Finally, US offshore wind is on an upward trend. How did we get here?

For years the US offshore wind market was in a state of arrested development, but progress ramped up in 2021. Our Director of Business Development, Jeff Anderson, looks back at a momentous year for the industry – and what can be done to supercharge development.

Four new offtake agreements for projects in Massachusetts and Maryland in the final weeks of 2021 capped off an eventful year for the American offshore wind sector.

An offshore wind farm with a vessel between turbines. The US offshore wind market is set to grow significantly in years to come.

The opportunity for the US offshore wind market, not only to lower emissions but to create jobs, is enormous. But federal, state, and local hurdles, and the challenges of an immature industry, meant that relatively little progress had been made since last time we looked at the state of the market, in 2019. That summer, there was much to be encouraged by: appetite for change, falling prices, and proposed targets for clean energy – but not much tangible action to build a sector on.

That all started to change in 2021. In March, the Biden administration launched a concerted push to catalyse the offshore wind sector. October saw the Bureau of Ocean Energy Management (BOEM) confirm seven lease auctions by 2025, construction began at the first commercial-scale farm, and the Infrastructure Investment and Jobs Act was signed into law. In December, four projects totalling 3.2GW were approved in Massachusetts and Maryland.

And that streak continued into January 2022, when New York state pledged $500 million to develop the sector – including ports, manufacturing, and supply chain infrastructure. It has been an unprecedented series of announcements that have created the conditions for real growth.

With the foundations in place for offshore wind to lead the American clean energy revolution, let’s look at what’s going well – and the opportunity areas where action is needed to really ramp up progress.

 

Approvals and Auctions

BOEM has now approved two commercial-scale offshore wind projects in US waters: Vineyard Wind 1 in Massachusetts and Rhode Island’s South Fork Wind. The 130MW South Fork project will have 12 turbines and located around 35 miles off the coast of NY. Construction is expected to begin summer 2023.

The BOEM’s confirmation of seven new lease auctions by 2025 has created regulatory certainty, which in turn breeds increased confidence from developers and investors. With Maine, New York Bight, Central Atlantic Carolina Long Bay, Gulf of Mexico, Northern & Central California, and Oregon slated for development, and a goal of 30GW installed capacity by 2030, the way is cleared for a vibrant industry over the next decade and beyond.

 

Infrastructure Deals

The US Infrastructure Investment and Jobs Act, signed into law by President Biden in November, has been described by politicians on both sides as a “godsend”. The new act will see significant investments across infrastructure ranging from O&M harbours to the electric vehicle charging network.

Separately, in the first week of January 2022, Governor Kathy Hochul of New York announced a $500 million investment in the state’s offshore wind industry, including developing and expanding its manufacturing and supply chain infrastructure, creating thousands of new jobs.

Both of these packages will be crucial in accelerating some of the upgrades needed to ports and the power grid that are needed for the sector to flourish the way it has in Europe.

 

Wheels in Motion

While there were encouraging signs for the market in 2019, a number of tangible big steps forward has changed the mood from one of cautious optimism to full-on positivity. President Biden’s administration is powering ahead with the infrastructure deal, new projects are now being consented regularly, and Vineyard Wind 1 is under construction. Irrespective of a change of administration, there is momentum and the push is no longer purely a renewable energy play – it’s an economic benefit and jobs market play, with the industry having the potential to create up to 80,000 skilled, well-paid jobs. No incoming president would put the brakes on a job creation opportunity of that scale, no matter what.

 

The Skills Gap

There has been plenty of good news recently, but developers and consultancies still feel that a lack of talent could be a major stumbling block for the sector.

For good reason, offshore wind developers want experienced people who’ve been there and done it to lead their projects. With 17 projects in the works in the US right now, and New York’s state potential to generate another eight imminently, that’s at least 150 roles to be filled with experienced players who need to be sourced.

Bringing candidates across from other sectors is an option – there is a considerable, diverse and experienced talent pool in industries like oil and gas and manufacturing. But the complexities of convincing people to move sector, especially those with experience, is driving up salaries. These are not insurmountable issues but, if they continue unchecked across the industry, might not be sustainable.

 

Collaboration is Key

Large infrastructure projects like offshore wind farms are complex, with complicated supply chains. The overall state of the US supply chain has improved since 2019 – we’ve seen some monopile fabricators commit to building homegrown plants. But with each state operating autonomously, individual states are still competing against each other to bring in facilities – every state wants to have a blade manufacturer in its jurisdiction, for example. The introduction of joined-up thinking and cooperation between states to split the manufacturing base among them will go a long way, bringing new synergies, creating sustainable jobs and a cost-effective supply chain that works for everyone.

 

Vessel Laws Still a Hurdle

The 1920 Jones Act means that to transport goods within three miles of the coast, vessels must be US-flagged and owned. This was a wartime ruling that has unintended consequences for offshore wind construction, which needs transport and installation (jack-up) vessels. To get to 30GW by 2030, at least five US-flagged turbine installation vessels are needed – and there are currently none. Commissioning a new jack-up vessel can take up to four years, and while NOV is working on the construction of the first Jones Act-compliant vessel of its kind, it’ll only be used for Dominion projects.

There are ways round this shortage – using Canadian ports or feeder barges, for example. But neither are a practical, cost-effective solution. The other offshore wind developers in the US will have to find one, and fast.

 

Conclusion

The recent flurry of positive developments has bred the feeling that a corner has been turned – the momentum is now with the sector. There are now several confirmed development sites, two commercial-scale projects approved, one of which is under construction, and the mood has changed to one of full-on optimism. But the old challenges around supply chain and personnel are still creating some uncertainty, meaning collaboration between companies and states is necessary to find the solutions. Once that happens, the US is on track to be one of the world’s biggest offshore wind sectors: a clean energy-generating, job-creating juggernaut that not even an anti-renewables president can derail.

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