Key View

  • Recent actions by the Biden Administration, including the establishment of a target to develop 30GW of offshore wind capacity by 2030 as well as efforts to expand and extend tax credits for the sector, pose significant upside risk to our already robust forecasts for US offshore wind power development over the coming decade.
  • State policies in support of offshore wind development will magnify the impact of a shift in federal policy approach toward the sector, with a number of state governments set to continue to strengthen support for the buildout of offshore wind.
  • The ongoing development of supporting port infrastructure and supply chains to support offshore wind construction, operation and maintenance will also provide a key boost to the sector, with New Jersey and New York in particular set to drive significant investment.


Recent actions by the administration of President Joe Biden, including the establishment of a target to develop 30GW of offshore wind capacity by 2030 as well as ongoing efforts to extend and expand tax credits for the offshore wind sector, pose significant upside risks to our forecasts. In February 2021, we revised up our capacity growth forecast for the US offshore wind power sector as a result of an expanded offshore wind project pipeline, with our forecast including 11.5 gigawatts (GW) currently set to come online by the end of the decade. That said, increasing support for the sector at the federal level under the Biden administration, in office since January 20, leads us to expect that sizeable upward revisions to our forecasts are likely over the coming years. Most notably on March 29 2021, the White House released a joint statement from the Interior (DOI), Energy (DOE), Commerce (DOC), and Transportation (DOT) Departments which outlines a set of actions aimed at rapidly advancing the development of the US offshore wind industry. In the statement, the DOI, DOE and DOC announced a shared goal of deploying 30GW of offshore wind in the US by 2030 – a significant ramp up from the 42 megawatts (MW) of offshore wind capacity in operation as of April 2021. Among the actions outlined in the statement which are set to boost the industry towards meeting the 30GW goal, we highlight:

  • Plans for new lease sales by the Bureau of Ocean Energy Management (BOEM): The BOEM, which sits within the DOI, announced a new Priority Wind Area in the New York Bight. The area – which is located along the shallow waters that are adjacent to the New York City metropolitan area – is well positioned to hold a significant number of offshore wind developments. BOEM plans to hold a formal lease sale in late 2021 or early 2022 with the award of new leases key to the further expansion of offshore wind development beyond the existing project pipeline, particularly following a lull in new leases since 2018 under the Trump administration.
  • Acceleration in federal reviews and permitting for offshore wind projects: The BOEM plans to complete reviews of Construction and Operation Plans for at least 16 offshore wind projects by 2025, with the projects totalling more than 19GW of potential offshore wind capacity additions. Additionally, the BOEM has begun speeding up the advancement of federal permitting for offshore wind projects, with the bureau announcing it is preparing environmental reviews for the 800MW Vineyard Wind I, the 90MW South Fork, and the 1,100MW Ocean Wind offshore wind projects and will initiate reviews for up to ten additional projects in 2021. We note that permitting delays at the federal level have been a key barrier to the initial development of the offshore wind sector in recent years.
  • Increased funding for developments within the offshore wind sector: The announcement includes several funding announcements in relation to offshore wind project developments. Most notably, the DOE has allocated USD3bn in funding for offshore wind through its Innovative Energy Loan Guarantee Program, with funds set to go to the development of both offshore wind projects and offshore transmission development. Additionally, the DOE and New York State Energy Research and Development Authority (NYSERDA) announced the awarding of USD8mn in funding to 15 offshore wind research and development (R&D) projects, which aim to boost supply chain development and reduce barriers and costs within the US offshore wind power sector. The US Department of Transportation also announced USD230mn in funding for port infrastructure projects including those related to offshore wind energy projects.

In addition to these policies, we note significant upside risk from the heightened potential for an extension and expansion of tax credits available to offshore wind developers. On March 31, US President Joe Biden unveiled his American Jobs Plan (AJP), a proposed USD2.3trn spending plan including funding for physical infrastructure as well as research, manufacturing, workforce training and home and community-based care for the elderly and disabled. Among planned spending is USD100bn in funding for power and energy infrastructure, a considerable portion of which would go toward a ten-year extension of an expanded direct-pay investment tax credit (ITC) and production tax credit (PTC) for renewable energy and storage projects. Offshore wind developers currently can access a 30% ITC for projects that start construction through 2025, although developers must find tax equity investors to take advantage of the credits. As such, a switch to direct pay tax credits would eliminate the need to find a tax equity investor and would allow developers to access the tax credits directly, while a 10-year extension would provide longer-term visibility – further incentivising developments within the sector. While we have yet to factor investments proposed in the AJP into our offshore wind forecasts, we expect to see a considerable increase if the proposed investments are passed into law later in 2021.

Continued State-Level Actions To Magnify Impact of Supportive Federal Policy Approach

The impacts on project development of a more supportive federal policy approach will be magnified by continued support at the state-level. While federal level-support will be important in ensuring timely permitting and financial support mechanisms within the US offshore wind sector, we note continued support from state governments will remain the primary driver of growth in offshore wind as state policies enable the advance of new projects over the coming years. States primarily along the Eastern Seaboard have adopted policies to greatly expand offshore wind capacity in recent years, including the adoption of long-term offshore wind capacity goals, the holding of offshore wind solicitations which have resulted in the award of long-term PPAs to projects involving a total of nearly 12GW in capacity, as well as other supportive policies such as funding for port improvements, supply chain development and workforce training.

Recent months have seen a number of new examples of such policies, including previously-highlighted state-level actions taken since 2020 by the state governments of New York, New Jersey and Rhode Island. Most recently in March 2021, Massachusetts Governor Charlie Baker signed a bipartisan bill into law which boosts the state’s offshore wind procurements through 2027 by an additional 2.4GW – the state now aims to bring online 5.6GW of offshore wind capacity over the coming decade. We expect the strong support for offshore wind development shown by state governments in recent years will continue over the coming decade, underpinning the growth of offshore wind development in the US and supporting our positive outlook for offshore wind, with risks heavily weighted to the upside as a result of both increasing federal support as well as continued support at the state-level.

Port infrastructure developments key to realising offshore wind ambitions

In addition to increased policy support at the federal level and continued support at the state level, we highlight that steps toward the development of port infrastructure and offshore wind supply chains in recent months also stand to support offshore wind development. Recent months have seen a growing focus on the development of port infrastructure facilities needed for the manufacturing and assembly of offshore wind components as well as offshore wind construction, operation and maintenance, as existing infrastructure is insufficient to support the Biden administration’s offshore wind development goals. We expect investments in port infrastructure and supply chains related to the offshore wind industry will grow rapidly over the coming quarters as large-scale offshore wind projects gain momentum and state policies support key port and supply chain projects. The governments of New Jersey and New York in particular appear set to see significant investment in port infrastructure and supply chains for offshore wind, in large part reflecting both states’ considerable offshore wind development plans and specific policies aimed at boosting port infrastructure development. In the case of New Jersey, the state government in June 2020 pledged to develop the New Jersey Wind Port in Lower Alloways Creek to serve as a base for staging, assembly, and manufacturing activities related to offshore wind projects. The project is being managed by the New Jersey Development Authority (NJEDA) with the state government aiming to spend USD200mn on developing the project, with funding included in Governor Phil Murphy’s proposed budget for the fiscal year beginning on July 1, 2021. Additionally, in December 2020, it was announced that EEW will set up a USD250mn monopile manufacturing facility at the Paulsboro Marine Terminal which in turn will provide monopiles for the 1100MW Ocean Wind project. Construction on the facility began in April 2021.

In the case of New York, the state government has pledged to invest USD200mn in the development of offshore wind port infrastructure over the coming years, with port infrastructure investments included as a key component of the state’s 2020 Offshore Wind Solicitation. Following the selection of two projects presented by Equinor Wind US LLC, involving a combined 2490MW of capacity, port infrastructure will be the focus of a combined USD644mn of public and private investment over the coming years. Among ports included in the proposal presented by Equinor Wind US LLC are the South Brooklyn Marine Terminal, which will serve as a staging facility and operations and maintenance (O&M) hub, and the Port of Albany, where a wind tower manufacturing facility will be located.

The continued expansion of port infrastructure and supply chains over the coming years will be key to support the buildout of offshore wind in the US, given the particular demand for specific infrastructure facilities able to serve the functions required for offshore wind construction and maintenance, and the lack of such facilities currently. As such, the advances in port and supply chain development seen in recent months bode well for our outlook, with continued growth in port and supply chain investment key to supporting the growth of offshore wind over the coming decade and beyond.

The above article has been sourced from Fitch Solutions and can be accessed by clicking here