As the Offshore Substation (OSS) market continues restructuring to meet increased demand, Spinergie estimates that by 2035, over 260 offshore substations (AC and DC) will be in operation.
Building OSS is characterized by long lead times and large-scale fabrication. In response to growing demand in a high-risk market, industry players have adapted to these challenges through various strategies.
Strategy One: Acquisitions
A notable example of adapting to the shifting market is the recent acquisition of HSM Offshore by Eiffage Smulders. This acquisition will enhance Eiffage's capacity to deliver large EPCIC OSS projects in both the AC and DC markets.
Eiffage Smulders’s market consolidation efforts are not new, however. Since the end of its partnership with Equans—following the 2023 acquisition of Equans by direct competitor Bouygues—Eiffage has been expanding. In fact, it first entered the large DC substation market by acquiring the Hillebrand yard in Vlissingen. Simultaneously, at the end of 2023, the company announced a partnership with Neptun Werft (Meyer Group) to repurpose the Neptun Werft Rostock site for the fabrication of large HVDC topsides.
Strategy Two: Diversification
Beyond acquisitions, other OSS players have begun diversifying their offerings.
A key example is Atlantique Offshore Energy (Chantier de l’Atlantique in Saint-Nazaire), which officially entered the DC market last year by building 320 kV HVDC topsides. This is in addition to its long-standing HVAC offerings. Such a move, on smaller DC substations, allows the company to break into the DC market without expanding its fabrication space.
Strategy Three: Investment
OSS market growth has driven players to invest in new capacities.
Dragados Offshore will soon open a new yard in Campamento, southern Spain, to accommodate an increasing order book for DC substations. Discussions are also underway regarding the reactivation of its Mexican yard to produce associated jacket substructures.
Strategy Four: New players
The market's attractiveness has also drawn new players.
CRIST, a shipbuilder in Poland, secured its first EPCI contract for the HVAC OSS of Ocean Winds’ BC-Wind project, marking its entry into the AC market.
The state of the market
Market growth is not the only factor driving these strategic shifts. OSS fabrication remains a high-risk sector with limited profit margins. Long fabrication durations (more than two years for large DC OSS) and bottlenecks in HV component supply create significant lead times.
Additionally, the size of topsides necessitates large yard space, a sizable workforce, and complex fabrication planning. Furthermore, OSS topside fabrication is in direct competition with O&G fabrication, either topside or even FPSOs (for large DC topside).
The oil and gas market may currently be considered as a more profitable market, with historic players proposing important investment capacities. This is creating a bottleneck on yard capacity for OSS fabrication. As a result, wind developers are increasingly shifting risk to suppliers by generalizing EPCIC contracts. Consequently, pure manufacturers must form partnerships with heavy-lift vessel managers to secure these contracts. Companies offering installation assets capable of handling topsides from 2,000 tons up to over 20,000 tons for DC units are scarce.
These risks have also led some historical players to strategic decisions. CS Wind (formerly Bladt) is refocusing its core business on transition pieces (TP) and foundations, more profitable and less risky. In contrast, Heerema, which owns a heavy lift vessel fleet, has restarted OSS jacket fabrication at its yard in Vlissingen. The demand from wind developers for EPCI solutions may push the T&I company to reinvest in OSS fabrication activities, which it had ceased in 2019.
Read More: Watt’s Up with OSS? An examination of offshore substations and what to expect in the near-term future
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