The US government drew a minimal response from global investors after reaching out in early June to gauge interest in potential commercial-scale offshore wind development in the Gulf of Mexico (GoM), Recharge can reveal.
Germany’s RWE Renewables was the only offshore wind developer to respond over a 45-day public comment period to the initial request for interest (RFI) issued by the Bureau of Ocean Energy Management (BOEM), the federal industry regulator.
By comparison, there are 13 domestic and overseas companies actively developing offshore wind projects along the US Atlantic coast, with others including RWE ready to participate in upcoming lease sales. At least that many have publicly expressed interest in the nascent California and Hawaii markets.
Also commenting on a potential GoM launch were 25 clean energy advocacy, conservation, educational and environmental groups, individuals, and the American Petroleum Institute (API), a Washington, DC-based national trade association.
After taking office in January, President Joe Biden set a 30GW by 2030 national offshore wind goal versus 42MW in operation today. His administration launched the RFI as an “important first step to see what role the Gulf may play in this exciting frontier,” according to Deb Haaland, secretary of the Interior Department, which includes BOEM.
The RFI specifically sought feedback for a targeted swath of the outer continental shelf (OCS) facing the states of Alabama, Mississippi, Louisiana, and Texas, ranging from shallower areas of 60 metres (197 feet) or less able to support fixed-bottom foundations and those down to 1,200 metres that would call for floating platforms.
Louisiana, which has the most but not the best offshore wind resource of the four states, is the most interested in advancing the sector.
In May 2020, the US National Renewable Energy Laboratory (NREL) released two studies that found those states plus Florida, which also borders the GoM, had 1.87TW of gross technical offshore wind resource potential. Louisiana had 42% or 508GW.
The studies found GoM is “well positioned” for offshore wind development citing its shallow, warm waters, smaller average wave heights, and close to existing offshore oil and gas infrastructure.
Unique conditions there, however, such as hurricane exposure, lower winds, and softer soils introduce technology challenges and could complicate efforts for offshore wind to become cost competitive, according to NREL.
‘Need for commercial viability’
In three pages of comments, RWE said it believes that GoM wind resource is attractive and could benefit adjacent onshore electric power markets. “Both supporting economic development in the region that leverages synergies with its well-established oil and gas sector and helping to cut emissions to avoid the worst impacts of climate change.”
For decades, Louisiana and Texas have been the engines for growth in GoM oil and gas development, employing most of the 345,000 workers that construct, design, engineer, maintain, operate, and supply the extensive infrastructure there.
In 2020, GoM federal lease areas produced 14.6% of US crude oil that averaged 11.3 million b/d, according to the Department of Energy (DoE).
When considering all the different factors that create a path to successful and responsible development of offshore wind projects in the GoM, “the need for commercial viability requires careful consideration of accessible markets where the renewable energy can be sold,” RWE said.
“While RWE Renewables expresses interest in the wider RFI Area as a whole because we believe in the long-term potential of the GoM region for offshore wind development, market conditions today make it challenging to identify more specific areas to prioritise.”
Market conditions today make it challenging to identify more specific areas to prioritise.
RWE said gaining scale resulted in significant cost reductions for onshore wind in Texas, the leading US wind state. “The cost of offshore wind will also decline as it scales up in other US markets,” it said, suggesting that any GoM activity will trail the east and west coasts.
Governor Greg Abbott in Texas, the world’s 10th largest economy, has been unenthusiastic about offshore wind, viewing renewables more broadly as an unreliable source of electric power. Gas fuels more than 45% of electricity output in the state and supply is plentiful. The present boom there in utility solar PV is also forecast to extend into the 2030s.
Accessing Texas, whose economy is more than three times the size of those in Alabama, Louisiana and Mississippi combined, would appear necessary for offshore wind to gain the required scale to become cost-competitive with other energy resources. Texas is also the largest state electricity market.
Waning oil industry
In its comments, API noted that the US GoM OCS, especially in the shallower waters of the RFI area, contain numerous production and drilling facilities that are at or near the end of their design life.
API said it supports utilisation of alternative right-of-use and easements to repurpose these facilities – where possible – to support the production, transportation, or transmission of energy from sources other than oil and gas.
These activities could include wind and hydrogen generation, as well as carbon capture and storage, or aquaculture, plus research.
API said its members are concerned that some alternative use applicants – none were named – may attempt to utilise such a programme “simply to inappropriately defer mature decommissioning obligations instead of proffering substantive projects aimed at achieving the policy objectives outlined by Congress and this administration.”
The group urged BOEM to consider multiple actions prior to authorising any alternative uses such as requiring applicants to independently prove they have the financial capability to meet all legal and regulatory obligations including to decommission the applicable facility.