Marine Maintenance Synergies - Sharing costs within new market spaces
Global Marine Group, Chelmsford, UK
Although there have been power cables in the marine environment for many decades, until fairly recently they have been relatively few in number, predominately national or short haul international cables and in terms of total kilometres rather limited when compared with telecoms cables
The financing of power cable repair has rested with the insurance industry, which because of the relatively limited number of cables, and more importantly faults, has been a model that the majority of parties (owners and insurers) have been content with.
The growth in offshore wind power has led to a significant increase in power cable sea bed kilometres to both service and connect to their respective national grids along with the number of international interconnector links necessary to harness and transmit electricity between European markets. This has led to both an increased risk profile for power cables, and correspondingly more faults, whether from manufacturing or from third party aggression and hence a marked increase in the number of insurance claims.
Increased costs and liability have caused stakeholders to look at ways of reducing costs and strengthening the supply chain to enable a more rapid and streamlined response time, noting that within insurance based repair models, the supply of repair services incurs a significant delay (months) between the fault occurring and a repair being undertaken.
This abstract outlines the case for merging submarine cable repair services e.g. telecom, power, O&G etc. offering a chance for industry to achieve effective, economic and timely cable repairs.
Traditionally, markets have relied upon self-insurance adopting zone or private maintenance arrangements. The cost of most telecommunication repairs varies between £250K and £1.2M. Power cable repairs costs are frequently in the multiple of millions.
This level of expenditure is understandable if necessary to divert a dedicated specialist installation vessel from existing activities and do not consider the cost of service interruption; this was calculated for a 300MW UK windfarm in November 2014 to be some £3M to £12M per month.
This paper examines ways of reducing costs and strengthening the supply chain to enable a more rapid and streamlined response time.
Creating a sustainable and shared pipeline of work, rather than a cyclic contracting environment helps to keep a critical mass of skilled people and assets available at a reasonable cost base. Power cable owners would see a reduction in their repair costs, telecoms cable owners would benefit from enhanced Dynamically Positioned (DP2) tonnage.
The insurance industry would be able to confidently underwrite a range of cable failure mechanisms with a greater certainty of the likely repair cost risk which should ultimately lead to lower premiums and reduced O&M costs for the offshore power assets owners thus making the industry more stable and attractive to a predominately risk averse investor class. Ultimately the economic benefits would flow through to the energy consumer as lower electricity bills.
There are many cost and availability advantages to power and telecom asset owners in repair convergence, but to release maximum benefits owners and regulators need to consider the challenges and difficulties of operating in a marine environment and not attempt to apply shore based frameworks to a very different operational plane.
Dual market operation will help create a more stable and sustainable supply chain, in particular related to skill availability and future asset availability. Power and telecom convergence will not necessarily be attractive in all areas, only those with a critical mass of renewable assets or a concentration of hydrocarbon activity. There is a real opportunity for a reduction in the power asset owner's insurance costs which would ultimately benefit the British and European consumers.
Understand the market and sector differences in cable repair strategy and operations as well as their respective economic frameworks and the potential for beneficial convergence.