Methanol

DNV: What are the total costs of ownership for different methanol-fuelled containership designs?

DNV’s Alternative Fuels guidance paper has been updated to include various engineering aspects as well as a detailed commercial case study for a methanol-fuelled 5,500 TEU containership.

Published

1 year ago

March 8, 2024

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In a recent amendment to the chapter on methanol in its guidance paper ‘Alternative Fuels for Containerships’, classification society DNV has added new technical information regarding potential fuel tank arrangements and bunkering, as well as a new section that discusses the business case for a methanol-fuelled 5,500 TEU containership operating in transatlantic trade between Europe and North America:

Steep increase in orders for methanol-powered vessels

According to the February statistics available from DNV’s Alternative Fuels Insight (AFI) online hub, there were 267 confirmed methanol-fuelled ships in operation or on order, most of them in the container segment (169). “In 2023, methanol emerged as the leading alternative fuel option, securing the highest number of ship orders, totalling 138 (excluding methanol carriers),” revealed Jan-Olaf Probst, DNV’s Executive Vice President of Business Development. “Among these orders, containerships accounted for the predominant segment, with 106 vessels set to run on methanol.”

Study compares TCO for different design variants for mid-sized containership

Titled “Commercial considerations for a mid-sized containership”, the new section in the DNV guidance paper summarizes a commercial analysis undertaken by DNV for the 5,500 TEU vessel to determine the total cost of ownership (TCO) for several design variants: a conventionally fuelled ship, a dual-fuel methanol-ready design, and a dual-fuel methanol-fuelled ship. The analysis includes separate evaluations for various hypothetical fuel price scenarios. The study assumes an operational life cycle of 20 to 25 years for the vessel.

Key influential cost factors identified

The detailed discussion covers all cost components, including capital investments (CAPEX), financing costs (FinEX), operating expenditures (OPEX), fuel costs (FuelEX) and fuel-related carbon costs (GHGEX). Especially the future fuel and greenhouse gas costs are difficult to predict. Three key influential factors for these cost items have been identified: the uptake and availability of alternative fuels; the availability of technologies to remove CO2 from the atmosphere (carbon capture); and the effects of the regulatory development on restrictions and costs of GHG and air pollutant emissions.

t2 con 470 average cost components

Analysis rests on three assumptions

DNV based its analysis on three assumptions: (a) that the IMO Carbon Intensity Index (CII) will be the main driver for the fuel mix a ship will be operating on in the near future, and the IMO ambition has been adjusted to achieve 100% decarbonization by 2050; (b) the results of the DNV Energy Transition Outlook (ETO) as a base scenario for fuel price predictions, and three additional scenarios spanning potentially extreme variations between the price developments for fossil fuels (VLSFO/MGO) and carbon-neutral fuels (e- or bio-MGO/methanol); and (c) a CO2 pricing scenario based on ETO modelling but raised slightly to reflect the anticipated new decarbonization ambition by 2050.

t3 con 470 fuel price variations

Dual-fuel methanol vessels come at little extra cost but greater flexibility

Under these assumptions, the TCO for the 5,500 TEU methanol-fuelled containership amounts to approximately 494 million US dollars over 25 years of operation as an average between the most (USD 469 m) and least favourable scenario (USD 518 m). Given the uncertainties described above, the TCO can be considered as more or less equal for all three designs of the ship, with the methanol-fuelled vessel about 0.4% and the methanol-ready version 0.9% more costly than the conventional design. However, these differences may disappear if the building costs of methanol-powered ships come down as more new ships are ordered.

It is important to note that a dual-fuel methanol vessel provides increased flexibility in terms of fuel type, regional availability as well as unexpected fuel price developments. Given the small differences in TCO, this flexibility comes at little or no extra cost compared to a conventional oil-fuelled vessel.

t1 con 470 total cost of ownership for three different designs

Key for charter rates: Break-even daily rate

Two additional criteria should be looked at when planning a newbuilding project under commercial aspects: the annual costs and the resulting break-even daily rate. Charter rates must be well above the break-even rate for the investment to be profitable, and to brace against market risks.

Assuming 350 days of operation per year, the break-even daily rate for the vessel under study ranges between USD 52,000 and USD 60,000 at the beginning of service, depending on the fuel price scenario, and rises to between USD 65,000 and USD 73,000 (+23%) at the end of the financing period.

Carbon-neutral fuel variants expected to come at extra cost

Thereafter the annual costs are expected to drop to between USD 34,000 and USD 43,000 and by the end of operation will amount to USD 36,000 to USD 63,000. The increase over the years is mainly a result of the growing amount of carbon-neutral fuel that must be blended in for the vessel to remain compliant with tightening emission limits. In the event that carbon-neutral fuels are less expensive, the break-even daily rate will remain more or less constant during the financing period and again after its end.

Methanol-ready design reduces risks and costs of future fuel switch

The initial CAPEX for a methanol-ready design is about 3% higher than for a conventional design. Considering the small differences in TCO between the variants of the ship, and a potentially shrinking cost gap as more methanol-ready vessels are ordered, a methanol-ready design appears to be an attractive option; it allows the owner to install the methanol fuel system at a later time when fuel availability and prices, the regulatory environment and CO2 costs are clearer. Furthermore, there is a broader lender basis for newbuilding projects designed to operate on alternative fuels.

Fuel costs will form main share of operating costs over timeWhile the operating expenditures – excluding fuel costs – are not expected to differ much between the vessel variants studied, fuel costs alone may rise from currently 25% to 40% of annual costs to as much as 60% during the financing period, and will account for up to 90% of annual costs thereafter. The cost of carbon-neutral fuel will depend on its availability, and the amount of blend-in fuel needed to achieve compliance with emission regulations, especially the revised IMO GHG strategy, will be a strong determining factor for FuelEX.

t4 con 470 annual total expenditures

Note: The full Maritime Impact article by DNV can be found here.

Photo credit: Venti Views on Unsplash / DNV
Published: 8 March 2024

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Bunker Fuel

Singapore: GCMD develops calculator to explore IMO GFI-linked pricing system

Free cost and compliance calculator has been developed by its team based on the newly approved GHG emissions pricing framework by IMO’s MPEC 83 recently.

Published

5 days ago

April 16, 2025

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Singapore: GCMD develops calculator to explore IMO GFI-linked pricing system

The Global Centre for Maritime Decarbonisation (GCMD) on Tuesday (15 April) introduced a free cost and compliance calculator that has been developed by its team based on the newly approved greenhouse gas (GHG) emissions pricing framework by the Marine Environment Protection Committee during its 83rd session (MPEC 83).

The calculator will help maritime stakeholders explore how the two-tiered, GHG Fuel Intensity (GFI)-linked pricing system could impact operational costs.

GCMD said the buzz around International Maritime Organization's MEPC 83 and the newly approved GHG emissions pricing framework has been intense — and understandably so.

“To help make sense of it, our CEO Prof. Lynn Loo started with handwritten trajectory calculations to break down the core workings,” it said in a social media post.

“Building on that, our team has developed a simple, accessible cost and compliance calculator to help you explore how the two-tiered, GFI-linked pricing system could impact operational costs.”

The calculator is just one input—its results should be considered alongside other economic and operational factors to inform commercial decisions.

The tool covers covers heavy fuel oil (HFO), liquified natural gas (LNG), B24 biofuel, e-ammonia and bio-methanol.

“Whether you're assessing fuel options, planning newbuilds, or just trying to get a feel for what this might mean for your operations — this tool offers a useful first-cut view. For added clarity, we’ve included the workings on the side so you can trace the calculation process,” GCMD added.

Note: GCMD’s cost and compliance calculator can be found here.

Photo credit: Global Centre for Maritime Decarbonisation
Published: 16 April, 2025

Bunker Fuel

Singapore: Bunker fuel sales increase by 0.5% on year in March 2025

4.47 million mt of various marine fuel grades were delivered at the world’s largest bunkering port in March, up from 4.45 million mt recorded during the similar month in 2024, according to MPA data.

Published

6 days ago

April 15, 2025

Admin

Singapore: Bunker fuel sales increase by 0.5% on year in March 2025

Sales of marine fuel at Singapore port increased by 0.5% on year in March 2025, according to Maritime and Port Authority of Singapore (MPA) data.

In total, 4.47 million metric tonnes (mt) (exact 4,469,170 mt) of various marine fuel grades were delivered at the world’s largest bunkering port in March, up from 4.45 million mt (4,445,070 mt) recorded during the similar month in 2024.

Deliveries of marine fuel oil, low sulphur fuel oil, ultra low sulphur fuel oil, marine gas oil and marine diesel oil in March (against on year) recorded respectively 1.62 million mt (+0.6% from 1.61 million mt), 2.33 million mt (-3.7% from 2.42 million mt), 500 mt (+100% from zero), 100 mt (-98% from 5,100 mt) and zero (from zero).

Singapore: Bunker fuel sales increase by 0.5% on year in March 2025

Bio-blended variants of marine fuel oil, low sulphur fuel oil, ultra low sulphur fuel oil, marine gas oil and marine diesel oil in March (against on year) recorded respectively 51,900 mt (+100% from zero), 93,700 mt (+42% from 66,000 mt), zero (from zero), zero (from zero) and zero (from zero). A new addition of biofuel blend, introduced in February this year, B100, recorded no sales in March.

LNG and methanol sales were posted respectively at 39,000 mt (+1% from 38,600) and zero (from zero).

A complete series of articles on Singapore bunker volumes by Manifold Times in 2024 can be found below:

Photo credit: Maritime and Port Authority of Singapore
Published: 15 March, 2025

Events

Maritime Week Americas to assess how US policy changes will impact bunkering

Event, taking place in May, will try to assess how US policy changes will impact the day-to-day business of shipping and bunkering, as well as the maritime industry’s shift towards a zero carbon future.

Published

1 week ago

April 11, 2025

Admin

Maritime Week Americas to assess how US policy changes will impact bunkering

Maritime Week Americas is coming to the United States amid the trade mayhem and turmoil and will try to assess how US policy changes will impact the day-to-day business of shipping and bunkering, as well as the maritime industry’s shift towards a zero carbon future.

President Donald Trump has wasted no time in overturning the status quo and injecting massive uncertainty into every aspect of world trade, said ship.energy.

With the dust still nowhere near settling, there is no telling when the chaos will end or what the energy, shipping and bunker markets will look like in a month or year from now.

Llewellyn Bankes-Hughes, CEO of ship.energy, founder and organiser of Maritime Week Americas, said: “There is no doubt that the conversations at MWA25 will be livelier that ever as delegates battle to come to terms with a completely new world order. What all this turmoil means to shipping and bunkering, let alone to global, regional, and national economies, will be the question that everyone joining us in Tampa will be asking. Hopefully by the end of the event we will have some answers.”

Maritime Week Americas is always where the key questions are raised and answers are sought. With vigorous debate and frank discussion, well over 250 bunker buyers, suppliers and traders will gather in Tampa for an intense week that includes training, the MWA25 Flagship Conference, and – as always – some unmissable networking.

MWA25 will look at shipping and bunker markets throughout North, Central and South America and the Caribbean, examining traditional bunker markets and the ‘new’ fuels whose take-up is rapidly picking up pace. But can the same be said now for the United States?

Traditional marine fuels are still the mainstay throughout the Americas. The conference will examine fuel quality and quantity issues and take a close look at what is happening in some of the continent’s more active markets, such as Peru and Panama.

There LNG is now a mainstream marine fuel as its availability grows throughout the Americas, with Panama among the newest supply hubs. But is there potential for a backlash over LNG’s green credentials?

Biofuels are also on a fast upward trajectory, with Brazil and other countries now leading the way. But while LNG and biofuels look set to play a key role in fuelling ships for the foreseeable future, other fuels, such as methanol, ammonia and hydrogen may not be too far behind. These, and the full range of alternative fuels will be examined in depth during the MWA Conference.

More ports are now beginning to appreciate the environmental benefits of making shore power available to visiting vessels, with some – such as Miami – currently assessing the benefits of installing electric power facilities and others – such as Seattle – already planning to mandate cold ironing for cruise ships visiting the port. At the same time, more electric-powered vessels are beginning to appear, with Canada’s Montreal and Vancouver currently leading the way with new electric ferries. Meanwhile, the world’s biggest electric-powered ferry is expected to start operating between Buenos Aires in Argentina and Colonia in Uruguay by mid-2025.

For the first time, Maritime week Americas will include an entire session focused on Jamaica, an island determined to revitalise and boost its shipping, maritime and bunkering activities.

As always, MWA25 will feature some exciting networking events, designed to highlight the new venue and to ensure that the delegates take every opportunity to network.

Note: More information on Maritime Week Americas can be found here.

Photo credit: Petrospot
Published: 11 April, 2025