Offshore Wind Growth to Compensate Falling Demand for Marine Gensets in Shipbuilding

With most of Europe’s shipbuilding activity migrating to the Asian countries of South Korea, China and Japan, the traditional demand for marine generator sets has dipped. This shift, coupled with the Euro zone recession and financing difficulties, has further deepened the slump in demand for new vessels and thus, marine genset suppliers have been forced to find other avenues of growth.

New analysis from Frost & Sullivan, European Marine Generator Set Market, finds that the market earned revenues of €163.9 million in 2012 and estimates this to reach €197.7 million in 2017.

Although commercial, commodity vessels such as tankers and cargo ships are being built in low-cost Asian countries, Europe’s reputation for building high-value ships such as cruise ships, luxury yachts, icebreakers, offshore support vessels, and tugs has kept the shipbuilding industry alive. Another factor stoking the demand for ships and vessels, and eventually, marine gensets, is the increased oil and gas exploration and production activities as well as growth in renewable energy (especially offshore wind).

“In the future, wind farms are expected to be constructed further away from the shore and in deeper waters,” said Frost & Sullivan Energy & Environmental Research Manager Malavika Tohani. “With wind farms increasing in size, there will be a requirement for vessels that are highly specialized and fuel efficient, giving marine genset manufacturers a new customer base to supply to.”

Meanwhile, the demand for oil and gas is continuously rising, especially from emerging economies such as China and India. This has spawned demand for subsea equipment, as the number of offshore explorations for energy resources is multiplying. The need for boats and vessels to engage in these activities bodes well for the marine genset market.

The market has also got a boost from industry regulations and emission norms, which drive retrofitting activities therefore, the demand for gensets.

“Increasing emphasis is being placed on ‘green’ trends in the shipbuilding industry, the most important of which is greater fuel efficiency due to a rise in fuel prices,” noted Tohani. “However, lifecycle cost and other environmental concerns are also becoming important, thereby requiring greater R&D by engine manufacturers and subsequently, modifications by genset packagers.”

Overall, strong demand is expected for large gensets above 1 MW, with Europe focusing on manufacturing high-value, specialized ships and vessels.

Frost & Sullivan, September 3, 2013