trend. And in the foundation and turbine installation space, vessel availability remains relatively comfortable in the near term, and Europe still has some surplus capacity among both foundation installation vessels and wind turbine installation vessels.

However, the picture changes when we look ahead, further ahead, particularly in the Asia-Pacific, as larger turbines above 15 megawatts become the norm. Demand for suitable installation vessels is expected to exceed supply, creating a significant bottleneck from around 2030 onwards if the vessels can't meet the demand.

Luke Rushbrook (08:48)
Yes, and as you mentioned, Ben, we're seeing this demand increase for both foundation and turbine installation vessels happening around 2032, sort of '33. And in the 2030s, we're also starting to see increased demand for heavy O&M vessels. These are vessels which will be capable of heavy component exchanges, on turbines which are 10 megawatts or greater. So currently, there are only a few vessel operators with a dedicated O&M fleet, and other operators might use their installation vessels for O&M when they're not working on installation contracts. So, this increased demand in the early 2030s for both installation and heavy O&M may have the potential to cause supply bottlenecks.

Rameeza Haq Duggal (09:36)
I'm just curious, does policy shifting change demand a lot? How quickly can this change the market?

Luke Rushbrook (09:40)
Yeah, policy can have a significant impact on demand, and the US is the clearest example we have right now. The reversal of federal offshore wind leasing and permitting support effectively froze a significant portion of the US pipeline within months. Projects that were in advanced development have been paused, canceled, or restructured and that's not a slow-moving impact, that's something with immediate commercial consequences.

But the speed of the impact of policy does depend on where in the project lifecycle it hits. For example, if the project is already under construction with vessels contracted and steel in the water, a policy shift is very hard to unwind, and the commercial commitments are locked in already. But if a project is at development or financing stages, the policy reversal could kill off the whole development.

Ben Swarbrick (10:38)
Yeah, good points, Luke. the geopolitical dimension adds another layer, as such. Energy security concerns are only ever getting stronger, and the need for an energy-secure future is extremely important, and the accelerated European offshore wind commitments are growing faster than any subsidy regime that's managed in the past decade. And the market has responded accordingly with developers, investors, and vessel operators all committing more aggressively.

But here's the risk that I think is underappreciated. Because vessel newbuild lead times are 4 to 5 years, the vessel market responds to the mar—to the demand signal it sees today, not the demand signal it sees in the future. If policy shifts mid-cycle, you can end up with vessels ordered for a pipeline that no longer exists at the scale anticipated at the beginning. Or conversely, a pipeline that grew faster than the vessel order book can serve. Either scenario is commercially painful for the supply chain.

At TGS-4C, we have a project opportunity pipeline where we show projects that we feel will be most likely to be realized within the industry. They include all the geogeopolitical shifts, market trends, and everything going on with the market. And our predictions are up to 2040 and are much more realistic than the government forecasts that originally outlined.

Luke Rushbrook (11:57)
Okay, so it's also important to understand demand in O&M, operations and maintenance. Rameeza, you've recently published research on turbine failures globally. When you look at the data across all turbines currently installed, which generation of turbines has seen the highest failure rates? And how significant do you expect turbine failure activity to become looking forward?

Rameeza Haq Duggal (12:22)

Yes, we have recently published research looking at both historic, turbine failures and what we expect to see over the next 15 years. And I think this is one of the most important areas, for the offshore wind industry because failures ultimately drive vessel demand, repair campaigns, and O&M spending. So, looking at the historical data first, turbines up to 5 megawatts accounted for the largest share of recorded failures. Around 77% of all observed failure incidents occurred in these in this turbine class. And that's not entirely surprising, as these turbines were deployed during the earlier stages of offshore wind development, when the technology was less mature and operators were still building experience.

Looking ahead, the scale of the challenge grows simply because the installed fleet is growing so rapidly. We forecast around 34,000 turbine failure events globally between 2026 and '40. This is quite significant. The majority of those failures will occur in the largest offshore wind markets with Europe and China, together expected to account for roughly 85% of all turbine failures.

Luke Rushbrook (13:39)
And also which components on these turbines do we see fail the most often?

Rameeza Haq Duggal 13:43)
In terms of components, blades and gearboxes are the most frequently affected. In fact, major component replacements account just for around 12% of all failure events.

Ben Swarbrick (13:56)
We said earlier that turbines are evolving rapidly, but this will open the floor for higher failure rates on turbines, or could this mean lower O&M? As you mentioned, Rameeza, 77% of failures are with older and smaller, less than 5-megawatt turbines, right?

Rameeza Haq Duggal (14:14)

That's a very important question because more failures and more maintenance are not necessarily the same thing. Larger turbines mean fewer turbines are needed to deliver the same amount of capacity. And as technology matures, reliability should improve as well. That said, the global offshore wind fleet is growing rapidly, so even if individual turbines become more reliable, overall maintenance demand is still likely to increase simply because there'll be many more turbines operating offshore.

There is also a challenge with some of the older turbine models, where replacement components are becoming harder to source as suppliers phase them out. So, overall, I expect turbine reliability to improve, but I also expect the O&M market to continue growing as the offshore wind turbine fleet expands.

Luke Rushbrook (15:03)
Yes, this is backed up in our latest vessel activity analysis report that shows most O&M activity is performed on turbines greater than 10 years old. And we're seeing turbines aged 2 to 4 years had the lowest O&M activity in the latest analysis. So, not all failures have the same impact. What types of repairs require the most vessel time and specialist equipment, and which failures tend to result in the longest downtime for operators?

Rameeza Haq Duggal (15:36)

This is where the picture becomes interesting because the most frequent failures are not always the most disruptive failures. For instance, blade-related failures are expected to occur more often than many other component failures. However, in many cases, they can be repaired relatively quickly, which means the resulting downtime and, of course, vessel days as well, they are lower than people might expect. The failures that tend to create the biggest operational challenge are electrical system and BOP failures. These occur less frequently, but when they do happen, they often require longer diagnostic work, special—specialist equipment, and more complex repair campaigns.

Part of the challenge is that offshore wind turbines are highly integrated systems. Identifying the root cause of an electrical or BOP issue can take considerable time before repair work even begins. Once a fault is identified, operators may also face vessel availability constraints, weather windows, and specialist personnel requirements. As a result, these lower-frequency but higher-impact failures often lead to the longest periods of downtime and can have a disproportionate effect on project availability and revenue.

Luke, looking ahead to the 2030s, can the existing and planned vessel fleet support the combined demand for new offshore wind installations, operation and maintenance, repairs, and repowering projects? Or are vessel shortages inevitable?

Luke Rushbrook (17:14)
Well, I think that a bottleneck is—is not guaranteed, but the industry is approaching a period where installation, decommissioning, and major O&M will all compete for the same vessel assets. It may not be a case of whether there are enough vessels, but whether there are enough vessels in with the right capability, in the right location, at the right time. We have seen already the vessel industry has adapted well to the increasing turbine sizes through newbuild programs and upgrading the capabilities of existing vessels.

But building new vessels isn't the only solution. Being able to optimize the utilization of current fleets could help to avoid major bottlenecks. And a few operators in Europe also have dedicated O&M vessels that don't work on installations, so I think we're likely to see an increase in this segment as well as demand for O&M increases. And unless vessel capability and capacity grow ahead of demand, intervention and heavy lift availability could become a constraint for offshore wind in the 2030s. W-would you agree with that, Ben?

Ben Swarbrick (18:27)

Yeah, absolutely. I would agree with that, Luke. One potential bottleneck that I could see—but as you say, they're not guaranteed—is the port infrastructure and whether the ports will have the capability and the capacity for the larger and heavier components. We're already seeing at the minute a shortage of these ports available, and if the market trends keep going and keep increasing turbine size, foundational size, we could see potential issues here.

As well as this, the vessels, they're going to require heavier lifts, larger deck loads, to be able to operate in deeper water and we've noticed there's been a backlog for certain supply chain components. For example, OEMs building larger cranes can be limited at this time. So, it's important, as we said before, for the vessel operators to really know what's coming so they can best prepare for this.

Rameeza Haq Duggal (19:22)

So, one last question. China has been expanding its domestic wind turbine installation vessel fleet. We have already seen Chinese vessels working beyond their domestic market. So, do you expect Chinese vessels to enter Europe and other international markets? If they do, would developers, vessel owners, and policymakers be willing to accept that capacity?

Ben Swarbrick (19:44)
Yeah, well, we've already seen Chinese vessels entering the European market in the O&M and installation segments, although these are vessels that have been purchased, refitted by European operators and in all cases, the vessels were upgraded or configured to meet European operational requirements. But I think this shows that the vessel operators are aware of where the constraints lie, and making moves to adapt early is increasingly important to, allow their fleet to meet future demand. With developers, yes, pragmatically, when the choice is a Chinese vessel or a 6-month delay that costs millions in lost revenue and contract penalties, most developers will want to take this vessel.

But this is not always a ready solution, and political pressure overrides the procurement preferences with this. And on the other half of that, with the governments, some will resist the security of industrial policy grounds and others will quietly accept it to try and keep their offshore wind targets on track. The tension between energy transition ambition and supply chain sovereignty is real and not yet resolved in any markets.

Rameeza Haq Duggal (20:54)
So, we are coming up on time. I think this is a good point to wrap up. From my side, offshore wind is growing fast and that growth creates demand across the full vessel market installation, maintenance, repairs, decommissioning, all competing for the same vessels in the same decade. That is a major opportunity for vessel owners, but to capture it, the industry needs something it doesn't fully have yet, which is long-term policy certainly. Without it, the capital stays on the sidelines, and the supply gap widens. So, Luke and Ben, to close the discussion, what is the single most important takeaway from your analysis for investors, developers, vessel owners, and policymakers?

Luke Rushbrook (21:36)
Yeah, thanks, Rameeza. I think my key takeaway would be that so far, the vessel industry has adapted well to the increasing demands we've seen with larger turbine components, and they've mainly adapted through building new vessels. But I think going forward to addressing any potential bottlenecks, there needs to be improved utilization of the existing vessel fleets, to make sure they're in the right place at the right time. And having a data-led approach will help operators with vessel coordination across different regions and projects. Ben?

Ben Swarbrick (22:10)
Yeah, what I'd like to say is turbine installation trends are forever changing. We've seen this. We've noticed that the 6-megawatt turbines have been phased out or being nearly phased out, and after this, the 10-to-15-megawatt turbines will be phased out. So, it just increases the importance of having vessels ready for future demand and future turbine sizes, whatever they may be 25-megawatt, 30 megawatt, or even 40 megawatts.

Voiceover:
And that's it for another episode of PowerPod. I hope you found it as interesting as I did. As always, thank you so much for listening to us today and we hope you join us again on our next episode here at TGS-4C.