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The future of US offshore wind: the top ten biggest projects

Nascent sector will grow from 30MW to several gigawatts over the coming years, writes Richard A Kessler

In four short years, US offshore wind has transitioned from a 30MW five-turbine pilot project operating off Rhode Island to a potential major new source of clean, cost-competitive energy for the nation’s most populous coastal states.

Industry forecasts suggest US offshore wind capacity could grow to as much as 16GW by 2030, although this will be influenced by multiple factors such as how fast projects can navigate through the regulatory process, supply-chain development, pricing and technology trends.

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Market interest is being driven by a surge in policy commitments by states along the eastern seaboard from Maine to Virginia. Official state offshore wind capacity commitments now total about 23GW by 2035, which, in turn, has spurred increasing robust competition at lease auctions. Those tenders scheduled next year in New York and California are expected to generate record-high revenues for the federal government.

For this ranking, Recharge has chosen only those projects where developers have exclusive development rights in a given lease area and a viable off-take mechanism for sale of electricity. All are on the outer continental shelf administered by the federal government, except for Icebreaker Wind.

10) Icebreaker Wind – (20.7MW)

The nation’s only freshwater array will be installed about 13km from shore in shallow Ohio-owned waters in Lake Erie facing the city of Cleveland, with construction expected to start in 2021 and commercial operation in 2022.

The $126m pilot — which has won federal approvals and is in the final state permitting stages — will act as a catalyst for future commercial-scale projects in the Great Lakes and to make Ohio and the surrounding region an offshore wind supply-chain hub.

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Icebreaker Wind expects to use six specially adapted offshore versions of Vestas’ 3.45MW V126 onshore turbines. The foundations will combine gravity bases with suction buckets, like those deployed at the 269MW Deutsche Bucht offshore array in the German North Sea.

LEEDCo, a non-profit, public-private partnership based there, is co-developing Icebreaker Wind with Norwegian equity investor Fred Olsen Renewables.

Cleveland Public Power, the city-owned municipal utility, will buy 63.6% of Icebreaker’s output over 16 years at an undisclosed rate. LEEDCo is talking with other parties interested in securing the balance.

9) Skipjack – (120MW)

This project off the coast of Delaware, in the smallest area so far leased in the Atlantic, will employ ten 12MW GE Haliade-X turbines.

Denmark’s Orsted, which became the project owner last November by acquiring developer Deepwater Wind, is eyeing commercial operation in 2023, although Skipjack still requires the necessary federal permits.

In 2017, Maryland awarded Offshore Wind Renewable Energy Credits (ORECs) for Skipjack’s 120MW of capacity for 20 years (the project is credited with one OREC for each MWh delivered to the grid). Each year, 455,482 ORECs will be sold at an above-market and levelised price of $131.94/MWh, guaranteeing a revenue stream and allowing the project to secure financing.

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8) South Fork – (130MW)

Orsted is developing this project with Eversource, the largest energy supplier in New England, in the Deepwater ONE North zone off the coasts of Rhode Island and Massachusetts. In July, the joint venture awarded Siemens Gamesa a conditional contract to supply 8MW SG 8.0-167 turbines.

The project has a 20-year power-purchase agreement (PPA) with Long Island Power Authority (LIPA), the transmission system owned by New York state. The PPA price has not been publicly disclosed, nor has the project cost, and South Fork still requires the federal permits needed to allow a 2022 commercial start.

7) Marwind – (248MW)

US Wind, a subsidiary of Italy’s Toto Holding, won rights in 2014 to a modest-size zone east of Ocean City, Maryland, with about 970MW of potential capacity. In 2017, the state awarded ORECs to subsidise an initial 248MW phase at a price of $131.94/MWh over 20 years; each year, 913,945 ORECs will be sold to utilities to guarantee a revenue stream.

The project still needs late-stage federal regulatory approvals and is yet to name a turbine supplier. Marwind has undergone several iterations, partly due to concerns about its visual impact on the local tourism economy and property values in Ocean City. The latest plans call for 32 turbines and a 2023 commercial start.

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6) Revolution Wind (700MW)

Orsted and Eversource will also develop this array in the Deepwater ONE North zone, with Siemens Gamesa winning a conditional supply contract for 8MW SG 8.0-167 turbines. Subject to permitting, plans call for commissioning in 2023.

Elected officials are touting Revolution Wind as perhaps the best example thus far of regional cooperation to help enable the industry’s development. For the first time, two states — Connecticut and Rhode Island — will buy output from a single project and benefit from supply-chain investment.

Orsted has signed 20-year PPAs with utilities in both states. National Grid in Rhode Island will take 400MW of capacity at an all-in price of $98.43/MWh, while Eversource and United Illuminating agreed to buy 200MW at $94/MWh and an additional 100MW with pricing set to be made public.

In Rhode Island, the project will create more than 800 construction jobs and provide $40m to upgrade port facilities in Providence and Quonset Point. In Connecticut, it will contribute $22.5m toward a public-private initiative at the Port of New London that will upgrade its heavy-lift capacity for assembly of wind turbine components including towers and create over 300 construction jobs.

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5) Vineyard Wind (800MW)

Iberdrola’s Avangrid and Copenhagen Infrastructure Partners (CIP) jointly own this $2.8bn project, the commercial-scale pioneer in the US, south of Massachusetts’ Martha’s Vineyard island. MHI Vestas will supply 84 of its V164-9.5MW turbines, its first large US offshore order.

In August, the industry flagship hit a complication when the Trump administration delayed granting a key permit necessary for construction, which had been due to start this year, and ordered a further environmental review that will include the cumulative impact of all proposed Atlantic offshore wind projects and likely state procurements. It expects to complete the study in early 2020, then seek public comment on the findings over 45 days before resumption of the permitting process that will conclude with regulatory approval - possibly in the second quarter.

The delay and ongoing regulatory uncertainty prompted Avangrid and CIP to acknowledge that the original timeline to complete the project by the end of 2022 was no longer feasible. Contracts with electricity distributors appear to have some delivery timeline flexibility. Both sides and state officials are committed to the success of these pioneering offshore commercial contracts.

On the premise that construction would begin in 2019, Vineyard Wind pre-qualified for an ITC worth 21% of capital expenditure — a key reason it was able offer record-breaking winning bid prices in the state’s initial solicitation of $74/MWh in the first year for the initial 400MW capacity and $65/MWh for the balance over 20 years.

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It may still qualify for the 21% ITC as permitting delays can possibly be recognised by tax authorities as a valid reason to maintain pre-qualified tax-credit levels.

4) Empire Wind (816MW)

Norway’s Equinor (formerly Statoil) scored a US breakthrough in July when New York selected Empire Wind to supply capacity in the state’s first offshore wind power solicitation. The $3bn project will employ 60-80 turbines — no OEM selected yet — in a triangular segment of the Hudson North zone facing Long Island, where it won rights in 2016. Around $60m will be spent on port upgrades that will support future projects and help position New York state as a US offshore industry hub.

The state has set a 2024 deadline for the start of commercial operation. Equinor says it could begin project development as early as spring 2021 with construction in 2022 but this will depend on how well it can successfully navigate the federal permitting process.

Equinor signed a 25-year PPA with the New York State Energy and Research Development Authority (Nyserda), which oversees the offshore wind tender process. The project will have an average all-in development cost of $83.36/MWh (2018 dollars), according to the state. Nyserda will buy ORECs from Equinor and resell them to load-serving entities to meet their obligations under the state's Offshore Wind Standard, which requires the purchase of at least 9GW of offshore wind power by 2035.

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3) Sunrise Wind (880MW)

This Orsted/Eversource project was the other winner in the July New York tender and will serve grid-constrained Long Island, where energy prices are high, using Siemens Gamesa’s SG 8.0-167 turbines.

Sunrise Wind will be developed adjacent to the Revolution and South Fork projects in the Deepwater ONE North zone, about 48km (30 miles) east of Montauk Point, Long Island. Deadline for commercial operation is 2024.

The joint venture owners will now pursue the necessary federal permits. Equinor signed a 25-year PPA with the New York State Energy and Research Development Authority (Nyserda), which oversees the offshore wind tender process, with the project having an average all-in development cost of $83.36/MWh (2018 dollars), according to the state. Nyserda will buy ORECs from Equinor and resell them to load-serving entities.

Favourable to the project’s selection were proposed investments to create a National Workforce Training Center for offshore wind in partnership with Suffolk County and a new O&M facility with dockage for a 76-metre service operation vessel in the greater Port Jefferson region that will create more than 100 full-time jobs.

2) Ocean Wind (1.1GW)

Orsted won New Jersey’s first offshore wind capacity allocation in June for this project 24km off the coast of Atlantic City.

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Ocean Wind offered a first-year OREC price of $98.10/MWh, but did not publicly reveal the income for the remaining 19 years of the award. The levelised net OREC cost - which represents the actual OREC costs paid by ratepayers after they receive capacity and certain other revenues - is estimated at $46.46/MWh over the contract life.

Public Service Enterprise Group, which owns the state’s dominant power utility and will build the project's onshore transmission infrastructure, has an option to acquire an equity interest.

Orsted anticipates it will need up to two years to have all the permits in place, with the 90 GE Haliade-X turbines spinning by 2024. Ocean Wind is eligible for a 12% federal investment tax credit (ITC). The state says the project will bring $1.17bn in net economic benefits to New Jersey and create 15,000 jobs over its life.

Significantly, this could include the nation’s first purpose-built factory to fabricate monopile foundations in or around the Port of Paulsboro, which would serve Ocean Wind and other projects along the east coast. Orsted has signed a memorandum of understanding with German offshore structures fabricator EEW, and the two sides are working out details.

1) Dominion (2.64GW)

Unveiled in September, this massive project off the coast of Virginia would be among the world’s largest. It differs from others in the US in that developer Dominion Energy will seek to recover costs through its customer base. The investor-owned, vertically integrated utility with 2.5 million customers in the state and no offshore wind experience has not said how much the array will cost.

Governor Ralph Northam has placed Virginia’s offshore wind future entirely in the hands of Dominion and, unlike other states, there are no plans to promote competitive offshore wind power supply. His administration will work with Dominion to get the project through the federal permitting process.

But the project could face political risk after Northam, a Democrat, leaves office in 2022. State law prohibits consecutive terms by governors and his successor may be less supportive.

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