The U.S. Offshore Opportunity - Ready for take-off Ethan Zindler October 22, 2019 - Offshore Wind Advisory
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The U.S. Offshore Opportunity Ready for take-off Ethan Zindler October 22, 2019
Contents Global outlook 2 The U.S. 7 1 October 22, 2019
Global outlook A rapidly diversifying market 2 October 22, 2019
Global outlook
2019: a blockbuster for new build
Global offshore wind build
Annual installations (GW) China
19.0
U.K.
17.2 17.3
16.8
Germany
15.4
15.0 U.S.
Netherlands
Taiwan
10.1
Japan
9.7
9.2 9.2 9.4
France
South Korea
6.4
Denmark
4.3 4.6 4.4 India
Belgium
2.1
1.4
Poland
1.3
0.9 0.9
0.3 Ireland
2010 2015 2018 2020 2025 2030 Other
Source: BloombergNEF. Note: ‘Other’ -- Spain, Portugal, Italy, Finland, Sweden, Norway, Vietnam.
3 October 22, 2019Global outlook
2019: a blockbuster for new build
Global offshore wind build
Annual installations (GW) China
19.0
U.K.
17.2 17.3
16.8
Germany
15.4
15.0 U.S.
Netherlands
Taiwan
10.1
Japan
9.7
9.2 9.2 9.4
France
South Korea
6.4
Denmark
4.3 4.6 4.4 India
Belgium
2.1
1.4
Poland
1.3
0.9 0.9
0.3 Ireland
2010 2015 2018 2020 2025 2030 Other
Source: BloombergNEF. Note: ‘Other’ -- Spain, Portugal, Italy, Finland, Sweden, Norway, Vietnam.
4 October 22, 2019Global outlook
After a raucous 2018, a
quieter year for buy-outs
Global offshore wind acquisition Global offshore wind transaction multiples
Gigawatts (GW) Transaction multiples (2018 $m/MW)
11.7
1.3 10
Commissioned/ 609MW
under construction
8
4.1
Unclear date
7.0
Under Construction of financial
/ commissioned 6 close
5.7 5.9
2.3
0.8
0.9 Permitted
3.8 2.1
3.9 4
3.3
3.0 1.1 1.0 Permitted
6.2
2.2 3.7 Announced
2.2
1MW
4.2 1.6 1.6 2
1.3 Announced /
2.7 3.0
2.0 0.6 planning begun
1.1 1.2 1.4 1.0 0.8
0.1
0
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
2005 2007 2009 2011 2013 2015 2017 2019
Year of financial close Year of financial close
Source: BloombergNEF. Notes: Includes only disclosed values. Exchange rate on day of
Source: BloombergNEF. Note: Closed deals only. project financial close. Deal count is 81, only two from outside of Europe.
5 October 22, 2019Turbine supply: diverse in
China, consolidated elsewhere
Global offshore turbine manufacturer market share
Annual Installations (GW) Non-contracted
Siemens Gamesa
MHI Vestas
Mingyang
15.4 Sewind
GE
Goldwind
Aerodyn
9.7
10.1 CSIC
9.2 9.2 9.4
Dongfang
Doosan
6.4 Envision
Guodian
4.4
Hitachi
Mitsubishi
Senvion
Sinovel
2018 2019 2020 2021 2022 2023 2024 2025 XEMC
Source: BloombergNEF. Note: Includes conditional, unconditional and preferred supplier agreements.
6 October 22, 2019Offshore wind capex forecast
2018 $m/MW
3 2.82 2.76
2.70
2.55 2.51 2.48
2.46 2.43 2.40 Transmission
2.38 2.35
1.93 1.87 Other
2 1.82 1.76
1.72 1.70 1.68 1.65
1.63 1.61 1.59
Installation
1 Array cable
Foundation
0 Turbine
2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030
Commissioning year
Source: BloombergNEF. Note: Transmission includes offshore and onshore substation and connecting export cable. ‘Other’ includes insurance,
engineering and management and contingency.
7 October 22, 2019What will drive costs
Offshore wind turbine capacity forecast Average project water depth
Turbine capacity (MW)
15 Water depth (m) 2019
Forecast 60
10
Average
40
Contracted
Projects
5
20
0 0
1990 2000 2010 2020 2030 1990 2000 2010 2020 2030
Commissioning year Commissioning year
Source: BloombergNEF. Note: Average depth across project area calculated relative to mean sea
Source: BloombergNEF. Note: Bold dots and line indicate the median. Error bars estimate the level. Includes only European projects in BNEF’s 2030 offshore wind forecast (web | terminal).
10-90 percentiles. Data excludes China Excludes floating wind projects.
8 October 22, 2019BNEF long-term outlook
Cumulative installations (GW) 177GW
China
U.K.
Germany
U.S.
19% Netherlands
CAGR Taiwan
Japan
France
South Korea
Denmark
India
22GW
Belgium
Poland
Ireland
Other
2018 2020 2025 2030
Source: BloombergNEF. Note: ‘Other’ -- Spain, Portugal, Italy, Finland, Sweden, Norway, Vietnam.
9 October 22, 2019The U.S. Aging fossil resources + high east coast power prices drive build 10 October 22, 2019
The U.S.
Ailing U.S. coal and nuclear
plants create a void
Coal and nuclear capacity by operating status U.S. coal and nuclear plants by long-run
(MW) operating margin, 2011-25 ($MW-day)
Retired
Retiring
Online, at
risk
Online, not
at risk
Source: BloombergNEF U.S. Coal and Nuclear Retirement Monitor. Note: ‘at risk’ and
‘not at risk’ based on estimates of forward operating margins. Source: BNEF
11 October 22, 2019The U.S.
New England has cheap gas
in summer…
Average ISONE merit order in July 2018 ($/MWh)
Oil
Coal (sub-bit)
Hydro pumped storage
Biomass
Coal (bit)
Gas (OC)
Gas (CC)
Nuclear
Hydro
Solar
Wind
Source: BloombergNEF U.S. Merit Order Maker Note: Plants arranged in order of ascending short-run marginal cost.
12 October 22, 2019The U.S.
…that becomes expensive in
winter
Hydro pumped storage
Average ISONE merit order in January 2018 ($/MWh)
Gas (OC)
Oil
Gas (CC)
Biomass
Coal (sub-bit)
Coal (bit)
Nuclear
Hydro
Solar
Wind
Source: BloombergNEF U.S. Merit Order Maker Note: Plants arranged in order of ascending short-run marginal cost.
13 October 22, 2019The U.S.
Timing is everything
Average hourly capacity factors in Vineyard Wind’s lease area, 2007-2012
80%
70%
60% 2007
2008
50% 2009
2010
40% 2011
2012
30%
20%
The evening peak
10%
0%
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Source: BloombergNEF, NREL.. Note: Historical wind generation from 2007-2012 comes from NREL’s WIND dataset.
14 October 22, 2019The U.S.
Power is most valuable in the
evening
Hourly price profiles in New England ($/MWh), 2013-2018
90
80
70
2013
60 2014
2015
50 2016
40 2017
2018
30
The evening peak
20
10
0
1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24
Source: BloombergNEF, NREL. Note: Showing historical prices from ISONE Mass SE hub.
15 October 22, 2019The U.S.
Merchant revenue estimate using
historical generation profiles
Estimated monthly merchant cash flows (nominal $m), 2021-2025
Capturing winter peak power prices
40
30
20 RECs
Energy
10
Capacity
-
Mar-22
Mar-23
Mar-24
Mar-25
Dec-21
Dec-22
Jun-21
Jun-22
Jun-23
Dec-23
Jun-24
Dec-24
Jun-25
Dec-25
Sep-21
Sep-22
Sep-23
Sep-24
Sep-25
Source: BloombergNEF. Note: Energy and REC revenue based on matching 2012 generation profile with ISONE Mass SE hub day-ahead power price futures and MA Tier I REC prices. Assumed Vineyard Wind could be
paid for full capacity value in winter and summer after 2022/2023 energy year.
16 October 22, 2019The U.S.
Vineyard Wind’s merchant value
looks close to its PPA value
Levelized revenue, 2021-2025
Nominal $/MWh $76.4
$75.2
$28.8 $28.8
$72.8
$42.8 $42.8
$3.7 $3.7 $3.7
Capacity Energy RECs Merchant PPA
Source: BloombergNEF. Note: Value of ITC not shown. Future revenues discounted by 8% annual rate. Median merchant revenue estimate from 2007- 2012 generation profiles. See BNEF’s U.S. merchant solar and
wind revenue analysis and the interactive merchant revenue tool.
17 October 22, 2019The U.S.
U.S. offshore forecast: 15GW
by 2030
Gigawatts States
2.5 OH
2.15 2.20
15.39
2.00 2.00 0.02
CT
2.0 1.77 2.30
0.43
1.60 RI
1.5 1.35
1.20 4.33 VA
1.0 0.02 6.39 NY
0.66 3.50
0.43 1.10
0.43 NJ
0.5 0.39 1.73 1.59
1.10 MD
0.03 0.03 3.20
1.60
ME
2016 17 18 19 20 21 22 23 24 25 26 27 28 29 30 Cum. Cum. Cum.
Commissioning Year 2020 2025 2030 MA
Source: BloombergNEF
18 October 22, 2019Copyright and disclaimer
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