Converting container ships to alternative fuels such as methanol or ammonia demands significant investment and loss of cargo capacity but clever designs can mitigate those costs, says a new report from the Maersk Mc-Kinney Moller Center for Zero Carbon Shipping.

Additional capital expenditure for new ships and conversions range from 10% to 33% of the cost of a standard fuel oil newbuilding, the study found in considering converting from fuel oil to methanol or ammonia, and from LNG to ammonia.

Increased tank volumes required for methanol and ammonia due to their lower density than fuel oil mean lost cargo capacity has a big impact on lifetime costs, it said in the report Preparing Container Vessels for Conversion to Green Fuels.

Twin island designs with separate accommodation and engine funnel blocks fore and aft can reduce lost cargo space by placing fuel tanks under the accommodation, but this must be done during the ship construction phase. Cargo losses are a lot higher when tank preparation is not possible.

“Dual fuel newbuilds are an attractive option to reduce the costs and complexity of later conversions. However, they require more upfront investment that may not pay off if the desired future fuel does not become as widely available as expected,” the report said.

The Maersk Mc-Kinney Moller Center collaborated on the investigative project with American Bureau of Shipping, AP Moller-Maersk, MAN Energy Solutions, Mitsui & Co, Mitsubishi Heavy Industries, NYK Line, TotalEnergies, and Seaspan Corp using a 15,000-teu twin island design with tanks for 6,000 cubic metres of fuel oil giving a range of about 22,500 nautical miles (41,670 km).

A 15,000-teu fuel oil newbuilding price was assumed to cost $150m and a new LNG or ammonia vessel $174m.

To have the same full range as a conventional 15,000-teu ship, a newbuilding methanol design would need a tank capacity of 16,000 cubic metres, leading to a slot loss of about 240 teu. A vessel not prepared for conversion would require an additional tank next to the engine room with a slot loss of 610 teu.

Additional capex costs for a methanol-fuelled newbuilding would be in the range of 14% to 16% for the full distance range and 11% to 12% for a reduced range, with 10,000-cubic metre tanks, the report said.

Conversion to full range ammonia tank under the accommodation would require a capacity of 20,000 cu m leading to a 540-teu slot loss or with full preparation taking out three cargo bays, up to 1,100 teu.

However, a 65% cut in range to 7,900 nautical miles would take out just a single cargo bay for a 7,000-cubic metre ammonia tank. The researchers said that should be sufficient to travel between Singapore and southern Europe with a slot loss of around 400 teu.

Additional capex costs for an ammonia-fuelled newbuilding would be in the range of 23% to 24% for full range and 17% to 19% for reduced range ships.

LNG newbuildings made ready for ammonia raise prices even higher to between 28% and 33% more than a conventional ship as they require initial LNG configuration costs, a larger tank and further preparation for ammonia from the outset and again at conversion.

“Converting unprepared vessels only makes economic sense on longer timelines or where reduced range options reduce cargo loses,” the report concluded.

Claus Graugaard, head of onboard vessel solutions for the centre, told TradeWinds that carbon and fuel price costs were not included as the objective was to research the capex cost and cargo capacity impact, but the report did assume an LNG-fuelled newbuilding would break even in about eight years on historic price savings of $140/tonne to fuel oil.

“For conversion of a DF [dual -fuel] LNG vessel to DF Ammonia to remain a relevant option up to 10 years after newbuilding, the cost spread must be at least $107/tonne fuel oil equivalent,” the report said.

Graugaard said integrated newbuildings were most likely to be economical but added: “You can do conversions if you start being a bit smart about how you convert, what fuel flexibility you are trying to achieve and the range of the vessels.

“The range and the volume of fuels you are carrying has a huge optimising opportunity. Just thinking about conventional vessels in terms of duration and ranges as we have always done is probably not the clever way to go in the next 20 years of transition.”

Results for the conversion of bulkers and tankers will be published in later reports by the centre whose experts, supplied by its strategic partners, are getting into their stride producing open innovation platform research for use by the whole shipping industry to accelerate the green transition, Graugaard said.