This is an extract from a recent report by Global Wind Energy Council titled “Global Offshore Wind Report 2022” focusing on the offshore wind market in the US.
Since the ambitious 30 GW by 2023 offshore wind target was released by the Biden–Harris Administration, there has been a noticeably positive attitude towards pushing the rollout of offshore wind on the political agenda. Although no new offshore wind turbines were installed in the US in 2022, the US offshore wind market continues to gain strong momentum in both state and federal waters.
Raised action at federal level
The Bureau of Ocean Energy Management (BOEM) is the US organisation that manages and is responsible for the offshore wind market in federal waters. Since the issue of the Outer Continental Shelf (OCS) Renewable Energy Program, which made the production and transmission of renewable energy sources like offshore wind much easier to procure, BOEM has issued 25 commercial and 10 competitive offshore wind energy leases in the Atlantic Ocean, ranging from Massachusetts to North Carolina. To position the domestic offshore wind industry to meet the 2030 target, BOEM has been extremely active in the past 12 months, working to identify areas of unexplored wind energy potential. This has been paired with fast paced leasing auctions in a bid to align output with ambition.
The collaborative efforts by BOEM and a flood of developers in the New York Bight leasing round led to this being the largest ever offshore wind industry auction in US history. With the proposal being made in January 2022, and the auction being held in February 2022, there was a shortened timeline which saw this auction closed in Q1 of 2022. This leasing round saw the auction of circa 448,000 acres of seabed off the coast of New York up to New Jersey allocating 5.6 GW of offshore wind capacity to six bidders. With a record USD 4.37 billion being generated in revenue, the auction set new records.
Coming in second to this auction was the announcement of the wind energy auction in Carolina Long Bay which saw the auction of two leasing areas off the coast of North and South Carolina. At full capacity this region has the potential to produce an output of 1.3 GW of offshore wind energy which could power 500,000 homes. The two winning developers of the auction round generated a revenue of USD 315 million.
Following the Carolina Long Bay lease, completed by BOEM in May, a now clear schedule for the Californian offshore wind market will see the leasing of 373,268 acres of seabed in federal waters of the Humboldt Call and Morro Bay Call areas. This boasts a potential of 4.5 GW of installed wind power generation. This auction, which follows the Call for Information and Nominations for offshore wind areas in California in 2018, is planned to take place in Q4 of 2022 and will be the first US project to award offshore floating wind. BOEM is expected to publish a Proposed Sale Notice in Q3 of 2022 that will allow for a public consultation, welcoming comments on the details about the two proposed lease areas.
Looking ahead to what can be expected from the US and the efforts of BOEM, the next area for offshore wind growth is due to be the Gulf of Mexico. BOEM has issued a Call for Information and Nominations to assess the commercial interest and viability in this region. In light of this, BOEM is scheduled to issue a draft Environmental Assessment for the Gulf of New Mexico in the middle of 2022. Other areas of interest with planned auctions include Central Atlantic and Oregon in 2023 and the Gulf of Maine in 2024.
In addition to the Department of Interior’s approval of the construction and operation plan of the Vineyard Wind project – the first large-scale offshore wind farm in the United States – in May 2021, BOEM has also started a series of environmental reviews of offshore wind projects on the east coast. These include Revolution Wind project, Ocean Wind project, Kitty Hawk offshore wind project, Dominion Energy’s Coastal Virginia Offshore Wind project and US Wind’s wind project offshore Maryland. The end of last year also saw the announcement of the Record of Decision (ROD) by BOEM for the South Fork Wind project. Similar to the Vineyard wind project, this project is due to come online delivering power to New York in 2023.
Growing ambition including floating at state level
At the state level the US has experienced a rise in declared ambition, with this year’s standout announcement of an additional 3 GW of offshore floating wind installations by 2030 by the California Energy Commission (CEC). Floating wind is establishing its place in the offshore wind industry as a solution to exploit the vast wind potential being offered by sites with deeper waters. This new technology is enabling even greater ambition than ever before. In addition to the target in California, a new bill outlining a plan to develop 3 GW of floating offshore wind capacity in Oregon by 2030 has been introduced in the state’s House of Representatives. If enacted, the bill will enable planning the development of 3 GW of commercial scale floating wind projects within federal waters off Oregon’s coast by 2030. Louisiana also announced a 5GW target of installed offshore wind capacity by the year 2035, making this the states first ever policy based Climate Action Plan. This plan details around eighty four actions that must be conducted to enable socioeconomic growth in the state.
Massachusetts also passed an increased offshore wind target of 5.6GW by 2027 at state level in late Q1 of 2022, which is the second time that the state raised its offshore wind target. So far the state has procured 3.2GW of installed offshore wind capacity and so the trajectory is positive and within reach. After taking into consideration the progress made at state level, the total announced offshore wind procurement targets are now 49.5 GW. This is a 28.6% increase in state level commitments from the previous year where the target was positioned at 38.5GW. If these targets are met this will propel the US to be able to make significant changes in global emission contributions.
Strong market growth expected from 2025 onwards
According to the GWEC Market Intelligence global offshore wind database as of June 2022, the US offshore wind pipeline total has reached 40 GW for both federal and state waters. This includes 21 offshore wind projects which have secured offtake or won state solicitations and announced an anticipated year of operation. Developers expect a total of 18 GW of offshore wind to be online between 2023 and 2029. Of the 18 GW of offshore wind capacity, 23.4% is likely to be built in New York, followed by New Jersey (20.5%), Massachusetts (17.7%), Virginia (14.4 %) and Maryland (11.2%), making these the top 5 offshore wind states in expected new installations. With regards to project ownership, the situation is the same as last year and the majority of assets, planned to be built in 2023-2029, are controlled by European developers including Ørsted, Avangrid Renewables (a subsidiary of Spain’s Iberdrola), EDPR, Ocean Wind and CIP as well as oil and gas companies like Equinor, BP and Shell.
Compared to GWEC’s US offshore wind outlook in last year’s Global Offshore Wind Report, adjustments have been made for the commission date for projects expected to come online in 2024 and 2025. The primary reason for this is the change of project commission date for some projects. Additionally, in GWEC’s updated US offshore outlook we included two projects that won the second offshore wind solicitations in Maryland and another two that won the third solicitations in Massachusetts at the end of 2021. As a result, GWEC Market Intelligence believes that the strong offshore wind growth is likely to take place from 2025 instead of 2024.
As of June 2022, offshore developers have selected or announced preferred turbine suppliers for ten offshore projects. Thanks to Dominion Energy’s 2,640 MW project off the coast of Virginia, Siemens Gamesa remains as the largest winner with a 4,354 MW order backlog in the US. Vestas took over GE as the second largest supplier after Empire Offshore Wind – a joint venture between Equinor and BP named the Danish turbine manufacturer as the preferred supplier for the 2.1 GW Empire Wind 1 and Empire Wind 2 offshore wind projects in New York last October. Although, GE Renewable Energy’s order backlog in the US is just 1% lower than Vestas. As of today, the most popular models selected for US offshore wind projects are SGRE’s SG15-222 DD, Vestas V236-15.0 MW turbines and GE’s Haliade X- 13MW DD.
Overcoming challenges in the US supply chain
Following the breakthroughs made on the federal and state levels, further progress has been made to address the several challenges. Authorities are making ample effort to take advantage of the expertise of Europeans companies and markets to leverage wind potential in a project-based approach.
Local supply chain –Balance of plant
The US embarked on the construction of its first offshore wind tower manufacturing plant as of 2022, a contract awarded by the Port of Albany. A US based OEM won a USD 42.7 million contract as part of a joint venture with a view to manufacturing homegrown wind towers by late 2023.
Another component that is developing in the US supply chain is that of cables. At the end of last year, the UK based Prysmian Group secured USD 880 million in offshore wind cabling projects, awarded by Vineyard Wind. As a result, they will be building a cable plant in the US to accommodate the commission of the three core cables (HVAC 275 kV) with XLPE insulation and single wire armouring.
Local supply chain – Vessels
The Jones Act still stands as a dominant bottleneck adding to the lengthy timelines of project rollouts in the US offshore wind market. However, the market has adjusted to this to deliver projects which are, in many cases, supported by European based companies.
The market is, however, experiencing raised private sector efforts to work around these restrictions including the joint venture by Equinor and BP to support the Empire Wind offshore wind farm project. Together they have awarded a long-term service operation vessel (SOV) charter agreement to Edison Chouest Offshore (ECO), a US-based company, in order to be compliant with the Jones Act. This SOV will be the first in US waters to be hybrid with capability to operate partially on battery power.
The Danish subsidiary Maersk Supply Service has this year chartered a wind turbine installation vessel (WTIV), which will be used in the installation of the 15 MW Vestas manufactured turbines in both Empire one and two. This vessel is expected to come into operation around 2025. Maersk mitigated concerns regarding a breach in the Jones Act by chartering this vessel as it is constructed with barges and tugs supplied and managed by Kirby Offshore Wind, a US-based company.
Infrastructure – Ports
Investments in port infrastructure is a critical component of enabling the offshore wind sector to play it’s part in reaching decarbonisation targets.
Infrastructure – Grid
A State Agreement Approach (SAA) has been approved by the Federal Energy Regulatory Commission (FERC) to implement the wind transmission grid solicited in New Jersey. The SAA permits the New Jersey Board of Public Utilities (NJBPU) and PJM Interconnection to use a competitive planning process for the selection of a provider of a transmission solution. The joint SAA received 80 proposals from utility companies and developers indicating an appetite for finding transmission solutions on the supply side. It is anticipated that a decision on the outcome of any recommendations or decisions will be confirmed later this year.
Workforce Development
Dedicated resources for the growth and development of human capital is essential in enabling the offshore wind sector to reach it reach its full capacity.
The complete report can be accessed here
