Wind

First 'Made in America' offshore cable deal on table as Orsted puts wind in Skipjack sails

Danish sector pacesetter proposes to build manufacturing facility in Maryland with Hellenic Cables as part of $400m capital spend in state's supply chain

Hellenic Cables cablelay vessel
Hellenic Cables cablelay vesselFoto: Hellenic Cables
  • Tim Ferry

Global offshore wind power pacesetter Orsted has sweetened its bid to build the 840MW Skipjack 2 project in the US Atlantic with the promise of $400m in capital investments in the state of Maryland, including a first-of-its-kind cable manufacturing facility that would generate hundreds of local jobs and help close a crucial gap in sector’s nascent supply chain.

The Danish developer has proposed to tie up with Greek contractor Hellenic Cables for the $140m facility, which would be located next to the planned wind hub at the Tradepoint Atlantic industrial centre in Baltimore, with the aim of producing up to 1,000km of inter-array lines a year for its upcoming projects.

Construction of the cable factory, a 52,000m2 (550,000ft2) facility, could start as early as next year, creating over 300 new jobs, but is contingent on the approval of the Skipjack 2 proposal by the Maryland Public Service Commission (MPSC), which issued a call for proposals in January for 1.2GW of offshore wind capacity by 2030.

“These investments are further demonstration of Orsted’s broader perspective and interest in establishing Maryland as a key contributor to the broader US offshore wind industry to ensure sustainable economic impact and jobs,” David Hardy, CEO of Orsted North America, told the MPSC at a hearing on the project in August.

Economies of scale

The move underlines Orsted’s commitment to not only win the Skipjack 2 project but to take advantage of economies of scale throughout the US sector, as the developer has the largest project pipeline in the region at 4.1GW and is expanding its manufacturing footprint throughout the northeast.

The wider resonance is that the US offshore wind sector needs to rapidly expand its supply chain in the northeast given the forecast ramp-up in the market over the next decade as the first wave of gigawatt-scale projects is built in line with ambitions set out by the White House earlier this year.
Both segments of high voltage subsea cable sector, including inter-array cables which link the turbines, and higher voltage cables that carry the total production to onshore substations, are expected to “treble” on a global pipeline that Oslo-based Rystad Energy forecasts to reach 250GW by of the end of this decade, Alexander Fløtre, the analyst group's head of offshore wind research told Recharge.
To reach the Biden administration’s offshore wind capacity goal of 30GW by 2030, the US will need 979 miles (1,575km) of cable, according to the 2021 Offshore Wind Market Report recently released by the US Department of Energy.

Combined with rising demand for fibre-optic cables, “you could say that it is a golden era for cable suppliers,” said Fløtre. However, the market remains tight as the sector is dominated by only a handful of players, including Nexans, Prysmian, NKT and JDR Cables.

Athens-based Hellenic Cables, a subsidiary of Cenergy Holdings, has not been among the larger players in the sector but has recently made strong strides forward in the market, including winning its biggest contract ever for 650km of 66kV inter-array cables for the UK’s giant Dogger Bank offshore wind farm phases A & B, via construction contractor DEME.

Orsted’s choice of Hellenic for the Skipjack 2 project may reflect aligned strategies by the two firms, the developer told Recharge: “Orsted and Hellenic have a longstanding supply chain partnership, and we are proud to expand that partnership – and help enable Hellenic’s entry in to the US market – through the development of this facility.”

Fløtre suggested that the investment in a US-based Hellenic plant could also play into the developer’s strategy “to increase competition and cut costs in the longer term”, noting “Orsted’s choice of Hellenic Cables… may also be due to a desire from Orsted to increase their bargaining power in the cable sector, by making the market more distributed.”

More players in an industry that will see rapidly rising demand may prove to be the hedge that Orsted needs to ensure the long-term viability of its project pipeline.

Maryland has two offshore wind projects currently under development, Orsted’s 120MW Skipjack 1, as well as the 270MW MarWin project, owned by US Wind, a subsidiary of Italian energy firm Renexia, which is also based in Tradepoint Atlantic and has issued a competing proposal in this second round for all 1.2GW on offer with its Momentum Wind project.
(Copyright)

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Published 23 September 2021, 12:13Updated 27 September 2021, 16:23
USOrstedMarylandHellenic CablesRystad Energy