Ørsted warns of £350M bill to repair array cables in its offshore wind farms

Ørsted has warned that it expects to pay out an estimated DKK3 billion (£350 million) between now and 2023 to take remedial action on damaged cables within up to 10 of its wind farms offshore of the UK and Europe. The so-called ‘array cables’ will have to be repaired or replaced.

The cables have been damaged because the cable protection system (CPS) is in movement across rocks that have been placed on the seabed around the foundations to avoid seabed erosion (so-called scour protection). This abrades the CPS and in the worst-case scenario causes the cables to fail.

The company said it was taking a two-phased proactive approach to ensure the long-term integrity of the cables.  In the first phase the CPS is stabilisated to prevent further degradation and in the second phase damaged cables will be repaired or replaced. Ørsted said, “Stabilisation will deliver the optimal value risk management in the short term to prevent further damage and can likely eliminate the need to repair or replace most of the less damaged cables in phase two.”

The stabilisation activities will require periods of downtime which the company described as ‘limited’. It said investigations would continue on the issue and the remediation measures needed, including the impact in relation to suppliers, partners, and insurance.

The company said the early cost assessment would be revised and the largest cash outflows would be in 2022 and 2023. The estimate includes  a warranty provision of DKK 0.8 billion (£93 million) to cover potential costs towards partners, and one third is expected to be capitalised.

The warning came in a first-quarter update from the company which also said earnings from its operating  offshore and onshore wind farmswere in line with the same period last year. Offshore, more wind farms in operation (adding generation from Borssele 1 & 2 and CfDs for another 400 MW of generation from Hornsea 1)  were offset by significantly lower wind speeds.  Overall, average offshore wind speed fell from 12.1m/s to 10.5m/s .

Availability rose from 93% to 95%, a major factor in lower availability in Q1 2020 being cable replacement at Hornsea 1.

Further reading

Longread: take a deep dive into offshore cable risks

Moody’s downgrades Gwynt y Mor Ofto to Baa1, saying uncertain cable repair costs will drain reserves

BritNed interconnector expected to be out of action until 22 April; cable fault blamed

From the archive: OFTO performance examined

Cost pressure in the offshore wind sector ‘could drive up disputes’

 

 

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