Clarksons Renewables Offshore Wind Project and Vessel Newsletter

Week 49

HIGHLIGHTS OF THE WEEK Renewable Energy Stocks Surge Amid Shifting Interest Rates by Jonas Shum, Managing Director Clarksons Securities.

The offshore wind industry and renewables in general, grappling with challenges posed by factors such as interest rates, inflation, and supply chain issues, are witnessing a potential shift in their narrative, particularly concerning interest rates. Notably, bond traders are indicating a more than 50% probability of a Fed rate cut by March of next year, fully pricing in cuts by May. This shift has been accompanied by a substantial decline in long-term treasury yields, with the US 10-year treasuries falling to 4.21%, from the peak around 5%.

Developers, who were adversely affected by rate hikes over the past two years, have emerged as the primary beneficiaries of this changing interest rate narrative. Recent stock performances reflect this reversal, with Aker Horizons, HydrogenPro, Bonheur, and Scatec posting strong gains in the share price. The interest-sensitive developer subsegment is leading the charge in stock performance, signaling a positive response to the declining interest rates.

The recent stock developments in the renewables sector, driven by a changing interest rate narrative accompanied by a notable decline in interest rates, underscore the importance of closely monitoring interest rate trajectories. The historical context provides insights into potential economic shifts, emphasizing the need for vigilance in anticipating their impact on various sectors, including renewables.

Thus, understanding and reacting to evolving interest rate trends remain imperative for informed decision-making and risk management in the market. Combined with supply chain costs easing, further falling interest rates are likely to be positive for the renewables industry.

OFFSHORE RENEWABLES NEWS

CBED has acquired two service operation vessels (SOVs). The SOVs, Wind Evolution (formerly Vos Start) and Wind Creation (formerly Vos Stone), are due to be delivered to the company at the end of Q1 2024. Following delivery, both Wind Evolution (formerly Vos Start) and Wind Creation (formerly Vos Stone) will be dry-docked for refurbishing, name change and painting according to the CBED fleet design. The SOVs will be ready to take on new walk-to-work, inspection, maintenance and report and subsea projects starting in Q2 2024. Source: CBED

Cadeler has lowered the minimum acceptance condition for Eneti, suggesting that the merger will go ahead. At the end of this week, Cadeler announced a one-week extension of their stock-for-stock offer for Eneti, after Eneti shareholders voted in favour with 78.25%. The offer will now formally expire on 14 December 2023. Cadeler simultaneously announced that the minimum acceptance condition has been lowered from 85.01% to 70%, which Clarksons Securities Renewables believes indicates that everything is in place for the merger as the new threshold has already been exceeded. After the expiry of the offer period, Cadeler intends to initiate a squeeze-out merger of the remaining Eneti shareholders who have not voluntarily exchanged their shares. This will be done through a subsidiary of Cadeler. Such a squeeze-out will be subject to Marshall Islands law. The expected settlement date for the merger is now 19 December 2023. Source: Clarksons Securities Renewables

Masdar has made three offshore wind power deals at COP28. Masdar has signed three contracts in the offshore wind energy sector at COP28. One of these agreements is a strategic partnership with RWE for the Dogger Bank South project in the UK. As part of this co-operation, Masdar secured a 49% stake, while RWE retains control of 51%. The transaction, which is expected to be finalised in the first quarter of 2024, subject to approvals, is a key step in the expansion of offshore wind capacity in the UK.

Dogger Bank South, located in the North Sea, comprises two 1.5 GW wind projects with a total capacity of 3 GW. Masdar's involvement in the final consultation phase of these projects emphasises the company's commitment to playing a key role in the development of sustainable energy solutions. At the same time, Masdar entered into a global alliance with Iberdrola worth 15 billion euros. This strategic collaboration aims to jointly invest in offshore wind and green hydrogen projects, focussing on key markets such as Germany, the UK and the US. Building on the success of its joint venture in the Baltic Eagle project in Germany, the alliance is considering a potential co-investment in the 1,400 MW East Anglia 3 offshore wind project in the UK.

Masdar could hold a stake of up to 49% in this project. The East Anglia 3 project, which is scheduled to be fully commissioned in the fourth quarter of 2026, has been awarded a 15- year consumer price index-linked contract for difference by the UK government, cementing its position as a reliable source of clean energy for more than 1.3 million UK homes and 2,300 jobs. Masdar also signed an agreement with the Jordanian Ministry of Energy and Mineral Resources.

This agreement includes the joint development of a 1 GW wind project with an integrated battery energy storage system (BESS). In addition, a memorandum was signed to explore the feasibility of building a green hydrogen plant. This initiative includes a comprehensive study to determine the feasibility of a green hydrogen project near the port of Aqaba. Source: Masdar

Jan De Nul Group, in partnership with LS Cable & System and Denys, has signed contracts for two 525 HVDC cable systems for the grid connection projects BalWin4 and LanWin1. These contracts are the first to be executed under the long-term framework agreement established earlier this year with TenneT. The scope of the projects includes the design, manufacturing, transport, installation, protection, and testing of three 525 kV cable systems linking offshore wind farms to the onshore grid via the BalWin4 and LanWin1 connections. Jan De Nul will handle the transport, installation, burial, and protection of offshore cables, utilizing specialized vessels like the recently ordered XL cablelaying vessel, Fleeming Jenkin. LS Cable & System will be responsible for designing, manufacturing, terminating, and testing all cables, while Denys will manage the civil and cable pulling aspects related to the onshore cable routes. In total, more than 1,000 km of HVDC will be designed, manufactured, transported, installed, protected, and tested for these two projects. Source: Jan de Nul

Japan’s Kansai Electric Power Company (Kansai) recently joined the Source Galileo, Odfjell Oceanwind, and V?r Energi consortium for a floating offshore wind initiative near Norway's Goliat platform. The GoliatVIND project, positioned 95 kilometres from Hammerfest at a depth of 3- 400 meters, aims to add 320 GWh of renewable energy to the region. Odfjell plans five turbines, each with a 15 MW capacity, and targets operational status by 2027, utilizing the Goliat platform's existing power cable to connect to the mainland. The initiative demonstrates floating offshore wind technology in Norway, meeting the growing demand for electricity in the region without major land interventions. Source: Offshore WIND

Korea Southern Power (KOSPO) and Equinor have signed a memorandum of understanding to explore possible co-operation on offshore wind projects near Chuja Island in South Korea. Under the agreement, KOSPO will work with the Norwegian state-owned company to develop potentially significant offshore wind projects near Chuja Island. The collaboration is expected to enhance KOSPO's capabilities in large-scale renewable energy projects by sharing expertise in the construction and operational management of offshore wind turbines. Equinor has recently entered into two other agreements with Korean companies, one for the 750 MW Ulsan Firefly floating offshore wind farm and the other for the Hoopoong and Chujin wind projects with a capacity of up to 1.5 GW, located approximately 10-40 kilometres east and west of Chuja Island. Source: Offshore WIND

Great Lakes Dredge & Dock Corporation has been awarded a third rock installation contract to undertake cable protection on an offshore wind project off the East Coast of the US. The company has already received contracts for foundation stabilization. This contract represents a new form of utilization for its vessel, which is currently under construction. Great Lakes will use the first Jones Act-compliant subsea rock installation vessel, Acadia, which is being built at Philly Shipyard to execute the project. The project scope includes procurement of rock from the company's US supply chain, transportation to and from the project site, and installation of the rock to support the windfarm's infrastructure. Operations on the project are expected to commence in 2025 and are expected to continue into 2026. The project remains subject to the client’s final investment decision. Source: Clarksons Renewables Intelligence Network

Vattenfall and BASF are in advanced and exclusive discussions to partner on the Nordlicht 1 and 2 projects through a sale of 49% of the project shares to BASF. Both parties signed a memorandum of understanding to formally express their joint ambition. Vattenfall will use its share of the fossil free electricity to supply its German customers. BASF will receive almost half of the produced electricity and supply its chemical production sites across Europe, in particular Ludwigshafen. The Nordlicht wind park zone is located 85 kilometers north of the island of Borkum in the German North Sea and consists of two separate sites: Nordlicht 1 with a capacity of 980 megawatts and Nordlicht 2 with 630 megawatts. Vattenfall develops and constructs the Nordlicht sites. Once fully operational, their combined production is expected to be around 6 terawatt hours (TWh) per year, equal to the electricity consumption of 1.6 million German households. Signing of the transaction is expected in the first half of 2024. Pending a final investment decision, which is expected in 2025, construction of Nordlicht 1 and 2 will start in 2026. The wind farms are expected to be fully operational in 2028. Source: Vattenfall

Parkwind celebrated the inauguration of its 250MW Arcadis Ost 1 wind farm in Germany with a ceremony in Berlin. Parkwind and its partners recently completed the installation of the last of 27 turbines at Arcadis Ost 1 in the German Baltic Sea, achieving a world first with the completion of an offshore wind farm installation without the use of jack-up vessels. By using selfpropelled floating cranes and the world’s latest and largest installation vessels the ships were able to maintain their floating position without the use of tugs or anchors. Source: Parkwind

Van Oord has completed the installation of the Hollandse Kust Noord offshore wind farm. The offshore wind farm is located 18.5 kilometres off the west coast of the Netherlands near Egmond aan Zee and supplies over 1 million Dutch households with renewable energy. CrossWind, a joint venture between Shell and Eneco, commissioned Van Oord in 2020 with the engineering, construction, procurement, transport and installation of 70 wind turbine foundations, cables between the fields and the wind turbines themselves. Van Oord started the installation work in October 2022 and completed the entire scope within one year. Utilising its vessels such as Bravenes, Nordnes, MPI Resolution, Nexus and Dig-It, Van Oord worked with industry partners DEME, Seajacks and Cadeler. Source: Van Oord

DEME and Greek renewable energy developer and independent power producer FARIA Renewables have signed a cooperation agreement to explore opportunities and co-develop offshore windfarms in Greece. DEME and FARIA Renewables will join forces to assess Greece's maritime area, identifying optimal sites for offshore wind development. They will conduct in-depth research and exploration, engaging with stakeholders and local communities. Simultaneously, they will support and create synergies with the domestic supply chain, ultimately developing successful and competitive projects. The Greek government recently announced the draft ‘National Offshore Wind Farms Development Programme’ which is overseen by the Hellenic Hydrocarbons and Energy Resources Management Company (HEREMA). The programme defines eligible organised development areas and estimates a capacity of approximately 4.9 GW of offshore wind projects that can be developed in the mid-term (up to 2030-2032), excluding the marine area between Evros-Samothraki which is designated for pilot offshore windfarm projects. In addition, the programme estimates that a capacity of around 12.4 GW could be developed in the longer term (after 2030-2032). Source: Clarksons Renewables Intelligence Network

?rsted has completed the divestment of 50 % of the Gode Wind 3 offshore wind farm to funds managed by Glennmont Partners from Nuveen. Gode Wind 3 has a capacity of 253 MW and was awarded to ?rsted in 2017 and 2018 as two separate projects with a weighted average feed-in tariff of EUR 81 per MWh. Gode Wind 3 is currently under construction alongside the Borkum Riffgrund 3 offshore wind farm, where ?rsted and Glennmont are already 50/50 owners. Furthermore, Glennmont also co-owns ?rsted’s Gode Wind 1 offshore wind farm. Source: ?rsted