Offshore wind turbine maker MHI Vestas plans to open its first US office next year and will begin engaging with the American supply chain in a much bigger way.

MHI Vestas, owned by Denmark’s Vestas and Japan’s Mitsubishi Heavy Industries, announced plans on Tuesday to invest $35m to begin testing its largest offshore turbine model, the V164-9.5MW, at a South Carolina facility owned by Clemson University.

“That’s our first step in showing our commitment to the [US] market,” says Adam Thomsen, MHI Vestas’ head of US growth implementation.

The next step, Thomsen says, will be opening a permanent US office sometime in the first half of 2018. The office will be somewhere in the northeastern US, but the company has not yet selected the state or city.

“The first wave of people we’ll get in will … hopefully be in preparation for a larger organisation,” Thomsen said at a press briefing Tuesday.

"We're very, very optimistic about the US market – we believe in it."

These first US-based employees will be tasked with “looking into the supply chain” locally, Thomsen says. “We want to build a US supply chain. We think that’s crucial to having this industry take off.”

“With what we’re seeing and hearing from our customers … 2GW [installed by 2025 in the US] is not an unrealistic target."

However, MHI Vestas does not plan to open to open its own nacelle or blade plant in the US for the foreseeable future – and does not believe the market as currently planned could sustain such a factory. The company operates production facilities in Denmark and the UK.

Having 2GW installed in the US by 2025 implies an annual market of 400-500MW from the early 2020s, as projects like Deepwater’s South Fork and US Wind’s Maryland development reach fruition.

But an offshore blade plant requires hundreds of millions of dollars of investment and a steady pipeline of orders, says Thomas Karst, chief sales officer at MHI Vestas.

“If you’re chasing [orders for] the main turbine components in a market that’s 400-500MW a year, every second year we’ll win, and every second year our competitors will win,” Karst says. “That will never sustain a wind factory of this magnitude.”

It’s critical that US offshore wind supply chain develop from the “bottom up”, rather than “throwing up a factory in what’s possibly a boom-bust market”, he says.

If you build a blade plant and then have to shut it down for a year while you await more orders, “your costs will obviously increase and your quality will go down because you have no continuity in the learning curve”, Karst says. “That’s not where we should start.”

Unlike the onshore wind market, where turbines account for most of a project's costs, they account for just 30% of the capital cost of an offshore project, Karst notes.

The “generic” remaining 70% –“the components and supplies and services that we’re sharing with [rival turbine makers] GE and Siemens” – is the place where the US supply chain should start to build itself up, he says.