Danish Offshore Wind Farm Installer Targets Push Into Asia

(Bloomberg) -- Denmark’s Cadeler A/S is targeting an expansion into the Asian offshore wind market as the technology is poised to grow after a crisis that threatened progress in some regions. 

So far the firm has focused on Europe where its ships helped to build some of the biggest projects, but it is now looking to expand to Asia, Chief Executive Officer Mikkel Gleerup said. After a $1.2 billion merger with Eneti Inc. to create the world’s biggest offshore wind installation company, it will list on the New York Stock Exchange on Wednesday. 

“With the combination, we are looking very, very intensively into Asia as well,” he said in an interview. “We think Asia is a highly interesting market, both Taiwan and South Korea, and to some degree Japan.” 

The offshore wind industry has had a lackluster year with canceled and delayed projects in Europe and the US leading to multibillion dollar writedowns. But global additions are forecast to be five times the total in 2022 by the middle of next decade, with Asia playing a prominent role in driving the gains, according to BloombergNEF. 

To meet that surge in demand, the combined group has ordered six large-scale newbuilds scheduled for delivery in the next few years. It also has four vessels active in the market today. Cadeler has an order backlog of 1.4 billion euros ($1.5 billion), said Gleerup. 

Its shares, which started trading on the Oslo Stock Exchange back in 2020, have advanced for 11 consecutive days. They rose 2.4% on Tuesday morning. 

The stock is up more than 10% this year, in contrast to declines seen elsewhere in the offshore wind industry. While the US listing was also a requirement of the merger, “our business can certainly benefit from being listed in the largest capital market in the world,” Gleerup said. 

The firm was founded in 2008 and has installed foundations and turbines at large sites including Orsted A/S’s Hornsea 2 off the UK coast, and Vattenfall AB’s Hollandse Kust Zuid in the Netherlands. Both utilities were caught up in the industry’s recent malaise, with Vattenfall saying in October that industry costs surged about 40% in the past 12-18 months. 

Still, Asia hasn’t been immune to the issues hitting the industry. Companies have posted losses and pulled investment from projects in South Korea and Taiwan due to inflated costs and supplier challenges, according to a recent BNEF report. 

But there are now more positive signs for the industry, Gleerup said. They include longterm interest rates that are starting to trend downward, which is especially important for capital-intensive industries such as offshore wind. Politicians are realizing that the industry needs more support, and the UK has upped its support prices for new wind parks at sea. 

“We have all learned something from this process and this period we have been through, but I think that we are seeing light at the end of the tunnel,” Gleerup said. 

(Updates with shares from sixth paragraph.)

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