Welcome everyone, to this virtual investor event focusing on renewables. Let me start with our usual disclaimer, that today's presentations include forward-looking statements that reflect our current views and are subject to risks, uncertainties and assumptions. The full wording of this disclaimer can be found in the slide pack. Today's session will be split into two parts, with a chance to ask questions at the midpoint and at the end. The presentations given today will be available to download from our website after it concludes. I'll now pass you over to John.
Good morning, and good afternoon to everyone, and thank you for joining us for our first virtual event. Over the last year, there have been many, many requests and a lot of interest in understanding our renewables in business and its associated strategy. We've had questions from analysts, we've had questions from investors, and we've had questions from our own staff. So our aim today is to discuss our view of the renewables market and our strategy as to how we intend to address the opportunities in offshore wind. Hopefully, we'll leave you with a better understanding of the important elements of this element of our business that will be a key to the energy transition strategy. We've planned to do this afternoon in five modules, with various members of our team covering the industry, our capabilities.
We've given you some case studies of some of the projects that we've done, a look at the floating wind market, and of course, the financial framework for the business today and moving ahead. The team have put a lot of effort into the event, and I hope you'll see it as a useful session for everybody to gain a better understanding of this business. But first, I'd like to start with a high-level view of Subsea 7's strategy and how renewables fits into the group. So first of all, Subsea 7 is a company based on a set of values, and our core values are shown on the right-hand side of this slide.
Historically, we've had five values, but in 2019, we introduced a sixth called sustainability, and that brought together all the relevant elements to do with sustainability and how we make sure we address that key stakeholder topic very, very well. What is Subsea 7 about, and what are we as a company? Well, our aim is to lead the way in delivery of offshore projects and services for the energy industry. And we know that that energy industry is very much an evolving one, where we can see the growth of non-hydrocarbons and a rebalancing of the hydrocarbons portfolio inside Subsea 7's business moving ahead. So for us, it's about how do we make that transition in the business, balancing hydrocarbons and non-hydrocarbons moving ahead. If we go ahead to the next slide, please.
We did get a lot of feedback, and a lot of very positive requests from, very relevant stakeholders, that we should do more work on sustainability and to give you better access to the messages and the actions that we're doing on sustainability. I was very pleased in the Quarter One this year to have published Subsea 7's very first sustainability report, and a copy is shown here on the slide and available on our website. The sustainability report is the bringing together a lot of the work that we've done in the company over the last year. On the right-hand side, you can see the key material elements of sustainability and how it affects Subsea 7 as a group.
The six key areas are health, safety, and wellbeing, business ethics, labor practices and human rights, the energy transition, our own operational eco-efficiency, and lastly, the ecological impact of the activities that Subsea 7 does in its various markets. So now let's look at the business and how we categorize the different sectors that we work in. We run Subsea 7 as three business units, which should be quite familiar to everybody on this call. The hydrocarbons CapEx business is traded under the Subsea 7 name, and that works in the SURF and conventional business. We also have a hydrocarbons life of field business that trades under the name of i-Tech 7. And lastly, the renewables business, which is the element that we're looking at today, trades under the Seaway 7 brand.
We look at how these different hydrocarbon and non-hydrocarbon elements fit together in our feature look at backlog. Today, I'm very pleased to say, at the end of Q2, we've got a $7 billion backlog inside the group, with around $2.2 billion in renewables and the remainder in the oil and gas sector. Now, let's look at strategy in a bit more detail. When I took over on the first of January this year as the Chief Executive of Subsea 7, I felt it was very important that we try to communicate very clearly and succinctly what Subsea 7 is about and our future focus areas.
You will have seen this messaging given in previous quarterly releases, and it's around the fact that we will have a hydrocarbons business, which is on the left-hand side of this slide, and a non-hydrocarbons business on the right-hand side of the slide. People that have followed Subsea 7 for a number of years know that we have run four parallel paths in the area of hydrocarbons, and it's all to do with what do we genuinely believe the subsea field of the future looks like. It's become clearer to everybody that making cost-optimized solutions for our clients in the hydrocarbon space is about how you link the system and its full delivery together, and deliver that as one package to the client. That is different elements which we've spoken to the investor community in the past. First of all, is our focus on early engagements and partnerships.
The final cost and the final performance of any field architecture depends on Subsea 7 becoming involved very early on, and working with our clients to optimize that field and optimize the infrastructure, both from a CapEx and OpEx viewpoint. We also, as you know, have many strong and long-lasting partnerships. Subsea 7 is the exclusive contracting partner for a number of oil and gas companies on a global basis. Secondly, we've always taken a view that system integration needs to bring together a set of standard products that we have in our portfolio, and how do we bring that product and technology thinking together, and how do we integrate it as a system? And we'll talk a bit further about some of the technologies that Subsea 7 have deployed in the last few years.
Thirdly, as you know, we were one of the pioneers of integrating SPS and SURF, and offering that as a package with our relationship with OneS ubsea and Schlumberger, which we created in 2015. Lastly, how we digitalize the delivery of our projects and long-term services to our oil and gas clients is also a key to how we deliver the field of the future. So those four elements are being brought together in the next few years, and will integrate further, and will be part of our hydrocarbon delivery. We feel very confident that we can work with clients to bring fields in at below $40 a barrel in the future. Now, let's look at the right-hand side. One thing Subsea 7 had is a choice, like many of our peers, in the industry, we had three choices as to how we look towards the energy transition.
Choice number one was to ignore it and just hope it went away. Second choice was just to sit on the fence and just see how it plays out. Thirdly, we have the path that we've gone down, which is we definitely believe that we should be a proactive participant in the energy transition. And that also has four different areas that we'll spend some time with you today explaining how all that fits together. Firstly, we've seen in the last year, and particularly in the last six months, our key oil and gas clients make very clear declarations of their view that they're moving very actively now in the energy transition. Our European clients have said they want to get proactively into renewables, as well as reducing the carbon emissions from their oil and gas fields.
Our North American clients are focusing very much on carbon reduction. Secondly, we know we have a part to play, our own Scope 1 emissions from our own activities. We need to make sure that our business in the future is sustainable and as efficient from a carbon, measurement system as we possibly can. Thirdly, we know that the industry is very much excited and looking at new technologies. Where does hydrogen fit in? And where does CO₂ fit in? And what opportunities do these new markets offer for Subsea 7? And lastly, we already have a very, very strong position in offshore wind, and the bulk of today will be around giving you more understanding of that sector. So now let's turn the page and just talk a little bit about the three elements that we won't be covering much in detail today in the energy transition.
So this is about the oil and gas, and how we assist our clients in a lower carbon environment in the future. Well, first of all, I think it's become very clear to everybody that gas is the key transition energy, mode, that the world will need to go from our world of 2020 to the world that we wish to have in 2050. So gas will have a high level of focus inside Subsea 7, working on gas field development and LNG projects as we move ahead. Secondly, we know that our clients are also looking at how they can digitalize the information streams and how they involve their contractors like Subsea 7, not only from an early engagement, but right the way through the construction and into ops and maintenance in the future.
One thing that we've done in the last year is to develop a Carbon Estimator tool that we use at tendering stage and at the early engagement stage to work with our clients, to give them a view of what the carbon estimate of the impact of that development will have, to allow them to make their choices, not only from a cost impact, a flow assurance impact, but also from a carbon disclosure impact. So that tool is running in parallel with the Subsea Planner, the tool that we developed with Schlumberger, that assists our clients in very quickly looking at many, many different ways of field architecture and laying fields out in their early engagements with us. Secondly, we've also done a lot of work on technologies.
We know that some of the technologies that we have in the industry are quite intensive in terms of energy usage and quite intensive in terms of CO₂ emissions. So if we look at the newest technology that we brought to the market in 2020, that is EHTF, which is a pipeline heating system that we have developed and deployed this year. It's already installed on Ærfugl and will be also installed in the US on Manuel at the end of this year. So that is really around trying to understand how these new technologies will assist our clients in taking their CO₂ emissions down. That technology is far more energy efficient than the DH technology that we used in the last few years in the industry.
So substantially less emissions on the FPSO to heat the same distance of pipeline than we would have done under old technologies. Lastly, electrification. We know that clients are very much looking at how they can electrify their oil and gas fields, and that's around, again, reducing the CO2 emissions from the development of oil and gas fields. We've been involved as a company in a number of the key power from shore projects that the industry has put into place in the last five years. We installed a 163-kilometer power from shore cable for Martin Linge in Norway a few years ago. We're also working today on an early engagement SIA feed study from Shell in Norway to electrify the Ormen Lange field and bring power to allow compression and oil late life pumping into that reservoir to enhance recovery there.
Lastly, as you might have seen, we have been selected for Hywind Tampen, the first floating wind development to power an offshore field for Equinor in Norway. So that's the lower carbon development and how we're assisting our clients on that. Now let's look at our own activities and the work that Subsea 7 does every day. So really, for us, we also know that we have a part to play in how the energy transition takes place, and we focused a lot on how do we maintain what we call Clean Operations. Clean Operations is a defined methodology in maritime engineering, where you go ahead and plan an activity to ensure you minimize the emissions and the associated CO2 releases from the activities that you do.
Subsea 7 has been running a clean operations campaign across its fleet for many years, and again, each year, we keep focusing on how do we improve that and how do we make sure that we track each campaign and track what we save. In 2019, we recorded over 3,500 clean operations across our fleet, with equivalent saving of around 20,000 tons of CO2. So clean operations are key to us. We know we're the biggest impact inside Subsea 7, and it's around how we operate our activities in moving ahead.
We know that as we move into the future, the digitalization of the activities of our fleet is also gonna be very, very important, and we are very much looking at how we can improve the fuel efficiency of the activities by better monitoring and better measurement of the activities moving ahead. One thing that we have done is the vessel you see on the right-hand side here, which is one of the largest hybrid vessels in the offshore industry. This is the Seven Viking, and she currently works for us today on the five-year inspection, repair, and maintenance contract we have with Equinor.
She is fitted with a battery system, which takes the very large bulk of the top of that vessel. Deck is full of batteries, and that allows the vessel to mix between low sulfur traditional fuels and battery backup for it to operate. She has given a sterling service in the last 18 months, and we're very, very pleased with the results that we got from her. We're seeing a 19% improvement in fuel efficiency, and that saved us around 2,500 tons of CO2 emissions in the last 18 months. Again, being bold, being proactive on energy transition is about making big investments in assets like this that can really show the way.
We also know that our fleet strategy for the future needs to say, "Well, if you can do it on one, can you do it on others?" So we currently have a study underway to look at the possibility of up to another four vessels that could also be quite quickly transferred into hybrid power operation. Lastly, just coming back to digitalization. I want to talk to you about another trend that we're pioneering in the industry, and we're seeing a lot of efficiency and better emissions coming from this. We now have three remote ROV operations where we run our ROVs from shore. So the ROV pilots, rather than spending time on an asset like shown here on the photograph, work from our offices and run the ROVs remotely from shore.
So using digital networks and very high-quality digital systems, we can run an ROV in 2,000 meters of water depth in the Gulf of Mexico from an office in Aberdeen. So again, new technology, new digitalization will really make a difference to the energy transition in terms of our own operations. If we change to the next slide, please. Let's talk about emerging markets and new opportunities for Subsea 7. Pictured here on the right is a carbon capture system that Equinor are looking to develop at the moment.
It's called Northern Lights in Norway, and Northern Lights is around taking the carbon emissions out of a very large cement plant, making sure that you scrub the CO2 out of that onshore, and then be able then to move that to an offshore location and then reinject that, in disused oil and gas fields offshore in the Norwegian sector. There is a pipeline system associated with that, and we'll be bidding that pipeline work in the next few months. That is actually out to the market at the moment. You need to remember as well, that CO2, onshore is very much a known market in the U.S. There are 6,500 km of pipelines already installed in the U.S. onshore sector for shipping CO2 around.
So for us, we're very interested in where the CO2 and CO2 sequestration go in the next five years, and what will be the opportunities for companies like Subsea 7 in working in CO2 handling? Hydrogen is also one of the new energy sources that we all read about that can really make a big difference in how we decarbonize the world in the future. We know that green hydrogen is very much dependent on renewable electricity to be used as part of its production in the first place. For Subsea 7, two very interesting markets which are coming, hydrogen and CO2, and our focus in the next 18 months or so is understanding the opportunities there, and how we will work and gain a place in that market. We have a long history of partnerships.
You saw us doing that with Schlumberger, One Subsea on the trees, where people in parallel industries come together in a new market, and there was no market in 2015 for integrated SURF and SPS to offer to our clients a different opportunity, and I believe that this is what we will do in both the carbon capture and hydrogen sector, that we will look for partnerships and complementary companies that we can work with over the next few years to offer new technologies for our clients. Lastly, in this sector, we do also have Xodus, which is our early engagement, externally focused company, which works very much with a number of our clients.
Today, Xodus is advising a number of clients on regulatory matters to do with carbon capture and hydrogen, as well as potential ideas for how to develop plants, both onshore in Europe, Australia, and in Americas, for handling carbon and hydrogen. So again, through Xodus, we get a good insight of which way the industry is heading on these emerging energies. Lastly, let's look at renewables, which is the bulk of today. So as you know, Subsea 7 already is a top-tier service provider in the fixed wind sector, and that is what today will be about. We'll be talking to you about our background and our history, what we've achieved, how the industry works, why we believe we have a part to play in this, and where do we go in the future.
You'll also hear today, during the various presentations, how we see floating wind coming together, what part we've played in it already, and what part we'll play with it in the future, and how we think that will fit together, but our logic is that the efficiency that we've seen in fixed wind should hopefully be with us in floating wind by around 2030, and at that point, we will also be a top-tier player in the floating wind sector. As I mentioned briefly, on the new energy sources, both Xodus and 4Subsea, 4Subsea being our digital IRM capability, company based out of Oslo. We also see a lot of capacity that Xodus and 4Subsea are now redeploying into the renewable sector.
It's very interesting that one of our clients in oil and gas already has 4Subsea to instrument up all their turbines and associated cables to give them a good understanding of what the future life of those, elements of the renewables fields will be coming together, which is what we do today for flexibles through 4Subsea for them in the oil and gas sector. Xodus has a very good brand reputation and a very good track record of providing support for early engagement activities in renewables. And lastly, over the next few years, we will be putting more of our R&D money and more of, more of our investment money inside the renewable sector to help us make sure that we are relevant with technology and at the cutting edge of where that industry will go to.
With that overview and introduction of Subsea 7's strategy and which way the company is heading, I'd now like to pass you over to Steph McNeill, who'll give you a better understanding of the offshore wind industry. Thank you, Steph.
Okay, good afternoon, and thank you, John. As John said, I'm Steph McNeill, and I lead the renewables business unit here in Subsea 7. I've been in the offshore energy business for over thirty years now, and I was one of the founding members of the Subsea 7 renewables business unit when we started it back in 2009. I'm going to start our session this afternoon on renewables with a short introduction to the market and to explain to you some of the basics. When we look here at the total global energy mix, we know there are various scenarios and many different projections on the evolution of this total energy mix.
However, while there is some variance, they do all show that a significant growth is anticipated in renewables in the next decade, while at the same time, over the same period, fossil fuels are expected to gradually reduce their share. So when we drill down into renewable sources, what we see today is that hydroelectric currently has the largest slice, but this has a limited remaining capacity for growth. Onshore wind, we see, is strong, and it will continue to grow. However, limits on turbine size and competition for land use mean that it's already approaching saturation in some early adopting regions like the UK. It has got a relatively high cost, and it requires a high level of subsidy, and we now see that onshore wind is starting to lose out to other forms of renewable energy and offshore wind in particular.
Solar, we see, is fast becoming the largest source of renewable power, and this is driven by significant improvements in efficiency and a reduction in cost. But finally, we see offshore as the new source of large-scale energy. While it's still at an early stage of development, it's showing today to be on the fastest growth trajectory. So if we drill further into the offshore renewables slice, what we see is it's dominated by far by bottom-fixed offshore wind today. Wave and tidal do have massive theoretical potential, but unfortunately, costs of development are very high, and we see no imminent signs of cost reduction. And finally, as John said earlier, we see floating wind is starting to emerge, and again, it has a fast growth potential, and it, we believe, will be probably the next most significant source of energy with the highest potential for growth.
Now, obviously, these free and limitless natural supplies of energy are a great thing on our journey to a carbon-free future, but they're not without their challenges. By their very nature, obviously, wind and solar, these power sources fluctuate significantly, so they're not always available when we need them, exactly where we need them. So because of this intermittent nature, there is a limit to how much we can rely on them as they grow as part of our energy mix. So other technologies will need to evolve to allow us to store this energy and to have it available when required. So we see already great advances in battery storage, and we see the impending incoming supply of green hydrogen emerging as parts of this solution. So we're pretty confident they will come with us, and they will allow us to continue to expand the renewables source.
So when we look at the market, and here we see the global expansion that is forecast for offshore wind expressed in gigawatts. So it's true to say that this is a market that is still in its very early stages of global development. So up to today, Europe very much has led the way in the development and the commercialization of offshore wind, but it still has massive growth potential. Within Europe, the U.K. has the largest planned growth in offshore wind. In the U.K., we completed Triton Knoll earlier this year, and we plan to be operational next year again on both Hornsea 2 and Seagreen. After U.K., Germany is the second-largest market we see in Europe, where we completed Borkum, and first power was achieved early this year.
And then we see the Netherlands as the third largest market in Europe, and we're going back out offshore next year to start our campaign on the Hollandse Kust for Vattenfall. France has been a little bit slow to start, but we believe it will be next, and we already have our team in place there, and they're currently working in supporting our second floating wind project in Norway, as John said. And then lastly, in Europe, for the moment, we see Poland is expected to follow, and we welcomed our first Polish employees, the Seaway 7 team, only last week. So then when we look outside of Europe, Asia is the next region we see seriously adopting offshore wind, and we see that being led initially by Taiwan. So we opened our office there back in 2018. We already completed Formosa 1 last year.
That was the first offshore wind farm in Taiwan. This year, we're out there working currently on Yunlin in Taiwan, pulling cables, and then later this year, we'll start to install the foundations for Formosa 2, and that will carry on through to next year. China has a significant and growing offshore wind industry as well, pretty much generally speaking, in shallow water regions, and for the moment, this is currently a closed market to us, although we believe this may change in the future when the developments start to move further offshore and into deeper, more challenging water, requiring a different set of skills. And then lastly, on our list today, we show the U.S. is leading projections to be the next region for large-scale offshore wind development.
We opened our office up there in Providence early this year, and we've completed our first U.S. project demonstrator, offshore Virginia, just last month. In summary, you see a large amount of the growth on this market is being driven by only a handful of countries. With huge global targets on energy transition to meet and so much undeveloped opportunity offshore, and quite frankly, no other plans to address it, we believe it's inevitable that many more countries will join the party sooner rather than later. We look next at the evolution of offshore wind costs. I apologize, this graph is a little bit busy, but I want to talk about the driving forces behind the growth in offshore wind, and a key driver is obviously cost.
So what you see here on this graph is an attempt to represent the evolution of the cost of both fixed and floating wind over time and by region. The different color dots represent the different regions. The graph along, the scale on the bottom, sorry, is the progression of time, running from two thousand and five to two thousand and twenty-five. And then the vertical axis shows a thing called the levelized cost of energy. So this is a term you may not be familiar with, but you do hear a lot in renewables, often abbreviated to LCOE for levelized cost of energy. And basically, it is a method of normalizing the estimation of the cost of an energy source. So we do this to allow us to compare different energy sources more easily on a like-for-like basis.
It's a little bit. You could equate it to the equivalent of using Brent Crude as a benchmark in the surf sector. What we see here, we've drawn an approximate trend line, but we see the average trend in LCOE, first of all, in fixed wind, has been downward. Just as an example, if you look 10 years ago, the typical LCOE for fixed offshore wind in the UK was $150 per megawatt hour, 10 years ago. Today, we see new developments in the UK have been sanctioned for as low as $50 per megawatt hour. If you think about it, over 10 years, the cost of production of offshore wind has gone down by a third.
Now, albeit that's in a mature sector like the UK, and not everybody can deliver costs, can deliver that level of cost of offshore wind today, but it does show you the trend as the economy and the market develops to support offshore wind in the region. So what has driven this massive reduction is a number of factors. Number one, I would say, is scale. The size of the wind farms, we've moved from small demonstrators, individual units, to much larger and larger farms, and obviously the economy of scale, as we put in more and more units, kicks in. One of the biggest factors, though, has been turbine size. So turbine sizes have increased progressively over the timeframe from being sub one megawatt to a megawatt, to two megawatts, up to recently nine megawatts.
Projects we're working on now where 12-megawatt turbines will be installed, and the latest generation of turbines is now 15 megawatts. So again, massive increase in the capacity of the individual turbines over this time period. Confidence in this market has increased. Offshore wind was a bit of a novel technology 10 years ago, whereas now the scale and the technology and the maturity and the confidence is significantly higher, and this has reduced the cost of finance. This is no longer... Investing in offshore wind is no longer a risky, but actually a pretty safe proposition.... And then finally, and I touched on it earlier, it's the evolution of technology and supply chain in the regions that have adopted wind, have allowed the LCOE to reduce as well.
So when you look at the market rate, now, it's impossible really for me to show the market rate as it's evolved over time, because it varies greatly, and it's different in every country for different geopolitical reasons. But in simple terms, what we see in the more advanced regions, that the LCOE of wind is approaching and is sometimes even below the market rate in the country, to the point that in the U.K. recently, offshore wind was quoted as being the cheapest form of new power across all sources of power within the U.K. We've seen also in the Netherlands, for instance, we've seen 10 years earlier than we'd originally expected, the first subsidy-free wind farms are actually being built with the Hollandse Kust in the Netherlands for Vattenfall, and Subsea 7 will be there installing the foundations and cables.
However, we have to be clear that some form of subsidy mechanism is absolutely essential in all regions to support and sustain offshore wind, fixed wind. However, the level and the amount of that subsidy has reduced rapidly in the last 10 years. Then finally, if we look here at floating wind. So floating wind today has a much higher LCOE than fixed wind, not surprisingly. But as this market matures and it moves further offshore beyond the reach of fixed wind, the LCOE of floating wind will progressively reduce. It's important to remember as well, that some regions and some areas don't have the seabed and the topography that will support floating wind, sorry, that would support fixed wind, and so floating wind is the only option.
A combination in reduction in LCOE floating wind and evolution into other regions will drive the LCOE and the market for floating as we go forward. So if we look now at what does this translate to in terms of investment, we allow for the increase in turbine size and reducing LCOE on planned developments, and even then, we still estimate a considerable growth in investment activity, as shown here. So even with the reducing LCOE, we still see considerable growth with a CAGR of 18% and a doubling in terms of investment over the next decade. So yes, we do see turbine sizes increasing, but at the same time, the size of the fields and the number of turbines that are being installed is growing rapidly.
So just to give you an example or a couple of examples to help understand, at the SSE Beatrice Wind Farm, where we landed the EPC contract back in 2016, there are 84 turbines of 7 megawatts each, so the total field capacity is 588 megawatts. So this year, we were awarded the contract, the EPC contract, for the SSE Seagreen Wind Farm, and there, there will be 114 turbines of 10 megawatts each, which gives a total of 1.1 gigawatts, practically double the size of Beatrice only five years later. And then when we look to the future, and we look at the SSE and Equinor development at Dogger Bank, development will start in the coming years, and there, they plan to have up to 270 turbines of 30 megawatts each.
So that will give us a total capacity for the field of 3.6 gigawatts. So a massive increase over a relatively short period of time, pretty much a 10-year lifespan, going from a 580 megawatt field to a 3.6 gigawatt field. And if it helps you to get your head around those numbers, I like to think of it as one gigawatt powers power. Sorry, one gigawatt is enough power for approximately 1.25 million homes. But it is a spiky market. If you look particularly where we are now in the early years in this market, it's very spiky. This is driven by subsidy rounds and the licensing rounds, basically, awards of acreage, where you can develop these wind farms.
And this spiky wind nature will continue at least until the middle of this decade, driven by the relatively small number of countries that are currently developing offshore wind. You see, in particular, the nature of what happens and provides lean years like 2020, where we've seen lower levels of activity. But we believe this spiky nature will become much smoother as we move into the middle of this decade and the level of investment and regions starts to kick up. Okay, so I think it's useful in order to understand this market. I think it's important to be aware of some of the key steps in the development of regional offshore wind markets. So to do this, we've prepared this sort of simplified generic model and timeframe to help you understand.
But I mean, I would highlight that this market does operate quite differently in every country, and it's important to study the rules in each country and the market and the mechanisms in each country separately, if you really want to understand this. But for today's purposes, I think this simplification will allow us to or help us to understand some of the key things to look for. So we're all aware of the global plans, the Paris Accord, et cetera, and the targets that have been set on a global basis to reduce our CO2 emissions. So what this in turn leads to is individual countries and nations setting their own targets. Having set their own targets, they then have to develop a plan for how they'll get there.
So when they conclude the offshore wind will be a part of that plan, they can then take some considerable time to develop the necessary detailed legislation and the processes to allow that market to develop. And key within that, obviously, securing a budget to provide the money for the subsidy, and then developing a subsidy mechanism. Also key in there is establishing a mechanism to identify the areas of the seabed that can be developed, when they can be developed, and how leases for those areas of seabed for the developments can be, can be awarded. So it's quite a complex process. It can be quite a challenge to get it going, particularly the first time you do it in a new region, and it certainly gets faster after the first time you do it.
What's helped is early pioneers, Denmark, the Netherlands, Germany, the UK, have put in place good systems that are well established, and we see other countries starting to copy these systems. But notwithstanding, it's you should not underestimate the effort required to get these processes off the ground. Certainly, as well, we find that societal expectations and pressures help a lot to oil these wheels. So potential, once the roadmap has been laid, potential developers then engage with this process, and they work, first of all, to secure a potential site. They have to define their project plans. What's very important here is to find a way to connect the development to the national grid. Typically, we find that these areas are not necessarily in areas with high areas of population, so connecting to the grid can be a massive onshore logistical, engineering challenge.
They have to start to establish their cost base, and they also kick off a very lengthy consent applications process. Again, these processes aren't without challenge, and it's certainly not smooth to get through all the consents the first time you go around this loop, and it still has its challenges even on the second and the third time. However, when the time is right, the developers will then start to intensively engage with the supply chain to help them detail their plans. When they're ready, they'll submit their bids and try to secure the subsidy necessary for their development to proceed.
Now, at this point, for the losers who don't secure the subsidy, having spent a lot of time and money, it's obviously quite a frustration, and then it's back to the drawing board, and typically recycle the plans and have another go at the next round of subsidy, which can be a number of years later. But then, for the developers lucky enough to have won a subsidy, the projects can then proceed through the FID process, the financial close, and the development can finally start to go ahead. So the detailed design is completed, construction starts, and finally, first power is achieved.
And at Seaway 7, we're involved, and we provide support, have provided, and will provide support at practically all stages through this process to varying degrees, right from we've engaged with government bodies at the early days when they're putting the rules in place. And then we support developers looking at potential sites, the sites for their developments, and then we carry out pretty much support and activities all the way through, right through into the field, being in operation. Okay. I think, again, to help understand the conversation this afternoon, to understand the market and get our capabilities, we've prepared here a simplified view of what an offshore wind farm looks like.
I'll start from the left, and I'll work my way out offshore to the right, and that's essentially the typical installation sequence, and these are the main, these are the main components. We see, first of all, the export cable, and that connects the onshore substation out to the offshore substation. We see the substation foundation and its topsides, and these are the main hub for collecting and transmitting power back to the beach. We've installed more of these than any contractor to date, to the best of my knowledge. Then the foundations and the transition pieces are installed next, and depending upon the design, we may or may not have to install foundation piles first, like we did in Beatrice, or as we're currently doing on Hornsea Two.
Then we connect all the foundations together with the array cables, and then from the array cables, the array cables link back to the substation. And then finally, last but by no means least, the turbines themselves are bolted on and plugged in, typically by others. I think it's useful for us to spell out what we see as some of the... From our contractor perspective, some of the key differences between, and some of the key issues relating to the design and installation of probably the three largest offshore elements to help understand contract awards. So starting with wind turbine generators themselves, I mean, without doubt, these are the most complex components within the field. However, these are supplied by others, and from our perspective, these are relatively standardized components with a common design.
In terms of the installation, it's mostly awarded as a subcontract to the turbine manufacturing contract. And then the installation project that comes out of that has relatively low engineering, supply chain, and project management content. And overall, we see these projects as having a lower level of complexity. When we then start to move below the waterline, though, and we get into the foundations and the array cables, typically here we see a much higher level of customization. These are awarded usually as a contract directly to a main contractor and are typically lump sum contracts. And what you have to do is carry out unique design checks, and a design process, and the fabrication, logistics, and installation requirements have to be tailored for each individual location for every site in the field.
It requires a high level of bespoke engineering and a very complex supply chain and project management activity. So overall, we see these projects having a higher level of complexity from our view. So I'd like to talk a little bit now then about the typical developer contract models, and I apologize if this is a bit confusing, but this is how it works. And for the offshore parts of the wind farm, developers have a wide range of contracting models depending on their preferences and the type of development. As you see here, there are many individual scopes of work, typically split across what we call four main contracting groups. So again, in order of installation, the first of these groups is offshore transmission, which covers everything from the onshore substation out to and including the offshore substation.
The second group then includes all elements related to the design, the fabrication, transportation, installation of the foundations. The third group covers supply, design, installation of the cables, including trenching, and the last group includes supply, installation, and commissioning of the turbines themselves. So some developers who have a lot of internal capability tend to segment the scopes and award separate contracts for each one of these elements, and then manage all the interfaces themselves in what we call a multi-contracting approach. However, as we see, because of the complex interfaces and the risks between these different elements, other developers who have less internal capability or capacity, or because the complexity of the field and the size is increasing, will often package these elements together in line with the main groups, as we've shown, creating EPIC or EPIC large contracts, as we've illustrated here.
And then as the field size increases, the interface risk and the clashes between the foundations and the cables, in particular, become very significant, and it's key to make this work smoothly in order to allow you to accelerate the development time. So we've already secured several, what we call integrated projects or integrated contracts, where we're combining a number of the elements of the foundation scope and the cable scopes together in a single contract package, which we call an integrated project. And then finally, because of the same complex interface between cables and foundations, we also see some contractors choosing to package all of the elements of foundations and cables together in a very large Balance of Plant EPCI contract, like Seagreen or Beatrice.
This obviously requires a large multinational contractor capable of significant project and risk management, coping with large numbers of interconnected scopes. Now, as we see it, as the market becomes increasingly global, as projects are becoming larger, becoming more complex, and the client base expands, this is where we differentiate ourselves, and we believe there'll be an increasing demand to be able to provide these integrated and EPC services. Then, if I look at where the money is spent offshore, here we give you a simplified view of what I would call a typical CapEx split. Now design, it's a relatively low cost in the overall development, but it's obviously strategically and technically very important.
So as John has explained earlier, with the capabilities in Seaway 7 or our partners in Xodus and 4Subsea, we have the full capability to manage the design from the concept through feed to detailed design. So the design, supply, and installation of the export export and array cables together is a significant portion of work. And again, here we have the capability and track record to deliver. The fabrication and the subsequent installation of the foundations is the largest scope available to a contractor, where, again, Seaway 7 have the capability and track record to manage. The actual turbine supply is the largest single element of spend, but this is strictly a scope for the turbine suppliers contracted directly to the developer, and this isn't an area where we can access.
The turbine installation, then, it's relatively small, but obviously a very significant element of the scope, but this is typically awarded to the turbine supplier, and it's not something in our sales set today. And finally, we have the manufacturers of substations, which is another very specialized element managed by the large electrical contractors. So altogether, we see that approximately half of the offshore CapEx is aligned with our capabilities today. So finally, for me, I'd like to touch briefly on our clients. And so here we show you our main potential clients today. So we show you here the top eight developers in terms of, first, their currently operated wind farms, then the developments that are under construction, the developments that have reached FID and will soon be under construction, and then their potential planned developments.
So we've supported all of them in the past with both their existing developments and currently have ongoing projects for all of the Big Four. We're carrying out Hornsea Two for Ørsted in the North Sea today and next year. We're carrying out Hollandse Kust for Vattenfall in the Netherlands, starting up offshore next year. We're on Kaskasi for RWE in Germany, and we're supporting Seagreen for SSE in the UK. Now, we expect the market to grow, obviously, and we expect to see more of the IOCs appear on this list, and this client base will grow. You see, Equinor are already there in the top eight, but we do expect to see Total, Shell, and BP join this list of leading offshore wind developers as we move into the future.
We have strong relationships with all of them already through our SURF business, and we're ready to help support them as they start on their energy transition journey. So that's me, and I'd now like to hand you over to Harke Jan to expand on our capabilities in renewables.
Thank you, Steph, and good afternoon, ladies and gentlemen. Let me start with a quick introduction. My name is Harke Jan Meek, and I'm the Chief Commercial Officer for Seaway S, based in the Netherlands, in our Zoetermeer office, just located outside the city of The Hague. So with the offshore wind market context nicely set by Steph just now, I will, in the next twenty minutes or so, talk to you more specifically about Seaway 7, how are we organized, our capabilities, and our strategy to position ourselves in this offshore wind market, concluding with a summary of what we have achieved to date and currently have ongoing. But let me start by taking a step back in time first.
There is a lot of attention and interest in renewables recently, among others, driven by the Paris Agreement on greenhouse gas emissions and the resulting global political and public focus on the energy transition, and we can only fully subscribe to that, as John clearly outlined in his opening statement. It is worthy, though, to highlight that we, as a company, have already been active in the offshore renewables business long before, with our first wind turbine foundation and substation being installed as early as two thousand and nine. As of today, we already have a ten-plus year journey behind us, during which we have established a long track record, and we'll talk about that track record later in more detail.
Let me now talk a bit more about Seaway 7, by showing you where our offices are based and where we manage our operations from. We have five main offices, four of which are in Europe, which currently still is the largest offshore wind market. With offices in the UK, France, Germany, and Holland, we have a strong local presence in all key European markets. This multi-location setup also provides us good access to a large and flexible resource pool. Our fifth office is our Taipei office that we opened about two years ago, initially to support our commercial activities, but now also it is a project office to support the numerous ongoing projects in Taiwan, and I will talk about those projects later.
With the development activity in the U.S. picking up significantly, we have also recently decided to establish a beachhead over there, and as such, opened a commercial office in Providence, Rhode Island. Currently, all office personnel accounts for about 500 people, with another 550 working offshore on one of our four vessels. We have two heavy lift vessels in our fleet, the Seaway Strashnov and Seaway Yudin. We have one cable lay vessel, the Seaway Aimery, and one installation support vessel, the Moxie. The Moxie typically works together with the Aimery as the dynamic duo, as we'd like to call it, which is nicely shown in the next slide. This slide basically visualizes the range of activities we perform with our asset, and you'll no doubt recognize the various wind farm components from Steph's earlier session.
At the bottom right, you can see the Seaway Aimery installing cables, after which the Seaway Moxie would be used for cable pulling, testing, and termination work, allowing the Aimery to already move on to the next cable, allowing us to optimize the cable installation cycle time. On the bottom left, a cable installation for a floating wind foundation is shown, reflecting the Equinor Hywind Tampen project, where we will execute the work in twenty twenty-two. We also have a separate session about that in the floating wind session later. In the back, you see the Seaway Strashnov installing a jacket foundation and the Seaway Yudin driving a monopile foundation into the seabed.
Although we have only two heavy lift vessels in our fleet, you will note the third vessel on the top right, which is the Seven Borealis, a vessel from the wider Subsea 7 fleet, to which we have access to as and when required, which, for example, was the case on the Borkum project a few years ago, where she supported the installation of transition pieces. One of the benefits for Seaway 7, to be part of the wider Subsea 7 group. If we then move to the next slide, I will talk you through how we're organized as a company.
We are basically set up to align with and mirror the client's typical contract models, meaning we are set up to offer standalone, specialized installation services for either heavy lifting or the cables, or we can combine them in integrated solutions, where we take away interface risks from our clients, and generally, we can also offer more optimized execution plans. In addition to the various scope combinations, we can offer also different commercial models ranging from transport and installation, to complete EPCI solution, whereby we also manage the design, the procurement, and fabrication elements. So the various scope and commercial combinations that we can offer are summarized in the next slide, here. Here you see our offering basically mapped against the various packages that are generally requested by our clients.
The table shows that with our capabilities, we cover a significant part of the offshore wind market out there, and it also visualizes what scope an integrated T&I or balance of plant EPCI would cover if we talk about those. Although the export cable scope is generally contracted as a completely separate package by our clients, with the cable manufacturers often executing the work with large, dedicated vessels, there are regular opportunities for us, though, to cable scope as well. Length of the cable is limited, and the scope can be effectively combined with the inner array cable scope. Our Coastal Virginia project, as well as the Yunlin projects, are good examples where we are currently executing the export scope as well.
So we talked about how we organized the Seaway 7 and what scope and commercial offerings we can offer, and how it is aligned with the specific market needs. So let me spend some more time expanding on our specific capabilities, and that make us deliver those services and underpin our value proposition to our clients. I would like to highlight four elements in that respect. Starting at the top left is our core competence and specialist expertise in transportation and in installation. What truly differentiates us, though, are our capabilities in project management, risk management, procurement, and engineering. Those are capabilities that are enablers to be able to successfully execute and deliver integrated EPCI projects.
As the resource needs in our project-based business are very cyclic, it is very valuable and beneficial to be able to have access to the wider Subsea 7 resource and asset pool, to complement or strengthen our capabilities for specific projects. In addition to the various skills and expertise required to run projects, we have another unique capability that is worthwhile highlighting, which is our front-end services. With the front-end services that, for example, comprise concept studies, environmental consulting, or digital solutions, we have an opportunity to engage with clients very early in the project, long before a tender would come to the market, and help them define and develop the project in the most cost-effective way. We actually find that it's probably through those early engagements with clients, that we can have the biggest impact on the project cost.
It is especially via 4Subsea and Xodus entities that are both part of the Subsea 7 family, but operate independently, that we deliver those services. Our fourth capability area is shown on the top right, and is about our capability and expertise to offer various commercial models, which require specific skills and capabilities, as well. To better understand the value of our offering and how we do fit in the market, I think it's useful to spend a few minutes on the competitive environment. So the first statement to make here, and probably the most important takeaway of this slide, is the fact that it is a very competitive market out there, with many active companies, so positioning of your company is extremely important.
So yes, offshore wind is an attractive, fast-growing market, yet a lot of parties are trying to get a piece of the pie there. The group of players is very diverse, though, with respect to expertise, background, scope, commercial offering, and what have you, and one can roughly divide all contractors in three groups, as has been done on the right-hand side of the slide here. The first group, or tier one, if you wish, are the companies that, like Seaway 7, can offer a full balance of plant scope, then you have Saipem, that focuses on foundation installation, both on T&I and EPCI basis, and thirdly, we have the group of companies that is offering specialist installation services, which is generally done on a T&I basis.
With the market growing so rapidly, as it currently does, and at the same time, the globalization dimension of new countries without an established supply chain coming into play, the context of offshore wind markets become more complex. We believe that clients, as a result, will see more and more benefits and value in integrated service offerings from reputable service providers. Being able to offer that like we do, provides a differentiating position. When we talk about this growth and globalization, let's zoom in on where we expect all this action to take place. We're moving to the next slide here. This graph is a visualization of the Bloomberg forecasts for projects to be developed in the 2020, 2030 timeframe.
So the vertical axis and bubble size indicate the market size, whereas the horizontal axis indicates the maturity of the market in the respective country. It should be noted that we have excluded China in this analysis, as we consider China a self-supporting market, which leaves very little, if any, excess potential for non-Chinese players. So if we then look at the graph on the screen, you will see that the UK and US are forecasted to be the two largest markets. However, although the market size is envisioned to be roughly the same, there is a significant difference between those two markets, and the difference is in market maturity. So the UK, with an established permitting and subsidy regime, and currently having around 40% of all the global offshore wind capacity installed in its own waters, is here ranked the most mature market.
The U.S. has a lot of potential, and a lot of activities are ongoing. Yet, with only a demonstrator project in place to date, and permit and environmental approval still outstanding for the first commercial wind farm, the market is less mature at this moment in time than the key European countries and Taiwan. So as we discussed in the beginning of my presentation, we have a local presence with local people in all of these key markets. And it is not just the presence in each market, we also have an established track record going with that, as you can see on this slide here. Most of our activities to date have been in Europe, where the roots of offshore wind reside, having executed numerous projects for both cables and foundation scopes under various commercial schemes and having worked for a wide range of clients.
We're also very proud to have been part of the first offshore wind farm that has been installed in Taiwan, where we installed monopiles foundations in 2019, and equally, we have been involved in the pioneering Coastal Virginia Offshore Wind Demonstrator project, offshore the US for Dominion and Ørsted, as recent as, as this year, so as of today, we have a proven track record in both the established as well as the main emerging markets. The graphic on the bottom left of this slide summarizes our track record to date. Impressive numbers that we are proud of, but probably more remarkable to realize is the fact that the foundation and cable numbers shown here are actually expected to double once we will have liquidated our current backlog, so let's have a look at the projects we currently have under execution then.
Very pleased, of course, to have a robust backlog in the North Sea, which is still seen as the largest offshore wind market going forward. Furthermore, the backlog comprises a range of different contract types, from a T&I to integrated and EPCI, highlighting again the importance of our ability to be able to deliver the range of of those services. So in the next session, we will present a few case studies to go into more detail on the various projects mentioned here. The second largest market outside Europe is Taiwan at the moment, so to have four Taiwanese projects in our current backlog underwrites our successful country focus on key markets, I think. Having discussed our track record and the projects currently in execution, the obvious next step is to talk to you about what is next.
So let's move to the prospect pipeline now. Which we can see here. So this slide provides a summary of our prospect pipeline, where we see a high level of tendering in Europe, Taiwan, and the U.S. Depending on the timing of the various governmental approvals, we expect that the first commercial U.S. projects will be awarded in 2021. Apart from fixed offshore wind tenders, we also see prospects for floating offshore wind emerging, which is a very interesting new development. And following the case studies on ongoing projects that will be presented after this session, we will also have a separated, dedicated session on floating wind, where Philippe will provide you a market overview and talk about our views and positioning in that market in specific.
With that, I would like to thank you all for listening, and I'll now hand over to Lloyd, who will kick off the case study session. Lloyd, over to you now.
Thanks, Harke. Let me start by introducing myself. My name is Lloyd Duthie. I'm Managing Director for the EPCI Business Unit within Seaway 7, based out of the Aberdeen office. I'm responsible for the win and execute of the large integrated EPCI projects. Moved into the renewables business unit in 2016. Let's move to the next slide. My move to the renewables business unit coincided with Seaway 7 being awarded the contract for the engineering, procurement, construction, and installation of the Beatrice Wind Farm foundations and inner array cables. At the time, Beatrice was the largest offshore wind farm being developed in the world, with 84 7-megawatt turbines situated off the northeast coast of Scotland. This brought unique challenges to the developer, including significant water depth range, along with complex and variable soil conditions across the site. This meant that one design would not suit all conditions.
The client, led by SSE, engaged early with Seaway 7 back in 2001, recognizing the value that we could bring to identify and manage the development risks for them. In May 2016, FID was achieved, and we were awarded the EPCI contract, valued at $1.3 billion. Let's move to the next slide. Coming back to some of these challenges and how we managed them, in engineering, we had to address the complex geology in the area, along with a water depth that varied between 35 and 55 meters. A common design for the whole site would have resulted in a conservative solution and impacted the project economics. Conversely, due to the variability across the site and the interaction with the turbines, a design for each location would not have been possible within the time frames available.
This was addressed through a balanced approach with five different structural designs, combined with a bespoke soil solution for each site. We managed to complete this within what was a very tight schedule. The project economics for the development relied on early power generation, and key to this was our ability to offer a staged completion on the design to allow the fabrication and procurement activities to get started within weeks of FID and maintain the schedule. This involved completing the design of the piles ahead of the jacket in a manner where the risk of interrelated change was eliminated. And in a similar vein, we were able to release the jacket design in three stages, with the top, middle, and bottom section of the jackets all phased in. Next slide, please.
The client's lessons learned from a previous project heightened their focus on quality, and Seaway 7, they saw our capabilities from oil and gas to manage this risk on a global footprint, which you can see in this picture. Where the risks were high, our focus extended down into the supply chain, with our presence being felt in over 55 companies across 11 countries to manage the quality but also ensure delivery onto the project on time. Next slide, please. The client's experience of our heavy lift assets on previous contracts was another key factor in selecting Seaway 7. Our industry-leading safety performance, combined with our assets, gave them confidence in our capability to address the key risks of completion on time, equipment reliability for the high number of foundations to be installed, and our HSE performance.
As an example, the piles for the jackets had to be installed within centimeter depth accuracy, and all to within a half a degree verticality. This level of accuracy requires significant subsea instrumentation to measure progress. When you consider the massive loads being applied to drive these piles, it would be a challenge to the equipment for a one-off operation. However, with our focus on the reliability, we ensure these key elements delivered for all three hundred and forty-four piles, and we achieved this with no breakdown. Including the array cables within our scope allowed us to address the engineering interfaces and optimize the foundation's steelwork, whilst also allowing us to optimize installation sequence and deliver early power generation to the client. Finally, our marine logistics experience was another aspect of our offering, which added value to the client.
With over twenty of our own vessels in the field at any one time, combined with the ongoing substation and wind turbine installation, we ensured that all operations, including those in the various jackets, continued without interrupting each other. Let's move to the next slide. So in summary, Beatrice is a world-scale offshore wind development. We've set the bar for these large projects, delivering on the various design challenges, managing a complex supply chain with a quality focus ahead of schedule and within budget. Next slide. Let's take us into our next and current ongoing EPCI project, the Seagreen Offshore Wind Farm. Next slide, please. Seagreen, SSE's next large EPCI project in Scotland, presented similar challenges to that in Beatrice. However, we knew we had to progress to be successful in what we knew was going to be a competitive climate.
Our Aberdeen office, having demonstrated the transferable capabilities from oil and gas to renewables on Beatrice, became the hub for our offering towards the client and supported their local content commitments for the project. In many ways, the project demonstrates the progression within the industry in such a short period of time. With approximately double the power generation of Beatrice, we have maintained the foundation cost at the Beatrice levels of $1.3 billion, while delivering 36% more foundations, with double the tonnage of steel and double the length of array cables. Our balance of plant offering, encompassing the foundations and array cables, combined with our performance in Beatrice, was a key factor in supporting our client, SWEL, in their successful subsidy auction and in their decision to award us a contract in June of this year. Next slide, please.
This progress was achieved through early engagement, again, with the client, and soils were once again one of the challenges. In this instance, bedrock was relatively close to the seabed and restricted the use of the driven pile approach we used on Beatrice. Supporting the client during FEED Suction casa were adopted that not only addressed the soil risk but also reduced the offshore installation timing and so weather risk there. Early engagement in the supply chain was a key element in our successful award. This allowed us to widen the supply chain, which allowed us the time to ensure we could select suppliers who we had confidence could deliver for the project, and we ended up with three fabricators from the Far East and Middle East to give us a balanced risk for the delivery of the 114 foundations.
Including the array cables within the Balance of Plant scope, followed the Beatrice model and allowed us to take advantage of our supply chain knowledge for the cables and bespoke assets to meet the client's needs. In this case, logistics management is arguably more challenging on Seagreen, given the supply location for the foundations and cables, and with over 2,000 vessel days, using some of the largest heavy transport vessels in the world, as you can see here, to bring the foundations, jackets, and cables to the North Sea prior to installation. This is in addition to the field logistics challenge associated with a just-in-time delivery to the heavy lift vessel and field for installation, and then followed by the grid vessel operations, rock placement, cable installation, burial, and finally, testing and commissioning of the system.
From contract award to completion, Seagreen will be complete within two and a half years. Thank you. And now let me hand you over to Philippe Glaser, who will go through some of our integrated projects with you.
Thank you, Lloyd. Good afternoon. My name is Philippe Glaser. I lead the Seaway 7 Renewables Business Unit in France, based in our Paris office. In particular, I look after the, our integrated projects, floating wind, and our clients based in France. I will talk you through one of our integrated projects, and then later, we share our views on floating wind. Next slide. Historically, our clients have either contracted cables and foundations together in a full BOP EPCI, or they follow a multiple contracting approach with multiple individual contracts, where they manage the interfaces. However, probably the most significant interface in the balance of plant is the installation of foundations and cable. As offshore wind farms become larger and installation periods become shorter, this interface becomes increasingly critical.
Therefore, in recent years, Seaway 7 have been working with our key clients to develop a third way, which is our integrated project solution. This approach will combine foundations and cables installation in a single offering. Vattenfall Hollandse Kust project in the Netherlands with 140 monopiles and more than 300 km of cable is a good illustration of it. Next slide, please. Working collaboratively early with Vattenfall, one of the leading developers in offshore wind. Together, we achieved a successful outcome on HKZ 1 and 2, helping them to win the auction. We supported them to achieve an optimized execution plan, leading to a lower cost solution for a subsidy-free development. Building on success with HKZ 1 and 2, we have been chosen by Vattenfall to be their partners again on HKZ 3 and 4, leading to further success when Vattenfall also won the auction. Next slide.
In total, for HKZ one and two, and three and four, we will be installing 140 monopiles and 325 kilometers of cables. Some of the innovations adopted reduced costs and helped Vattenfall to secure the project. Traditionally, monopiles were installed where a vessel is moored on the anchoring system. Seaway 7 developed an innovative installation methodology and trailer to allow monopiles to be installed while on dynamic positioning mode. This saves significant time during the installation by avoiding the need to deploy and to recover the moorings. Otherwise, towing floating monopiles to the installation site for sizable units, avoid significant transportation, transiting, on the works. Such installation methods led cost reduction. Our combination of innovative contracting model and technical expertise to optimize costs, led to this important contract for Vattenfall. Next slide.
Following on from these two Vattenfall projects, we have already secured on a similar approach, our third integrated project, Kaskasi, in Germany for RWE. Thank you, and then I will introduce Lars for the next subject.
Thank you, Philippe, for your previous presentation, and good afternoon, and welcome to this case study session related to the Hornsea offshore wind farm project. My name is Lars Mück, and I'm working for Seaway Offshore Cables in Germany. Our office is located in the city of Leer, one of the German shipping industry centers, and conveniently located along the river Ems, at the Dutch-German border on the North Sea coast. By car and using the adjacent motorway, the Eemshaven, where our marine base is located, is approximately 45 minutes. Bremen, approximately one hour, and Cuxhaven, as well as Hamburg, approximately 2 hours away. From origin, I'm a naval architect with specialization on subsea engineering, and I started my career 24 years ago and have since then been actively involved in the submarine cable industry.
My first direct involvement with the offshore wind farm industry took place in March 2001, and continued with the installation of the export and inner array grid cable system of the Arklow Bank offshore wind farm in 2003. In two thousand and four, sixteen years ago, I joined what now has become Seaway Offshore Cables. And within this period, I have served in numerous positions and functions, whereby my current position is the head of the wind team. So the team, which is actively involved in defining our business strategy, supporting the development of new markets and business area, and which is, for the majority of time, actively pursuing new projects and tenders with existing and potential new customers. Next slide, please. I now have the pleasure to provide some inside information about the Hornsea Offshore Wind Farm project as developed by Ørsted in four separate phases.
Once completed, the Hornsea Offshore Wind Farm will have an installed capacity of approximately 6-7 gigawatts, where Phase 1 has a capacity of 1.2 gigawatts, utilizing 174 7-megawatt wind turbines. Phase 2 will have a capacity of 1.4 gigawatts, utilizing 165 8-megawatt wind turbines. Phases 3 and 4 are still under development and shall each have a capacity of approximately 2 gigawatts. In November 2016, we were awarded the contract for the transport and installation of approximately half of the inner array grid cable system of the Hornsea One offshore wind farm project. Ørsted took the decision to award the overall work scope in two almost equal parts to two separate installation contractors in order to minimize the risk due to potential performance issues. Maybe just a quick anecdote on that one.
Even before we were awarded the contract for the Hornsea One offshore wind farm project, we were invited to participate and exhibit at the Ørsted's two thousand and sixteen Safety Day, as the management team of Ørsted recognized that the Seaway duo, our cable lay vessel, Seaway Aimery, and our installation support vessel, Seaway Moxie, were an innovative solution to the significantly growing demand in the offshore wind farm market. Our clear intent with the introduction of the Seaway duo was to industrialize the installation of submarine cable systems within the offshore wind farm markets, thus reaching new levels of reliability, predictability, and safety, whilst minimizing the risk to our personnel, assets, and the submarine cables.
As it turned out, our own expectations were even exceeded, whereby the Seaway duo has, since its market entry, continuously set new performance benchmarks when it comes to the rates of progress for the safe and efficient installation of submarine cables. At the end of the Hornsea One offshore wind farm installation works, we were even awarded the installation of an additional portion of approximately 10% of our original work scope, as Ørsted had partially de-scoped the second installation contractor. All set, the number of installed inner array grid cables reached a level of 89, with a combined length of approximately 170 kilometers. The associated overall contract value at the end of the project reached just above $50 million. Next slide, please.
Next to the ordinary submarine cable installation and post-lay trenching works, a number of additional work scopes were undertaken by our project team. Notably, the relocation of more than 2,500 boulders from the inner array grid cable routes and designated jack-up zones was undertaken by our teams. The relocation of these boulders is an important step of the site preparation works, which ensure, on the one side, that the submarine cables can be safely laid onto and subsequently trench into the seabed in between the individual foundations and platforms, but also allows for safe jack-up operations for foundation and wind turbine installation, as well as maintenance operations during the lifetime of the offshore wind farm.
Further to the relocation of the seabed boulders, additional associated work scopes, such as pre-lay inspection surveys and pre-lay grapnel runs, to ensure that the seabed is free of any obstructive debris, were completed, as well as messenger wires were installed in order to facilitate the individual cable pulling operations at the foundations and platforms. Next slide, please. Based on the excellent safety performance and our ability to establish new benchmark levels on the rates of progress, in combination with a never reached workability, we were invited to tender for the inner array grid installation works of the Hornsea Two offshore wind farm project.
This time, Ørsted, based on its experience on Hornsea One, took the decision to award the entire inner array grid cable installation scope, consisting out of 165 submarine cables with a total length of approximately 422 kilometers to a single contractor. After a competitive process, the contract for the Hornsea Two offshore wind farm project was awarded by Ørsted to Seaway Offshore Cables in July 2020. Hereby, the contract value at that stage was just below $100 million. In addition to the Hornsea One and Hornsea Two offshore wind farm projects, we were also awarded the contract for the submarine cable installation works of the first offshore wind farm in federal waters in the United States of America.
by Ørsted, but this time under a contract covering the turnkey supply and installation of the entire submarine cable system. It is important to recognize that the majority of contracts that Seaway Offshore Cables enters into are based on an EPIC approach. Hereby, we are responsible for the turnkey delivery of the submarine cable system, and we are collaboratively partnering with all major submarine cable manufacturers and other permanent material suppliers from around the world. Just to explain, these projects, which have become part of the DNA of our projects teams, do not just involve the ordinary transport and installation, but also the project-specific customization of permanent materials, inclusive of submarine cables, related accessories, and cable protection systems in close cooperation with our suppliers and our customers.
Furthermore, the termination, testing, and pre-commissioning of the installed electrical infrastructure up to the point that it can be simply energized as part of the WTG installation forms part of this EPIC-based work scope. I hope I have been able to provide you with some brief insights into the capabilities, experience, and daily business of Seaway Offshore Cables. The team of Seaway Offshore Cables is made up of 27 different nationalities, with an average age of 37, and all this at a staff level of less than 200. Our success is also visible when you take a look at our order backlog of more than 1,800 km of submarine cables to be installed and more than 600 wind turbine generators to be connected.
This backlog exceeds all project works we have undertaken in the last seven years since we focused on the renewable energy sector in 2013. We are passionate about our daily work, and regardless whether the financial or commercial, the technical or the operational, or the contract or administrative staff is concerned, we are enthusiastic to play an active role in the development of a greener tomorrow. In case you have any questions, please feel free to raise them as part of the Q&A session at the end of this webinar. Thank you, and enjoy the remaining presentations of this Subsea 7 Investor Day, and Steph, now it's up to you. Thank you.
Okay. So thank you. Thank you to Lars in Germany, and thanks also to Philippe in France. Thanks to Lloyd in Scotland, and last but not least, thanks to Harke and the team in the Netherlands. So I think, as you've heard today, we have experienced local teams based close to our clients in all our key markets today. I think our diversified and localized team is a great strength. It's very useful, and it's especially in times of COVID, where international travel is challenging. So I'd like to thank our case studies have helped to demonstrate to you our strength and depth. I think we've shown we are well established in all the current offshore renewables market regions today. Through our early engagement, we support developers to reduce their costs and win subsidies.
We're delivering on projects for the major renewables developers, and in turn, we're winning repeat business from them. We differentiate ourselves through our EPCI and our integrated capabilities, and a part of that, we manage large, complex projects. We're experienced at managing major interfaces and risks. We have an extensive supply chain management capability, and our projects are executed from and supported by our global network of local offices. So as we move forward, we're more and more supporting developers as projects become larger and expand globally. And finally, we provide reliable, on-time delivery. And so with that, I'd like to hand you back to John Evans to lead our first Q&A session of the afternoon. Thank you.
So everybody, this is the first of two Q&A sessions. This one will focus on the industry and Seaway 7. Please, can you save any floating wind and financial questions, as we'll cover these topics in the next part? There'll be a longer Q&A session at the end, so don't worry if we don't have time to take your question in this session. Operator, please go ahead.
Okay.
Ladies and gentlemen, we will now begin the question-and-answer session. If you wish to ask a question, please press the star and one on your telephone keypad and wait for your name to be announced. You may also submit your questions via the web using the Q&A panel. Please stand by while we compile the Q&A queue. This will only take a few minutes. To prevent any feedback noise, please turn off your computer speakers if you are dialing in by the telephone. Q&A is ready for questions. Thank you.
Doing again.
Your first question comes from the line of Michael Alsford from Citi.
Hi there. Good afternoon. Thanks for the presentation. Firstly, your positive outlook on the market potential is similar to ours, actually, for offshore wind. But could you talk a little bit more about the capacity of the organization to conduct the larger, more complex project scopes under, say, the Balance of Plant or the integrated contract models? For example, I guess, could you do two Seagreen type projects at the same time, or how many integrated type projects could you do? I guess, what are the physical and operational limitations currently from the organization? And then secondly, more specifically on the fleet, I guess, can you talk a little bit more about the flexibility to shift more vessel capacity to offshore wind, and what the CapEx might be for that? Thanks.
So I'll try to answer your questions, and I might ask Steph to chip in, but I'll start off. I guess, for us, I think the message that Steph gave is that we believe that in due course, there will be more larger projects, such as in an EPC configuration or an integrated configuration. With the way we're structured, we have engineering capability and supply chain capability. We can switch between oil and gas and renewables. The vessels in this market, and we'll talk a bit more about that in the second half of today's presentation, are more ability to subcontract, and I'll ask Steph to talk a little bit about subcontracting in a moment, so subcontracting is an opportunity for us.
I think the key thing for us will be, we believe we have the capability. It'll be the speed at which the market goes from a segmented model into a view that says there is more value in integrated or ultimately more value in EPC. Maybe Steph, you just spend one minute answering the question on vessel subcontracting.
Yeah, sure, John. I think as you said, I mean, we have a lot of strength and depth in the organization that we can dip into. So I believe we certainly have the capabilities to man up. In terms of vessels, we obviously have our own capabilities, significant capability across our fleet, but we do see that in renewables, there's less differentiation between the vessel types. And so we have, on a number of occasions to date, subcontracted to our peers, to the other big contractors. And equally, we have been subcontracting their vessels as well, and we'll continue to do that.
I think in terms of efficiency, the ability to subcontract work backwards and forwards certainly helps us cope with the global nature of the market and to develop economic and efficient solutions to deal with either peak demands or geographical conflicts. So I think with the capacity in the market and our ability to manage subcontracts at the end of the day, it's another subcontract of many that we're quite happy and comfortable to manage, I think, as we've demonstrated.
Mike, you asked a question on the fleet.
Yeah.
Yeah, sorry. Thank you, Stef. So, there was a second question about the fleet, and could we switch assets between oil and gas? We do have, and later on in the presentation, we'll give you an example of something that we intend to do. But yes, there is a limited number of oil and gas assets that can be redeployed. As Hake showed you, we put the Borealis to work on renewables in the past when its scheduling suited. So again, we have the ability to switch certain assets in there. But for us, it's around we believe that there is enough capacity in the market to allow us between subcontracting and our own fleet to be able to expand and grow the business.
Okay, thank you.
Thank you. Your next question comes from the line of Mark Wilson from Jefferies.
Thank you. Good afternoon, gentlemen. Thank you for the presentation. Just check you can hear me?
Yes, we can.
Oh, great. Thank you. So you say it's a very competitive industry currently, and at the same time, projections for the annual spend show budgets doubling as the power build-out grows. Do you think the industry, very simply, can actually meet this level of demand, and where are the specific bottlenecks in the value chain that may have to be addressed to actually meet that kind of build-out? Thank you.
As we've touched on earlier, we saw this in oil and gas twenty-five years ago. Clients used to segment all the pieces of the work, and we would do little slivers of the contract. And about twenty-five years ago, the oil and gas companies realized as these projects got deeper, more complex, larger in scale, that they needed tier one players that can bring all this together. So, so our view, actually, the bottleneck is the own ability of the industry to get itself organized and arranged around it. We, we do know that the top three players, in this world, your Ørsted and Vattenfall and RWE, have some exceptionally good internal capabilities, and that will take the industry so far.
But we believe that the bottleneck is the ability of the industry to organize itself in a manner that can bring the skills of companies like Subsea 7 to bear. I think you can see... You've seen a number of people announce in the market that they're building more tonnage, so we don't think tonnage will be a problem. I think the challenges we've seen in SURF is how many people can really understand risk and allocate risk properly to be able to deliver big projects on time, safely and securely. That's what we've been able to do in hydrocarbons. That's what we'd like to do in this business. So for us, we need our business model to have the stability of these large EPCs coming in.
For us, just doing T&I work and moving assets all around the place, which is what we've been doing in the last couple of years, is not particularly productive for us. So I think the industry has to get itself organized around how does it want to contract and how does it want to work. We've also seen in oil and gas, partnership-type relationships developed. We've also seen in oil and gas, a push for the engagement, where the oil and gas industry says, "We can't do it ourselves." So I think we'll see that change coming, and it's probably the unlocking of that side that we believe will probably get us to where we need to be by 2030 as an industry.
... Thank you very much for that. So, certainly from yourself, you don't see the need to add additional tonnage, let's say, in terms of foundation installation or cable lay vessels. Is that the message you're giving?
If you wait till the second half, you might want to ask that question again. But we will give you some more information on cable lay vessels in the second half. I think on the very large lifters, we are clear that there are some interesting technical advantages in some of the large jackups that can turn their hands to foundations or wind turbine installation. But at the moment, we have no view that we would enter into that sector. But on the cables, we'll have something to present to you in the second half.
Okay. Thank you very much. I'll turn it over.
Thank you. Your next question comes from the line of Vlad Sergievsi from Bank of America.
Yes, good afternoon, and thank you for a very detailed presentation today. Let me ask the question, which is on many investors' minds. There are obvious operational benefits for Seaway 7 being a part of Subsea 7. At the same time, renewable pure play companies do benefit from very rich market valuations right now. In this context, what would be your thoughts about a minority stake in Seaway 7 at some point in future? Potentially, for example, to fund additional capacity.
Vlad, I guess we, like everybody, have watched the market, and we can see what's happening in the market. I guess the honest answer is that the executive and the board are very open to. We're open-minded to how we configure the company and how we structure the business going ahead. We were one of the very first guys in the oil services sector to break out our renewables business separately to give visibility of the trials and tribulations of how we get on in that business and how we move ahead. You know, we always look at different options, and I think that we're clear today that there is a merit to keep the two businesses together, because as we've discussed in this presentation, we move assets and people backwards and forwards.
Is it possible to do a full spin-off? Yes. Don't think that's very desirable and probably less attractive to us, but the optionality of a partial spin-off is something that we'll be thinking about over the next few months to see what the market thinks, but also about where do we want to be in the future. So, you know, the message we want to give to everybody, our unique position in all that competition that Harke showed is the fact that project management and engineering and the ability to handle big projects, good balance sheets behind it is something that Subsea 7 can offer, and how we would structure any form of spin-offs would need quite a bit of thought. But we're open-minded to the topic, but we're not gonna rush into anything. We're gonna be in this business for a long time.
You heard my strategic statements at the start, that we're gonna be proactive within the energy transition, and it's part of our future. So we will need careful thought about what we do on that topic.
Thank you very much, John. I'll turn it over.
Thank you. Your next question comes from the line of Mick Pickett from Barclays.
Good afternoon, everyone. It's Mick here. A couple of questions, if I may, and I'll stay technical. You talked a lot about engineering on the cable side. Can you just talk to me what you do on cables engineering? Is that route engineering, or is it actually the physical properties of the cable itself? And secondly, you mentioned going from Beatrice to Seagreen, and from what I saw, it was double the size for the same price. I can understand turbines getting bigger and getting cheaper, but I would have thought you'd be a bit more sticky on your unit cost on size. Can you just talk how that project doubled in size, yet the price stayed the same?
Good questions, Mick, and I'll pass those over to Steph to give you the answers to those.
Thanks, John.
Sure. Yeah, thanks, Mick. I think starting with the cables, I mean, really, it's the whole range of engineering. So we start from the beginning and become involved with the developers in terms of the design of the cable. So we work closely between the developers and the cable suppliers, and obviously, the configuration of the cable drives the material, the steel, sorry, the metal inside the cable, which is a significant impact on the cost. So we've got a lot of guys in the team, in Lars' team, who you know all about the cables and the design of the cables. And then we work through, obviously, yeah, cable routing, cable layouts, optimizing lengths of cables.
Trenching is an important part of the scope, so a good knowledge of the soils and the seabed underneath the cables and how we can bury the cables to depth. Then, obviously, interface between the cables and the structures and the pulling of the cables and the cable protection systems are all key. We pretty much have the capability in-house to look at all aspects from cable supply, cable delivery, cable installation, cable trenching, and then the connection of the cable in structures. That is pretty much it for the cable side. I think we covered some of it in the case studies, then when we look at the difference between Beatrice and Seagreen, but this design has been important and optimization of the design.
There are fabrication solutions, and the cost per unit has been key, and switching to the Far East in terms of fabrication is probably the biggest single element in allowing us to reduce the cost there and to be able to deliver, as you said, double the size for practically the same price. It's all down to our knowledge of design and manufacturing of the foundations themselves.
... Okay, and then going forward, do you think that process is optimized, or will the unit cost be more sticky now?
Well, the size of the turbines, and if you look at the world development, the size of turbines is going up. And so we will see larger turbines, which allows further reduction in LCOE. So I don't think we've seen the LCOE bottom out yet. We learn more all the time. So yeah, I think we will see. We will be able to support developers to further reduce their costs and reduce LCOE as we go forward by various means, to further design innovation, design optimization, but also installation innovation and the techniques we use there. So I think we still have some way to go on that road, and we can continue to add value to the development.
Okay. Thank you.
I think, Mick, just to supplement- sorry, just to supplement what Stef says, you know, one thing that this industry has been grappling with is there was always a finite size to the monopile and how you can design a monopile. But as the industry has learned and developed, you know, the monopiles are getting bigger and more complicated. I think you look at the design of Seagreen versus the design of Beatrice, one's three-legged, one's four-legged. The other thing, as Stef says, we changed the foundation design to suction cans, which are very much used in oil and gas and not very much used in renewables, compared to installing pin piles. So there were thousands of tons of pin piles in Beatrice. So I think your question, I think, was: How sticky is the price?
We moved from European fabrication on Beatrice to Far East and Middle East fabrication on Seagreen. So we probably found about as optimized a cost model as we can for complex jacket fabrication. But as Steph says, it's about the engineering and the better understanding of how we're doing and the upgrading of different specifications and standards in the industry, as we all learn over the last five, ten years about what's going on in the industry. So, as Steph says, it's not over yet, but the cost elements are to do with where do you put the work and how do you move all the stuff half around the world is the key for us.
Thanks, John. Cheers.
Thank you. The next question comes from the line of David Farrell from Credit Suisse.
Hello, David.
Mr. Farrell, your line is open.
Can we try the next caller, and I'll see if David can come back?
Thank you, sir. Your next question comes from the line of Frederik Lunde from Carnegie.
Hi, good afternoon. I guess my question has been partly answered, but I was wondering if you're seeing any change in contracting with more oil companies now becoming active in offshore wind. And that could have obviously taken place in more alliances, more large EPCI or different criteria being emphasized in tenders rather than just price.
I think, Frederik... Well, good afternoon. Good to talk to you again. I think, you know, what's interesting here is, at the moment, Total are non-operators on Seagreen, and BP are non-operators on the wind farms they purchased in the US. So I think at the moment you're seeing the oil and gas companies come in on a non-operator basis, or it's the traditional renewables clients, and I include Equinor in that, 'cause we worked for Equinor for a decade in that world. So I think at the moment it is utility companies that are leading that. But as the oil and gas companies move much more determinately into the energy transition and clearer on their renewable needs, I suspect that they will look at flipping over and becoming operators.
The question is which contracting models they use is not clear to us at the moment, but, as we've said many times on this call, our belief is that there is merit in going towards these larger integrated projects or larger epic contracts. And I think, you know, the one thing that everybody is understanding, and, Lloyd's example there of Beatrice, you just looked at the number of different companies that we had to have interactions with to get all the right pieces of Beatrice to turn up, a few years ago. I think that we will see that as people are moving to the 150-200 tower or turbine size fields, that there will be more opportunity in that front. Quite which way people will go, it's not clear.
I think the other thing we all need to think about are oil and gas companies have very, very strong competitors in utilities. The utilities are power companies, and they understand how to generate power. So our traditional oil and gas clients are changing their position in the market and going into a market that may not be as familiar to them as oil and gas. So again, we will be working with both groups of clients, as that takes place.
Thanks, and you've been very vocal on the merits of alliances on oil and gas projects. Are you seeing the same rationale here on offshore wind?
I think it's fair to say, and Stef can give a bit more, that, you know, the traditional segmenting model sort of works okay. But, I think a number of operators now, we saw, Vattenfall was quoted there about, you know, their feedback about earlier engagement, and how to work. The one thing to remember, most utilities are highly regulated, generally in their home markets, as to how they can contract and how they do their procurement, because, generally in most countries in the world, there are, price caps or mechanisms with regulators to control the price of power. So the ability for those guys to change their contracting models isn't as clear-cut, as the oil and gas companies, who are pretty capitalist in their thinking, and they can switch models.
But I do think that we are certainly seeing that a number of the clients now see value in talking earlier to us. Whether that will become more partnership-type models in the next few years, not clear to us, I guess. Maybe, Steph, if there's anything to add to that?
Yeah, no, John, I absolutely, completely agree with what you said. I think, and we have seen it particularly on Vattenfall, on Hollandse Kust, where that's a subsidy-free development, so cost is obviously critical. So early engagement has been very important and working. I mean, there, that was a partnership. We worked very closely, very collaboratively with Vattenfall, both on Hollandse Kust one and two, and then subsequently on Hollandse Kust three and four. So I think without that partnership, without that approach, it would have been impossible to develop an optimized solution. I think it was developing the optimized solution, reducing the cost, certainly was significant in terms of winning the subsidy and for those projects to go ahead.
So I think we see the logic as it stands up for sure, in offshore wind. It's about early engagement is key to bringing cost down and key to success. So I would certainly recommend it. It remains to be seen, of course, the approach that our clients will take, but I do believe it would certainly add value.
That's great. Thanks.
Thank you. Your next question comes from the line of Amy Wong from UBS.
Hi, good afternoon. A question for me. Throughout the presentation, you mentioned the word competitive process many times, and then I think in one of your answers, you also acknowledged that there was gonna be a lot of tonnage coming in, and that wasn't gonna be a bottleneck for the industry. So my question comes down to kind of when you kind of take all that into account, and you're entering commercial negotiations with your clients, and how should we think about your ability to price your assets in kind of a way that, you know, best utilizes it for the best returns for your shareholders?
Thank you, Amy. I guess the way to look at it is just what we worked out twenty years ago in the oil and gas industry, is really a margin that you can get over an EPIC contract, if you're good at managing the EPIC contracts and can deliver those. 10% on a $1.3 billion job is better than 20% on $100 million of T&I, in terms of cash returns to your shareholders. So for us, it's about the fact that, yes, EPIC has always had a lower margin than transport and install, because all you do on transport and install is to get your slice to do with that particular area.
If you have the inbuilt skills, processes, and competencies to arbitrage risk and manage risk, which is what we do in the oil and gas space, we believe that the economic returns, as this industry heads towards a more integrated world, will be what will give us the returns for our shareholders. So that's how we try to think about this business. It's about the direction it's gonna go in. We've been very open with you that it just slugging it out on transport and install, as you know, we every one of us looks to expand globally and increase capacity rapidly, is probably not really where we want to be long term.
We're happy to have transport and install as part of the mix for the company, but longer term, we would like to have a mixture of EPIC, along with integrated, along with transport and install. So that's the way we look at returns for this business, for our shareholders. And Ricardo will talk a bit more about that in his presentation this afternoon.
All right. Thank you.
Thank you. Next question comes from the line of James Thompson from J.P. Morgan.
Oh, great. Thank you very much for taking my question, and good afternoon. Couple from me, please. Just obviously, in the presentation, helpful to get the market backdrop, et cetera. You know, China is clearly a big part of the market today, and obviously one that you call self-supporting. You know, when I-- when you think about the competitive landscape, what's the risk that the Chinese contractors actually start to play in the international arena, given that it looks like you know, the work they've got there, but looks like it's not growing, particularly as we head through the rest of the decade, would be the first question. And then secondly, obviously, you talked about turbines getting bigger.
I just wondered whether that, CapEx pie chart you've effectively shown on the breakdown changes at all as we move to bigger turbines. Does that, you know, increase your share of the overall project, or does it stay pretty similar as we move from a sort of 7-megawatt towards a 13-, 14-, 15-megawatt turbine setup?
I think I'll ask Harke to take both of those questions. Harke, if you can?
Yeah, sure, John. Thanks. So, maybe to start with the China question then. China is very, I think, high growth market, very interesting market, but what we see at the moment is that basically, the market is served by own equipment-
At the same time, we also see that most projects are in very shallow water, which I would say 15-50% less, for which you basically need a certain amount of assets. If China is growing, as we think they will, then we move into deeper water. And what we actually see is that then there might be becoming new opportunity for possibly external parties to make a play because you need different assets to get involved. So, I would probably see it more as an opportunity for maybe larger vessels to play in China moving forward than the other way around, of them maybe moving internationally also because their market is very big.
With respect to your question on the turbines, I think the ratio will probably remain the same. So yes, the turbine is gonna be bigger, but then pro rata, you're gonna have less turbines. But if you have less turbines, you will also have less foundations, which will be then bigger again to support your bigger turbine. So likewise for the cables, they will reduce in number, but on pro rata basis. So I would expect the lift to roughly remain the same.
Okay. As I understand it, you see things staying the same, depends, regardless of where the turbine size trends towards.
I think what we're saying is percentage-wise, plus or minus a couple %, yes, it might vary, but I think, overall, the spread in that diagram is not too far from the truth.
All right. Perfect. Thank you.
I think, we have time for one last question in this section before we go to a break. So operator, can you take the last question, please?
Thank you. Your final question comes from the line of Sasikant Chilukuru from Morgan Stanley.
Hi, thanks for taking my question. Most of them have been answered, but I've just wanted to understand, regarding the cycle times for the heavy lift vessels and the cable lay vessels. How long does it take for you to complete this project? And if you can give an indication of the utilization that you're looking at, that would be helpful. Thanks.
I think, you know, one thing that, the industry is grappling with at the moment is this year we've had, our spreads in, Taiwan, we've had our spreads in Europe, and we've had our spreads in the States, which is a very, very inefficient way of running a business. And that's why when it scales up and you get the right critical mass, you can do what we do in oil and gas, which is try to keep assets in certain geographies. I think then, in terms of operationals, I'll ask Steph to give you sort of roughly, you know, how long it takes us to do, 100 clicks of cable lay or whatever on a particular project, as well as putting, foundations in.
So maybe, Stef, you can just give some indications of, rough durations of these type of projects.
Yeah, sure. I mean, there's a lot of variables in there. There's a lot of factors, depending on obviously the type of foundation. Is it a jacket? Is it a piled jacket? Is it a suction bucket jacket, or is it a monopile? And then are we looking at a big factor then would be the environmental constraints. There's limitations on the times that we can pile and install. We're locked out overnight, sometimes for noise mitigation. We're locked out because of environmental constraints. So it's quite hard to put a range on it, but you could be talking a cycle time on a foundation typically between two and five days, depending on the complexity, I would say.
And I think, Stef, you touched on a very interesting point. You know, what we all need to remember is, in Northwest Europe, a lot of this work has very, very strict environmental permits on noise, vibration in water, and such like, which mean that management of environmental performance is very key as well. So I think as Stef says, you know, you can be between two days and five days putting a foundation in. I guess our cables are one or two days each between each tower. And again, that's where we have managed to work with the Moxie and the Aimery in quite an efficient way, where the Moxie does all the preparation work on the pull-ins as well as the termination work.
So she hops ahead of each cable, and we're ready then just to pull in. So the Aimery is just purely a cable lay machine, and that balance works very, very well for us. So, you know, these activities are in single days per activity, and then you multiply by the number of towers in the field.
Thank you.
I think that will be the last question for Q&A. We will take a short break for 15 minutes before we come back for a look at floating wind and some financials. We'll have a longer Q&A session at the end, so don't worry if we didn't get to your question in this session. Welcome back, everyone. This is the second part, where we'll be covering floating wind and our financial framework. After the floating wind and financial framework sections, we'll have another Q&A session, which should hopefully be a bit longer than the last one. Now I'll hand over to Philippe in Paris for his part.
Good afternoon again. I will talk about the floating wind. Next slide, please. The offshore floating wind is a promising market with potential to unlock wind opportunities in regions with deeper continental shelf. It's a high potential market, which will start its commercial phase in 2025, 2030. To date, a variety of solution are existing, and in the process to being commercialized with several demonstrators. The full-scale tested solution will provide sufficient bankability to get access to financing. Subsidy regimes to support floating wind are expected in different regions with various level of maturity. Next slide, please. Floating offshore wind has mainly two type of developments, off-grid and on grid solutions. With off-grid developments, the floating wind turbine farm is used to energize existing oil and gas platforms, and such development generally comprise between two to 15 turbines.
Equinor Hywind Tampen project, currently in progress in Norway, is the first illustration of it. With on-grid developments, the floating wind turbines farm is to be connected to onshore electricity network, and the development generally comprise between thirty to forty turbines. The commercial drivers and considerations, and possibly the contracting model as a result, are different for each development. Next slide, please. Floating offshore wind is a growth market with still uncertainties, how big and how fast it will develop. A large range of forecast is available to date, an accurate number of gigawatts for floating wind is to date, not so easy to predict. However, floating offshore wind market will move forward, and at this stage, we may consider a range of forecasted cumulative gigawatt between 1-2.5 by 2025, and between 3-10 by 2030. Next slide.
Since 2017, Seaway 7 contributed to development of floating wind project. At this time, we completed the demonstrator project for Equinor in Scotland with installation of inner array cables. Based on the success of this prototype project, end of 2019, Seaway 7 has been awarded by Equinor Hywind Tampen project in Norway. It's an off-grid development with 11 floating wind turbines connected to 5 offshore platforms. Seaway 7 scope is the installation of inner array cable, currently planned for mid-2022. In addition, we own minor equity stake with Ideol, one of the first floating structure player. Ideol have demonstrators installed in France and in Japan. This small stake allows us to follow concepts and technologies for floating wind. Next slide. This slide summarizes the key components of floating wind unit.
Starting with the engineering, the design of the floating structure, the turbine and floater coupled analysis, the mooring and dynamic cable design, and the installation engineering. We have the fabrication of the floating units, the integration at quayside of the turbines onto the floating structures, the towing and the moving of the floating wind units, and the installation of dynamic cables. Next slide. Subsea 7 has an extensive expertise in delivering large and complex offshore projects, and a large technical range of expertise in floating structure, mooring, and dynamic cable. Seaway 7, with Beatrice and Seagreen EPCI project, combined with the experience of numerous installations on fixed wind projects, has an extensive expertise in offshore wind projects, where industrialization and serial activities are critical drivers. Next slide.
As a conclusion, we are confident we have the relevant capability, and we will continue to develop our floating wind positioning in the years to come. Thank you. I leave the ground to Ricardo.
Thank you, Philippe, and good afternoon, everyone. I'll start with an overview of the way we account for our renewables activity, and then move on to look at past performance before adding a financial framework to our view of the future. So moving to the first slide, this is a quick overview of the accounting treatment of our contracts. Those of you familiar with our accounting for SURF activities will recognize the same principles here. Our contracts are mostly lump sum, whether T&I or EPCI. We do little day rate work. We recognize revenue on a percentage of completion basis, and we recognize a constant margin throughout the project life, beginning after 5% of our costs have been incurred. T&I contracts typically range from about $50 million to $150 million in value, with activity centered on the offshore phase.
EPCI contracts can be much larger and include a high element of procurement, which affects the revenue and cost recognition profile. Now to look at our historical performance. I'm sure it won't have escaped your attention that we have faced some profitability challenges in the recent past. This was mainly due to a combination of a downturn in oil and gas heavy lifting, an increase in competition at a time when few renewables EPCI projects were tendered, and as well as the costs of our global expansion. We have taken steps to streamline and strengthen the business, and these will be addressed on the next slide. We have increased our focus on service models, which differentiate us through the creation of a dedicated EPCI team and by targeting our marketing efforts on projects aligned with our integrated EPCI offerings.
We have also improved resource and knowledge sharing between Seaway 7 and Subsea 7 to improve operational performance. At the same time, we are seeing the benefits of streamlining the organization following our acquisitions, with permanent savings of about $20 million to our cost structure. The result has been a significant increase in backlog, as shown in the pie chart on the right. We are often asked about our approach to investing in the renewables business unit, and the next two slides address past capital investment and criteria for the future. Since 2017, Subsea 7 has invested about $500 million to consolidate Seaway Heavy Lifting and Seaway Offshore Cables. Our primary objective in the near term is to generate a sustainable return from the existing resource base. And the next slide looks at our expectations regarding future investment.
We do anticipate lower capital intensity in the coming years. As we have already mentioned, vessel capacity is being added to the industry by a variety of players, and we see continued opportunities for subcontracting, particularly of heavy lifting activities. There is less differentiation between heavy lifting vessels in the renewables space than in oil and gas, and reflecting this, there is a greater acceptance by clients of the subcontracting model, as Steph has already referred to. There are a few vessels we can move seamlessly between SURF and renewables. Seven Borealis is a good example. It can be deployed for specific heavy lifting work scopes within renewables, as shown in the photograph on this slide. We therefore currently see limited need to invest in renewables and see sustaining CapEx at just $10 million a year, assuming, of course, there is no need for any significant equipment upgrades.
As you know, we have had consistent success with Seaway Aimery and Seaway Moxie in cable lay, and they are fully booked in 2021 and 2022 on Hornsea, Kaskasi, Hollandse Kust Zuid, and Seagreen projects. We've therefore decided to make an incremental investment in Seven Phoenix to convert it to a cable lay vessel. The Seven Phoenix previously operated as a PLSV for Petrobras, and the conversion will result in a cost-competitive vessel. It will reenter the active fleet in the second quarter of 2021 and has firm work in the second half of 2021, as well as the full year 2022. Finally, let's turn to our financial framework for the years ahead. Our aim here is to set out the financial framework around the business strategy that you've heard this afternoon.
We have the resource base in place to deliver approximately $1 billion in revenues per year, and delivering $1 billion consistently will be dependent upon an increasing acceptance of the EPCI and integrated contracting models by our clients. This trend, we believe, will be driven by the market's globalization, the continued increase in scale and complexity of projects, and the growing presence in renewables of the oil majors, which are more familiar with this contracting model. If we can achieve this level of revenue, we believe that EBITDA margins would exceed 10%. Finally, we have set the same through cycle range of return on average invested capital for renewables as we have for our oil and gas businesses, namely between 9% to 14%.
We believe we can achieve this by improving EBITDA, a disciplined approach to capital investment, and with target rates of return exceeding our weighted average cost of capital. This will be complemented by tight working capital management. We believe this will result in the consistent generation of free cash flow, which will help the Subsea 7 Group sustain its three priorities, which are namely, disciplined reinvesting in its business, maintaining an investment-grade profile, and returning excess cash to shareholders. And now I'll hand you back to John for closing remarks.
Thank you, Ricardo. So hopefully, the session you just had over the last couple of hours gives you a good flavor of the business and the background to where we are and what our views are on the future. I think it's important to remember that we have delivered in renewables for over 10 years. It's a business that we understand well. There is a different client base, there is a different set of decision-making choices that our clients make, and it is a different business to surf and conventional. But we have made that transition, we've learned from some of our mistakes, and we are very enthusiastic about where it's gonna go in the future. As Steph has shown to you, we are a key player in the fixed wind business, and fixed wind is the next decade in this business, at least.
But we do know that floating wind is coming up strong behind, and we believe that there will be great opportunities again in the floating wind business for Subsea 7 to make a difference and really contribute to that growth model. We've talked to you today about the fact that there are many competent competitors in this sector, and there are many people that can drive piles, and there are many people that can lay cables. But what we want to talk about is the fact that we want to differentiate this business over time towards a more integrated, foundation and cable installation package, or ultimately, certain fields going towards the EPIC model that we've seen in the oil and gas industry. Why is that?
That's all because the fields are getting bigger, everybody's expanding, and everybody's moving from their comfort zone of Northwest Europe, where the whole supply chains are already in place. Seven gives Seaway 7 a unique capability that we have a global reach, and we really do understand risk management and how to put very complex, technically challenging, time-constrained projects together, and how to execute them, and to continue to deliver them in many parts of the world. As Ricardo says, our model for the next few years is to make sure that we generate free cash to underpin the return for our Subsea 7 shareholders.
We believe that we have a fleet that can work in the near term for us, and as you see with the Seven Phoenix, an investment of around $25 million will allow us to bring another vessel into the cable lay market, where again, we have a very strong track record, and we already have work on the books for it to go to. Last but not least, I think it's very important to remember that this is about how to create sustainable value for our shareholders and our stakeholders in a wider sense. We heard the question earlier about, do we do something with this business? Do we spin it off? Do we do something different with it? There's a lot of excitement in the market about this sector, but my main message comes to the very start of what I talked about.
Subsea 7 will have a proactive participation in the energy transition, and the energy transition is part of our future. We know that hydrocarbons will have a changing dynamic between 2020 and 2050, but we do know that the energy transition is here for the long term. So for us, it's about how we balance these two businesses, the synergies that we get by having the two of them inside the organization, and we will always look at the merits of doing different things with the different businesses. But today has been about being very open and very honest with you about what this business is about, how it's structured, how we look at it, and how we can see the growth coming.
We've never shied away that there is challenges in this sector, and I think it's very important to remember that there is a different dynamic in this space, but we've got to understand that dynamic, and we've got to understand our place in that world. And we're comfortable now that we know where our place will be and where our long-term growth will be in this sector. So for Subsea 7, it's about the fact that we see this as a long-term business, and we want to make our investments in this sector for the long term. So we genuinely believe that being proactive in our participation in energy transition is more than a few PowerPoint slides. It's about a real substantive business that can get to $1 billion on a pretty consistent basis, year in, year out.
Should be able to get us to around a 10%, EBITDA or better in that space as things start to stabilize. And it's about a relatively capital-light model going into the future, where we know that we can use the capacity that other people are buying in this industry to put together with our unique skills in putting big projects together. So for me, it's about the fact that we have a very, very interesting and very exciting opportunity for the future. As I took over this role on the first of January, the choice about the energy transition was very, very clear. But to me, and that was about we were gonna be proactive in it, and we were gonna move into this and make sure that we committed what we needed to do for the next decade.
Hopefully, today has given you a flavor of what we think the next decade will give us in this business, and I look forward now to taking more questions from you. So that formally concludes the presentation, and again, I'm happy that we carry on with the Q&A, so operator, can we please go ahead to the next question, please?
Thank you, so your next question comes from the line of Mick Pickett from Barclays.
Hello again, it's me again. A couple of questions, if I may. Obviously, you talked about floating there. It looks to me like obviously your scope will be significantly less in floating than it could be in fixed. Can you just talk about the scale you think you can offer to floating? And secondly, John, your presentation has all been about EPC, and you draw parallels to what happened in the oil and gas industry when that was starting out. If my mind serves me right, there was a lot of hard work and a lot of pain to be learned, and the contractors in oil and gas sometimes chose suppliers who weren't capable or as experienced as you would have hoped.
I'm wondering what you have thought with the current client base in the renewables is like, as to their commitment towards choosing those contractors and whether they will just go for the lowest cost on an EPCI basis as well.
Yeah, Mick, I'll take the second one first, and we'll come back to the floating. I think your question is very, very well made. I think that we know today there are seven good competitors in the business of Balance of Plant construction, as Steph has showed you there. The four big dredgers, ourselves, Heerema and Saipem. So, you know, we do know that clients are taking different approaches as to how they want to do this. Multi-contracting, breaking it all into little pieces, integrating certain risk elements, or going to the full EPC. And we do know this is a very young industry. The oil and gas industry, Brown & Root, installed the first offshore pipeline in nineteen forty-seven.
So we know that there's been, you know, nearly three-quarters of a century worth of knowledge and experience that got us down to the three big players that remain in the SURF business today, which is ourselves, Saipem, and TechnipFMC. I can understand this business, which is 15, 20 years old, and a lot of forming and storming and norming to go. So I'm sure there will be people that will learn their lesson. One of the big dredgers booked a $100 million hit on a project they took last year. So yes, there are people that will take pain out there as they understand what fixed price contracting looks like in this environment. So yes, I think this is a new industry. There's lots and lots of actors on the stage.
Lots of good actors, by the way, on the stage that start from different places. So we can see the lumpiness of the business, as Stef talked about, until we start to see the volume coming through in the middle part of this decade. And then I would hope that at that point then, the people that want to stay in this business will stay in the business. The people that might want to exit will probably choose to exit at that point. But we intend to be here, and we intend to be part of that future.
I think on floating, I think the important thing today is that on floating at the moment, our role has been on the cable activities, but equally, we can see a role that somebody needs to fabricate the floating hulls, and where does that go to, and how do clients want to get that procured? We have a very strong track record in installing spars and different offshore structures in our track record portfolio. So again, you can see today that because they're pilot projects, they're all being segmented. But we think in the future, there will be opportunities again to bring different parts of that together, and I think Subsea 7 will take a role in that in due course.
Thanks a lot, John. Cheers.
I think we'll take a couple of questions from the web, and then I'll return it to the Q&A queue on, on the phones. Our first question is probably one for Ricardo. How are you thinking about the return hurdle relative to SURF and the risk differential between the two businesses?
I think, as I indicated in my presentation, we see a number of parallels with our SURF business in terms of the risks associated with EPCI and lump-sum contracting. The metrics that we are applying, particularly for return on average invested capital, is identical to the ones that we've been applying to our oil and gas business. I think it's a valid metric. If over time we see that there is a different level of cost of capital, perhaps because the industry is viewed as less cyclical, less volatile, there is an argument for setting lower hurdle rates.
But for the time being, based on our experience so far, we treat renewables from an economic perspective in the same manner as we would any investment in SURF and the oil and gas sector.
And a second one from the web before we go back to the phones. John, I'll send this to you, and you can reallocate it if you like. Will you take on another construction support vessel to work alongside the new cable layer, the Phoenix? If not, why not, when you say that the two-vessel solution is key to your competitiveness?
It's a good question. Certainly for us, it's around the fact that, in the market today, the Phoenix will be a very interesting cable lay vessel. She was originally built, as an internet cable layer, and we purchased her in the early 2000s and put her to work in Brazil. So I think she will offer. So she has the right attributes for this type of work, a good size and good scale, to be a good little pocket battleship in this world. I think it's a very good question that, ultimately, the Moxie is around processes and procedures that we've developed from a walk-to-work vessel, which is effectively what the Moxie is.
She is probably about as optimized in the whole industry as can be, but there are a number of other walk-to-work vessels in the market that we can charter to complement, the Phoenix, I believe. So, for us, the core skill was around the cable lay attributes of putting the Phoenix to work in that market, but we will make sure that the methodology and the pre-rigging of the equipment and the technologies that we use on the TPs for winching the wires and such like in place and the cables in place will be the same.
So I think we'll go back to the phone line now, please, operator.
Thank you. Your next question comes from the line of Haakon Amundsen from ABG.
Yes, good evening. Just a follow-up question on the consideration regarding structure and spin-off. Can you give some more color on how an optimal and a partial spin-off, as you labeled it, would look like? I mean, in terms of ownership, agreements between the two companies, et cetera. So if you can give some more color on that would be very interesting. Thanks.
Yeah, Haakon, my answer to the question was we were open-minded, and we will look on a regular basis as to any merits. So at the moment, we haven't done that. We will keep that in mind. We can see the interest in the market, but, so I've got nothing more to add other than the fact that, we're open-minded to the merits of looking at that topic, but we certainly haven't done any work, and we certainly haven't concluded anything.
All right. That's very clear. Thanks.
Thank you. Your next question comes from the line of Sahar Islam from Goldman Sachs.
Thank you for taking my question. Can I ask how you think about other green technologies, like hydrogen, which could potentially be complementary to your offshore wind capabilities?
Yes, Sahar, I think, as my introduction talked about, we can see that, hydrogen certainly will be a part to play in the energy transition that society undertakes over the next twenty years. And we know that there are, you know, gray hydrogen, blue hydrogen, and green hydrogen. So I suspect that the push towards more green hydrogen, will come towards the end of this decade, and therefore, green hydrogen will need renewable, power, such as, offshore wind to support it. We've also seen a number of concepts, looked at in the market to have floating hydrogen production using, seawater and, you know, floating wind, as a way to, separate the, oxygen and the hydrogen.
Again, we can see technologies and different ideas about how to handle that technology, getting a lot of interest in the market. For us, again, it'll be around how does that technology crystallize into industrial scale opportunities, and then from there, what does that mean for Subsea 7? If it floats and it goes offshore or it's in water or underwater, in due course, we believe there'll be an opportunity there. You can see these closed cycle models of you know, floating wind farm offshore, feeding a hydrogen plant onshore, that then feeds into a gas grid system to reduce the amount of natural gas in the grid systems for domestic and industrial supply.
You can then see also hydrogen feeding into chemical plants, which then get the CO2 scrubbed, which then goes to an offshore pipeline to be reinjected offshore. So I guess for us, it's about the pipeline capability in CO2 sequestration that's of interest to us, and bringing that back into an offshore environment and reinjecting it. And for hydrogen, we can see the opportunity either of producing it offshore or producing the electricity, to make green hydrogen in due course.
Given it's, I guess, still quite a long-term concept, would you be willing to use your balance sheet to do M&A in the nearer term if there are opportunities to add to that technology portfolio?
We haven't looked specifically at that. I think, for us, what we, what we all need to remember is when we first got into wind ten years ago, a lot of people questioned why on earth we were wasting our time in wind, and why on earth we were wasting our time, doing wind work. So the last decade has been an interesting process for us to be in it and see. But what I have observed in wind, the speed that Seth showed you in his diagram, the technology intersecting with commercial regimes, intersecting with politics, intersecting with society demands, has really happened in the last decade. So I think we are very open to the fact that, the speed at which we might need to invest in newer technologies, we will be very open to that.
We invested in wind ten years ago when everybody told us not to do that, and we're pleased that we've done it, because today we have a business from that. So we will look at these new technologies, and we need to see. The question is: Where do we fit in, and where do we add value?
Thank you.
Thank you. Your next question comes from the line of Vlad Slivchevsky from Bank of America.
Thank you very much. Two questions, please. Just one to John. Is it feasible for Subsea 7 to consider broadening offshore wind offering to turbine blade installation service at any time? The segment which looks potentially less competitive from supply-demand standpoint. And one to Ricardo, please. Are there any identifiable factors today that could prevent you from achieving 10% EBITDA margin ambitious target in 2021 for renewable business? Thank you.
Let Ricardo answer the first question. I'll come back to the wind turbine installation once he's finished.
Vlad, the line wasn't particularly clear, but if I understood your question correctly, you're asking if there was any impediment to us achieving the target levels of profitability. I think, we've emphasized in the course of our discussion that where we really add value to our clients and where we differentiate ourselves is on EPCI projects, and, as indicated, we're still at a relatively early stage in the cycle, but we are seeing EPCIs becoming as an opportunity appearing, surfacing more frequently. We believe we have a very competitive offering, and it's a sector that we certainly deliver on. You know, we believe also that we have a good handle on the risks, both contractual and operational, associated with the business.
We've done a lot of work to strengthen the resources and expertise that are at the disposal of our renewables business unit. I mean, the challenges to achieve the profitability are well known, but we are, we believe, well positioned to be able to meet them and to deliver. The first step, of course, has been to establish a solid backlog, which we have done so, and now we have, in the next two or three years, to deliver on that backlog and continue winning new work.
And on the question of wind turbine installation, you're right, Vlad, there's a different group of players in that sector. As Seth's presentation showed, that generally is contracted in a separate mode, effectively a charter-type model where they charter the vessel. The wind turbine suppliers charter somebody to go in and do that work through a charter-type arrangement. For us, it's an area that we have not really concentrated on, because the packaging of our work is generally through both cables and foundations. But again, it's an area which is complementary and sits to the side of us. And again, you know, for us, the question is, if our clients ask for us to do that, we'll be interested in talking to them about it.
But for us, it's not been something that we've historically done in this sector. Our floating assets don't suit that work. That needs to be a jacket-based model. But as I said earlier, we do see the technical advantages of some of these very large jackets, which can do both foundations and wind turbine work. But we certainly have no intention to invest a lot of CapEx in building one of those at this point.
Great. Thank you very much, gentlemen.
Thank you. Your next question comes from the line of David Farrell from Credit Suisse.
Hi, afternoon, everyone. Apologies for earlier, I was getting a flu jab. I've got two questions. The first one is just in relation to the U.S. Obviously, that's a market that looks as if it's gonna grow, you know, and be the same size as the U.K. Does your track record in oil and gas give you any kind of competitive advantage? And can you also kind of talk around the need for Jones Act-compliant vessels? And my second question comes in the form of, obviously, it's fantastic, you know, focusing upon green energy, but we're doing this with vessels still using, low sulfur fuel oil.
Are you seeing the clients in the renewables business pushing more and more towards moving to kind of different forms of bunkering, say, LNG, as we've seen in some of the, the more recent additions to the offshore wind turbine installation market?
If I start with the U.S. and ask Steph to carry on about the growth in the U.S. I guess our oil and gas experience, yes, gives us experience of Jones Act, and we worked in the U.S. under the Jones Act structure for 50-plus years. So we do understand the Jones Act and its and how to comply and how to make it work. So that is an area that we have knowledge and understanding of. I think, Steph, maybe you can take it from here, but I think you were very clear in your presentation that despite the pies being the same size, the U.K. is a very mature market, where the U.S. is a very new market. So maybe you could just explain the difference between the two markets.
Yeah, sure, John. No, and there's obviously a lot of learnings have got to be established yet in the US. I mean, I would say our experience from working there already, it does put us, it is a strength, so we're very familiar with working with the Jones Act and the restrictions. Obviously, renewables, it's not exactly the same, but there's similarities. So we do see going forward that solutions will be a combination of local vessels and international vessels, similar to what we see on the surf side of the business. So it's yet to evolve fully and be clear what's going to happen there.
But, you know, I do think our track record in SURF is a lot of strength. Our existing local presence in the U.S. is very useful in that regard. You know, the legislation, approvals, I think you saw the timeframe and where we are, and approvals and consenting and all that sort of stuff is happening in the U.S. right now, and through that and from that, we'll get greater clarity.
On the clients going to LNG-
Sorry
... to power sources. Steph, do you want to answer that question as well?
Yeah. I think what we see in renewables is similar to what we see in oil and gas, and the desire to decarbonize all elements of society. So for sure, there is a desire to reduce the CO2 generation through the developments of the field. I wouldn't say I see a particular greater emphasis in renewables, but I do think as John said, our studies, we've been pioneers with the subsea work that we've done already in terms of the hybridization of our vessels, and I think the ongoing studies will prove useful. So again, this is technology in its early days. I think we'll see progressive adoption in renewables as in the rest of the business.
It is a general trend. I don't think there's a particular acceleration on the renewables side today, but it is something that's coming in all sectors of society.
Okay. Thank you very much.
Thank you. Your next question comes from the line of Mark Wilson from Jefferies.
Thank you again. I'd just like to check in the current backlog, $2.2 billion in renewables, is there $1 billion revenue in there already? Just to check the project phasing. And you said in Q2, John, that we shouldn't expect another Seagreen. In fact, you said, I think one of those every two years would be optimal. I just wondering if you stick with that commentary, or would you be expecting to bring another one in earlier, in order to get that $1 billion a year profile? Thank you.
We still believe that those type of projects will come in one every two years. But we think the industry will accelerate in due course, and this is about where do we think this industry goes from 2020 to 2030, is what today has been about. So, the speed and the lumpiness of it is what Steph showed you at the start. The next two to three years is gonna be lumpy because we're in a world where different subsidy regimes, different countries, are pushing ahead. And it depends, as Steph showed to you, whether or not a client can get their, uh, subsidy regime approved in the contract for different auctions that take place in the mature markets. So for us, it's very much about if clients who, like, EPCIs get the sanctions of their projects, then it's probably okay for us.
If they don't, it's, it goes back to segmented. So we do need to expect some quite a bit of lumpiness in the next three to four years in this market. So I don't think we can draw a nice straight line. What we're trying to show to you is we believe the direction, that's where we'll be going to, and that's what this business can achieve. By the time we get to 2025, we'll be in a place where that basis and that level should be there, and it'll go up, and it'll go down, just as the different pulsating eventually in different countries are. So for us, that's how we view the business.
Seagreen next year, yes, is in our backlog, and we will be really heading towards $1 billion next year in this sector. This is about the steps that we're taking. We're taking a business that isn't returning what we want it to be. We want to get to 10%, and next year will be a journey along the way. We'll be definitely on the way to achieving the 10% next year. But as we've talked about in Q2, next year is all about procurement on Seagreen. There's very little offshore work on Seagreen next year. Again, it's around how do those things blend together, and can you have a consistent mix of T&I integrated and EPCI? That's really where we want to take this business to by 2025.
Okay, thank you. Very good presentation. Thank you.
Thank you. Your next question comes from the line of Frederik Lunde from Carnegie.
Hi again. I was just curious on floating versus bottom fixed. I guess it's a big question, how the industry will evolve, and in particular, as turbines get larger. So do you take any view on that, or are you basically riding two horses? And secondly, is the Seven Inagra too small to be converted to turbine installation?
Yeah, the Seven Inaga is too small. She might be able to do work in ops and maintenance, but she's too small for doing installation of turbines. So she was effectively a vessel built for ops and maintenance in the Nigerian shallow waters there. So she does not fit the bill for turbine installation. I guess your question is a very interesting one there, Frederik, about, you know, how does floating wind fit with the larger turbines? And that, again, I think is part of the challenge. One thing that we do know is that as each megawatt increases on the turbine size, the fixed foundation does not double. So when you go from two megawatts to four megawatts, the weight of the foundation does not double.
How it all plays out when you put the very large turbines on a floater and the economics of that, I think, is one of the challenges that the industry actually has, in that the efficiency that you get in fixed, you don't get in floating. And that's why Stef's line, which is the Bloomberg line, by the way, and Equinor concurrently concur with that, that it's probably by 2030, you will see that floating wind and fixed wind are roughly in the same place at the levelized cost of energy that we are looking for. So I think there's a way to go. There's a decade to go, and how does that work? There's also...
You heard a term in one of the presentation called coupled analysis, which is the relation between the torque and the turbine coming into the foundations. And that is one of the big interfaces that we take in fixed wind, is the torque coming down from the turbine into the foundations. We do know from some of the earlier work that's been done in floating wind, that as the turbines get larger, there is a challenge in how the coupled analysis works and how all that works its way through. So the industry will work its way through all of that, but it isn't quite the linear line that you can draw in fixed wind for floating wind. But as I said in my concluding remarks, the incredible pace that fixed wind has continuously iterated around turbine size, foundation size, optimizing.
Next question, how on earth can you guys put in twice the megawatts for the same price in five years, is the story of fixed wind? So I'm sure that floating wind will go down the same path, Frederik, and I'm sure in due course that will work its way out as well. So we are excited about floating wind, and I think it will come along those paths. I think my advice to anybody that looks at this business, don't underestimate wind, be it fixed wind or floating wind offshore. Steph said it, I think, in his presentation. We thought it would take another decade for subsidy-free wind to arrive five years ago. If you'd asked us five years ago, where do we think we were gonna be in that?
Three years later on, we were at subsidy-free wind, people bidding at that pace, and now we're installing subsidy-free wind now. So I think it's very, very important that the speed at which the industry is adapting and changing is the exciting piece about this industry. So society wants it, the technology, the industry can go for it, and there's lots of different actors from lots of different backgrounds in this industry, which keeps everybody on their toes, which I think is very, very interesting for us as well. So it will come, Frederik, I just don't quite know how it fits together at this point.
And if I could follow up on that.
Sure.
If it is floating wind emerging, do you see that as a threat to the big crane vessels as more work will be moved to yards? And also, how does local content requirements play into this? And do you have any sort of plans to team up or establish a stronger foothold in the emerging markets for wind?
I think, Steph has showed you we're in emerging markets of the Americas and Taiwan and France, so we're already there. So the key markets that we need to be in, in the near term, emerging wind, we're certainly in it. In terms of, you know, the distribution of where the work goes between floating crane vessels and, fab yards and such like, yes, it'll change with floating wind. Again, though, where we are interested in is working with clients that are interested in EPCI capability, big project management, big engineering skills to bring it all together, and know how all these interrelated parts fit together. So again, we believe we've got a part to play in that as well.
So yes, it may vary where it goes to in terms of asset utilization and such like, and that's why, as we go into the bigger crane capacity and such like, again, I don't think in the near term, we will be doing so many very big investments in that front. We showed you today a $25 million investment, which is a no-brainer for us, 'cause we have the vessel in the fleet, and she's stacked at the moment. So again, for us, it's as Ricardo talked about, we're trying to look at a more capital light model here in how this business expands in the future.
So I think we're running a bit-
Jo, if I could add something?
Over time now. Oh, sorry, Steph. Please go ahead.
Yeah, no, sorry. Just to Frederik's question, just briefly. So Frederik, I think it's a good question, but we do not see fixed and floating, to be honest, as competitive technologies. We would expect to see them as complementary technologies. When you look at the acreages that are available in the growth projections, the expectation is that floating would be in addition to fixed. I don't think we'll see a reduction in activity in fixed, quite the opposite, and we think it would be additional. Floating, as well, suits particular areas in the world, certain countries, for instance, Japan, where they have limited nearshore, shallow water, and the fixed capability there is limited.
So I think we will see countries will develop as much fixed as they possibly can, and then they'll also move to floating as well. So I think we'll maximize. When you look at the growing demand globally and what we have to do, our expectation would be that they will be complementary, and both will continue to increase at similar rates.
Thanks, Steph, and sorry for talking over you there, so as I said, we're running a bit over, so we'll take one question from the web, and then I'll hand back to the operator, so I'll again send this John's way, and he can choose what he wants to do with it. Will we develop any technologies for floating wind internally, or is it better to stick to third-party technologies?
That's a very good question. In Philippe's presentation, he talked about the fact that we have a minority shareholding in Ideol, a French floating wind company, and that, again, has been around us being able to understand, really from a technology watch, what's happening in there and what the opportunities are. I think it's fair to say today, there are many different competing technologies and many different ideas in the floating wind world, which is exciting that a lot of people are coming to the party with different ideas. For us, at this stage, it's around how do you make floating wind economic, and how does that all fit together? Because otherwise, we'll spend a decade doing demonstrator projects and getting no further.
So for us, at this stage, we are not tied to any technology, and we're open to see how the different technologies start to converge with the economics that goes with it. And when the economics and the technologies come together, then I think we'll make a decision as to which way we go on that front.
Operator, can we take the last question from the phone, please?
Thank you. Your final question comes from James Thompson from J.P. Morgan.
Great, thank you very much. I get to wrap it up. That's a good privilege there. Just a couple from me there, please, John. Just really wanted to talk a little bit about the follow-on opportunities. Obviously, you talk a lot about CapEx here, and those projects as they come. You know, I get the sense, obviously, that the kind of OpEx side of things from your perspective is fairly minimal, but how do you see this sort of developing in terms of incumbency? Do you think there's the same advantage from being on certain projects early?
The second question I had was just in terms of that integrated or BOP-type project, do you have kind of full vessel capability right now to do everything, or are there certain aspects, maybe site preparation or something like that, that you have to subcontract for?
I guess in the balance of plant today, we have the key capabilities to install the foundations and the cables, but yes, we use specialist capabilities for boulder removal, site surveys and such like. Although we, you know, we have assets that can do some of the boulder removal and cable preparatory work and such like. So again, we feel comfortable that we can cost one of those projects out and execute it. So that, that's not really an issue for us as we stand today. In terms of incumbency, I think what's very interesting here is that where the incumbency lies on these fields is really around the turbine supplier, and the turbine is the incumbent technology that sits in place.
And what you have to remember as well is that the industry starts from a very different place. About eighteen months ago, I spent some time in Denmark with both the big turbine manufacturers over a space of a week. And over a cup of coffee, I asked one of the turbine guys what he thought about O&M and O&M from the oil and gas industry. And he said, "Well, you know, O&M started for us guys as a Mercedes-Benz Sprinter van going to a field in Scotland and fixing something up the top of a tower." So these guys came from a minimalistic onshore world where ops and maintenance and onshore wind is literally a technician in a van getting sent out to fix a turbine somewhere in the middle of nowhere.
And then they see us in oil and gas with the same Viking, the one that we showed you here with, you know, six robot ROVs and the ability to deploy manifolds in 1,800 meters of water or whatever, you know? So again, we started two very different starting points as an industry, and that intersection point is gonna take quite some time. So today, you use crew transfer vessels, where people bob around for four or five hours to get offshore. They then hop along the front and go up a ladder and then climb up to the top of the tower. So there are many, many different places where the ops and maintenance starts.
So I think the ops and maintenance has developed a different way, in that industry, and it's about, again, a very tightly regulated, cost-focused utility mindset. As the fields get bigger and you've got 200 turbines, you really might want to look at what we're seeing today with people like Equinor out to bid now for dedicated mimics of the Moxie, which are effectively highly sophisticated walk-to-work vessels, which can keep a crew of 40 people, you know, in accommodation, where they can move around different parts of the field. So if you've got 200 turbines, you really might want to have a vessel in that field with a walk-to-work capability and the right technicians on it, and then you can start an O&M viewpoint there.
So how the ops and maintenance business goes, and where does that go to, and who leads that work, and who are the players in that, is gonna be very interesting for us in the future. As you know, we have an ops and maintenance business in the oil and gas world, and there is an interest for us there in that field as well. But where that develops to is probably gonna work its way out in the next five years.
Great, John. Thank you very much for the answer, and thank you all for the presentation. It's very interesting.
Well, thank you very much. And, I think that, we've come to the end of our allocated time, as Katherine was, ticking her fingers on the desk as she's telling me we're over time. I really do hope you found that this has been a very useful session. It started out as a set of requests for some sort of lunch and learn to talk about what the business is and how it works, and hopefully, the first part was really around us downloading. The second part has been more about our strategy, where we're going to, how we view the capital framework. So I really do hope you found this to be a very useful session. I'd really like to thank the team that you've seen here today. The people here are the people that run the business that you've spoken to.
So Steph McNeill, Harke, Lloyd, Lars, Philippe, all have day jobs here and have spent quite a bit of time getting this material together for you. So you've heard it from the horse's mouth. These are the people that build our business and are working out from there. I'd also like to thank Ricardo, Katherine here in Investor Relations, and Fernanda here in Investor Relations, that have done a huge effort here to bring the day together. You know, everybody's got day jobs here, including yourselves, and we really appreciate that people spent the extra time to come here and join us. This was our first event. We had hoped to do it face-to-face, but we've done it virtually this time. Hopefully, next time we'll meet with you, whether individually or collectively, we'll do it face-to-face.
We do know that you have many questions, and we do know that today was around trying to give you enough information to allow you to all get up to a same level of understanding about what we're trying to do. But Katherine and Fernanda and our Investor Relations team are available to work with you on a one-to-one basis, to try to help you, again, get better understanding of what this business is about. So just to close out, I'd really like to thank you very much for finding time this afternoon and joining us, and we look forward to meeting you again soon, and goodbye. Thank you.