This year is shaping up to be a milestone one for the nascent US offshore wind industry, with two commercial-scale projects – Vineyard Wind, and South Fork – looking to go into construction as the sector finally starts delivering on its potential after frustrating regulatory delays.
Last-gasp legal challenges notwithstanding, start of work on the two projects with almost 1GW between them means the nation can at last look beyond the small-scale pioneers of Block Island and Coastal Virginia that currently account for its only offshore turbines.
With the federal government looking to lease over 3,200 sq km (2,000 square miles) of the outer continental shelf with nearly 13GW of potential capacity, the momentum behind future projects is also set to continue building.
The Bureau of Ocean Energy Management (BOEM), the federal agency overseeing offshore wind development in federal waters, is looking sell lease acreage with 7GW capacity in the New York Bight wind energy area (WEA) in early 2022, 1.5GW in Wilmington East in May, and another 4GW off the coasts of central and northern California in November.
BOEM likewise hopes to advance up to 75,000 square km of the Gulf of Mexico and another 52,000 square km in the Central Atlantic to WEA zones, with potential lease sales in the former as early as the end of this year.
“2022 is going to be a pivotal year for… the offshore wind industry to help keep us on track to achieve the Biden administration’s goal of deploying 30GW of offshore wind by 2030,” Josh Kaplowitz, vice president for offshore wind for renewable energy advocacy group American Clean Power Association (ACP) told Recharge.
No records of decision (ROD) are expected to be issued by BOEM this year, but the agency under the Department of the Interior currently has eight construction and operations plans (COP) under review and scheduled for ROD issuance in 2023 for nearly 13GW of capacity. The ROD is the final step in federal permitting and construction can be expected to begin shortly afterwards.
Construction at Vineyard and South Fork
After lengthy delays, the 800MW Vineyard Wind, owned by a partnership of Copenhagen Infrastructure Partners (CIP) and Avangrid Renewables, a subsidiary of Spanish utility Iberdrola, finally received its ROD in May of last year, followed by financial close in September, and construction breaking ground in November.
The 132MW South Fork was issued its ROD in December and while the joint venture of Orsted with New England utility Eversource has yet to announce financial close, construction is expected to begin early this year.
“A key priority for 2022 will be mobilising the domestic offshore wind supply chain to support Vineyard and South Fork while also preparing for the explosion of build that's set to occur in the next few years,” Chelsea Jean-Michel, offshore wind energy analyst with Bloomberg New Energy Finance (BNEF) told Recharge.
Not all projects that receive approval will begin construction soon after, but contract stipulations and state mandates will push for timely project delivery, potentially jamming up still inadequate US supply chain and port infrastructure.
The Orsted-Eversource joint venture will see the 804MW Revolution Wind and 880MW Sunrise Wind projects receiving their RODs in 2023, and with South Fork, all of which are scheduled to be marshalled out of the 35-acre (14-hectare) New London, Connecticut State Pier with an annual capacity of 324MW. State Pier was only last month given its much-delayed final federal approval to begin a $235m offshore wind upgrade, and when completed next January, will be hard-pressed to meet the construction schedules of nearly 2GW of capacity by 2026.
“We were held up during the last administration, so now we're trying to keep the same commitments to the states as if we weren’t held up,” Orsted’s chief executive of North American operations David Hardy noted to Recharge. “It's going to be interesting to see if all this goes smoothly, or if we're going to end up with some delays or having to re-engineer the projects.”
Ports strategy needed
In contrast to the massive offshore wind ports in Europe, the US offshore wind rollout will deploy a host of smaller ports, “requir[ing] a comprehensive logistical strategy… [and creating] a need for robust and comprehensive logistical services,” Liz Burdock, chief executive of industry advocate Business Network for Offshore Wind (BNOW) told Recharge. “We need to make sure states, businesses, and the workforce are prepared to handle the logistical challenges the industry will be facing in delivering these projects during a compressed timeframe.”
The US offshore wind supply chain is ramping up to meet the challenge.
New Jersey Wind Port broke ground last September, and dredging and other wharf-related work has already begun on the $465m, 280-acre marshalling, assembly, and manufacturing offshore wind hub.
Dominion Energy finally confirmed its orders for 176 Siemens Gamesa SG-14-222 turbines for its 2.6GW CVOW (Coastal Virginia Offshore Wind) project, enabling the go-ahead for the OEM’s $200m blade finishing plant on 80 acres in the Portsmouth Marine Terminal. The facility when completed in 2025 will have a capacity for 100 blades annually that will employ hundreds and spearhead development of the massive harbour facility.
Lucas Stavole, senior wind analyst for Wood Mackenzie, notes that while most supply chain investments have been directly tied to state capacity awards, “there’s now interest outside the bidding as well.
Because of the federal support… we’ve reached the point where this is a serious industry.
“It's just a matter of the companies having enough confidence that the industry is going to actually move forward,” he told Recharge. “Because of the federal support… we’ve reached the point where this is a serious industry and companies are taking it seriously.”
ACP sees $120bn in investment and economic activity generated by the US offshore wind industry over the next decade, while the Special Initiative for Offshore Wind at the University of Delaware sees $109bn.
Vessels are another looming bottleneck, and a study by Tufts University found that the US will need at least five WTIVs capable of handling 15MW+ turbines, but only one, Dominion Energy’s $500m Charybdis, is currently under construction.
“States and the federal government could help by subsidising these vessels, just as they have done for other major infrastructure projects,” said ACP’s Kaplowitz.
The US transmission grid likewise requires massive upgrades, and “offshore transmission will become an increasingly important question for states – we may start to see it have an impact on RFPs (requests for proposals),” forecasts BNEF’s Jean-Michel.
New York State will tie the deployment of existing fossil-fuel transmission infrastructure into its round three 2GW offshore wind solicitation this year. New Jersey is leveraging new federal rules, dubbed the state agreement approach (SAA), which allow state policy goals to be considered by regional transmission operators when evaluating transmission grid upgrade proposals, along with usual cost savings and need factors, to create the nation’s first planned offshore wind transmission grid.
“Unique approaches to transmission such as New Jersey's use of the SAA and/or reforming regional interconnection processes could also reduce risk,” Jean-Michel said.
Legal clouds still loom
Litigation headwinds may also hinder development. Like the ill-fated Cape Wind project, Vineyard Wind has attracted a league of opponents that span the political and social strata, and South Fork, the second project to receive its ROD, is also facing lawsuits in state and federal courts over procurement processes and environmental and fisheries impacts.
“Vineyard Wind and South Fork are among the most carefully planned and analysed infrastructure projects in US history, and we are confident that their permits will withstand legal scrutiny,” ACP’s Kaplowitz told Recharge.
If not, however, these lawsuits “could significantly set back the industry by demonstrating that even federally-approved projects with offtake agreements (and in Vineyard's case, having reached financial close) still face great risk from opposing stakeholders,” warned Jean-Michel.
Policy uncertainty may also hinder industry development, and while the Biden administration has lavished attention on the industry, it has so far failed to pass its signature $2tn Build Back Better bill, which contained key provisions tailored for the offshore wind industry, through Congress.
The Biden administration is heading into mid-term elections this year with low ratings, but the industry has gained popularity across the political spectrum on its job creation, emissions reduction and investment attributes.
“There is the perception that we should be worried if one party wins out over another… but offshore wind should not be a partisan industry,” Mike Olsen, vice president of policy and government affairs at Aker Offshore Wind, told Recharge. “Offshore wind provides jobs, energy security, economic development, environmental benefits, tax revenues and more. These benefits are non-partisan.”