The U.S. Department of Energy has released a report titled, “Offshore Wind Technologies Market Report: 2021 Edition” which provides detailed information on the US and global offshore wind energy industries, technologies and market trends. REGlobal presents certain key extracts from the report primarily focused on the US offshore wind power market.

Key Findings:

  • Bureau of Ocean Energy Management (BOEM) created five new wind energy areas (WEAs) in the New York Bight. Most of the growth in the pipeline during 2020/21 came from the addition of five new Wind Energy Areas (WEAs) in the New York Bight, positioning them for auction under the competitive leasing process. In aggregate, these yet-to-be-leased WEAs have the potential to hold about 9.8 GW of offshore wind capacity.
  • Coastal Virginia Offshore Wind (CVOW) pilot successfully connected to the grid. The 12-MW demonstration project was connected to the grid at Birdneck Substation, Virginia. It was fully commissioned in January 2021. The project is owned by Dominion Energy and comprises two Siemens Gamesa 6 MW turbines mounted on EEW monopile substructures. It is the second U.S. offshore wind energy project to install commercial-scale wind turbines and the first project to be permitted and constructed in federal waters under the jurisdiction of BOEM.
  • Vineyard Wind 1 became the first fully approved commercial offshore wind energy project in the United States. Avangrid and Copenhagen Infrastructure Partners’ 800-MW Vineyard Wind 1 project received a Record of Decision, indicating the approval of the project’s COP in May 2021. With a revision to its COP in December 2020, Vineyard Wind reported it was switching from MHI-Vestas 9.5-MW wind turbines to GE 13-MW Haliade-X wind turbines. The project has reported plans to be fully connected to the grid by 2024.
  • Two U.S.-flagged offshore wind installation and support vessels were announced. Construction of the first U.S.-flagged wind turbine installation vessel, Charybdis, began at the Keppel AMFELS shipyard in Brownsville, Texas, in 2020. The new vessel is 472 feet long and designed by GustoMSC. Lloyd’s Register and Northeast Technical Services Co., Inc. also announced plans to construct a U.S.-flagged wind turbine installation vessel; however, as of May 31, 2021, construction has not yet started.
  • Globally, the offshore wind energy industry installed 5,519 MW of capacity in 2020. Much of the added global generating capacity can be attributed to 2,174 MW of new deployments in the Chinese market, followed by 1,503 MW commissioned in the Netherlands, 714 MW in the United Kingdom, 706 MW in Belgium, 315 MW in Germany, and 107 MW divided among the rest of the world.
  • Projections indicate that annual global capacity additions in 2021 and beyond will accelerate. 23,415 MW of projects are currently under construction. By the end of 2020, cumulative global offshore wind installed capacity grew to 32,906 MW from 200 operating projects. As of December 31, 2020, the global pipeline for offshore wind energy development capacity was assessed to be 307,815 MW.
  • The global pipeline for floating offshore wind energy more than tripled in 2020. Overall, the 2020 global floating offshore wind pipeline grew from 7,663 MW to 26,529 MW, representing 18,866 MW of growth since the “2019 Offshore Wind Technologies Data Update.” This growth is attributed to several projects beginning their planning phase during 2020, especially in Asian markets.

U.S. Offshore Wind Industry Overview

In 2020, the U.S. offshore wind energy pipeline grew to 35,324 MW – 24% over the 28,521 MW reported in 2019. Following the 2020 U.S. presidential election, the Biden Administration set a national offshore wind deployment goal for 30 GW of capacity to be installed by 2030 (The White House 2021b). The 30-GW national deployment goal combined with a renewed 30% investment tax credit (ITC) are likely to increase the industry’s confidence in the future market and may catalyze investment in domestic manufacturing and supply chain capabilities, vessel and port construction, and grid infrastructure necessary for sustained, long- term growth. To support this goal, by 2025, BOEM aims to complete permitting for 16 offshore wind energy projects, of which most have already submitted Construction and Operations (COP) plans. BOEM’s mandate includes a commitment to equitably settle use and environmental conflicts in federal waters, working closely with the U.S. Department of Energy, U.S. Department of Commerce, and industry stakeholders.

A major factor driving offshore wind energy in the United States is individual state policy commitments. In 2020, three states made major increases in their offshore wind energy policy commitments. In April 2020, Governor Northam of Virginia signed the Virginia Clean Economy Act, which set a procurement goal of 5,200 MW by 2034 (Virginia 2020). In March 2021, Massachusetts Governor Baker approved “An Act Creating a Next Generation Roadmap for Massachusetts Climate Policy,” which expanded the commonwealth’s offshore wind energy deployment goal to 5,600 MW by 2035 ( 2021). In June 2021, Governor Roy Cooper issued Executive Order 218, which created an offshore wind goal for North Carolina of 2,800 MW by 2030 and 8,000 MW by 2040. In aggregate, eight states have set offshore wind energy procurement goals that have grown from 23,698 MW by 2035 in 2019 to 39,298 MW by 2040 in 2020/2021.

New offshore wind energy deployment in 2020 was limited to the installation of the 12-MW Coastal Virginia Offshore Wind (CVOW) pilot project. CVOW’s commissioning marked the first lease in federal waters to make it through the entire federal regulatory process led by BOEM. The CVOW pilot project is now connected to the grid at the Birdneck substation near Camp Pendleton, Virginia, and started generating power in October 2020 and was fully commissioned in January 2021. The project was constructed by Ørsted using the Vole-au-Vent wind turbine installation vessel, is owned by Dominion Energy, and comprises two Siemens 6- MW wind turbines mounted on EEW monopile substructures. Dominion plans to leverage the experience of constructing and operating this demonstration project to optimize and lower risk on their planned CVOW (commercial) 2,640-MW wind power plant that they expect will be online by 2026.

The Vineyard Wind 1 project, owned by Avangrid and Copenhagen Infrastructure Partners, received a final Record of Decision on May 10, 2021, and became the first fully approved commercial-scale project in the United States after 3 years of review (BOEM 2021b). The project had completed state and local permitting requirements in June 2019 and received an interconnect agreement from the Independent System Operator-New England (ISO-NE) in July 2020. After a revision to its COP in December 2020, the project switched from MHI-Vestas 9.5- MW wind turbines to GE’S 13-MW Haliade-X wind turbines. The project plans to initiate onshore construction in 2021 and be fully connected to the grid and operational in 2024.

Lessons learned during Vineyard Wind 1’s approval process by stakeholders, industry, and regulators can now help streamline the regulatory pathway for other potential projects. On January 14, 2021, the New York State Energy Research and Development Authority (NYSERDA) issued two new awards—Empire Wind 2 and Beacon Wind—to a joint team of Equinor and BP (NYSERDA 2021). Empire Wind 2 (1,260 MW) is in the New York lease area and is expected to start commercial operation in 2026. Beacon Wind (1,230 MW) is in one of the Massachusetts lease areas and scheduled to start commercial operations in 2028.

As the U.S. project pipeline grows, states and electric grid operators are increasingly concerned about integrating large capacities of offshore wind energy. In November 2020, the mid-Atlantic regional grid operator, PJM, opened a 120-day solicitation on behalf of the New Jersey Board of Public Utilities for qualified developers to submit potential transmission solutions that would help deliver offshore wind energy to the existing power grid (New Jersey Board of Public Utilities 2021). The competitive solicitation is the result of a request by the board to incorporate the state’s 7,500-MW offshore wind public policy deployment goals into PJM’s regional transmission planning process through a novel pathway known as the State Agreement Approach. Other states are currently weighing options for a coordinated offshore wind transmission approach.

With several industry projects nearing their construction phase, there’s an increased focus on infrastructure and supply chain investments. Examples of these investments include:

  • In 2020, the New Jersey Economic Development Authority announced that it would build the first offshore wind energy port in the United States (New Jersey 2021).
  • During 2020, two U.S.-flagged offshore wind installation and support vessels were announced.
  • On the supply chain side, Ørsted and Eversource announced a $24-million investment in a foundation manufacturing facility in Port of Providence, Rhode Island (Revolution Wind 2021). This will be the first Tier-1 U.S. manufacturing facility to enter the offshore wind supply chain.
  • In January 2021, Welcon and Marmen announced investing in a tower and transition- piece manufacturing facility in the Port of Albany, in conjunction with Equinor and NYSERDA (Marmen 2021).

Industry is likely to increase the rate of major investments in port infrastructure, vessels, and manufacturing capacity as the first wave of offshore wind construction ramps up off the Atlantic Coast.

U.S. Offshore Wind Energy Pipeline

As of May 31, 2021, NREL estimates the U.S. offshore wind energy pipeline to have 35,324 MW of capacity, which is the sum of current installed projects, approved projects, projects in the permitting process, existing lease areas, and unleased WEAs. Table 2 shows the U.S. market divided into nine segments by capacity.

The biggest change to the total pipeline in 2020 resulted from transforming the four New York Bight Call Areas into five new WEAs, adding up to 9,801 MW of potential capacity to the pipeline.

Figure 2 shows the U.S. pipeline activity as of May 31, 2021, for all categories shown in Table 2 by state. The 2020 U.S. pipeline by project status includes two operating projects (42 MW); one fully approved project (Vineyard Wind 1, 800 MW); 15 projects (10,779 MW) that have site control, made major permitting progress, or secured a power offtake contract or have a viable pathway to obtaining one; 16 lease areas that developers have the rights to possibly develop (a technical potential of 11,652 MW); and seven unleased WEAs (with the potential to support 12,051 MW). Projects progressing through offtake and permitting approval processes continue to be primarily located in the northeastern United States. The availability of new lease areas, the emergence of new Call Areas, and the presence or absence of state-level procurement policies currently drive project development. Recent regulatory activity outside the north Atlantic United States indicates the potential for increased geographic diversification for offshore wind.

U.S. Offshore Wind Market Forecasts to 2030

Figure 7 shows two independent forecasts for offshore wind energy deployment in the United States through 2030. The chart illustrates the degree of expected market growth and the possible variability associated with the year, size, and location of future projects.

The forecasts in Figure 7 were developed by BNEF (2020a) and 4C Offshore (2021), which estimate that offshore wind energy deployments in the U.S. market will cumulatively reach 22.8 and 28.8 GW by 2030, respectively. For reference, the newly adopted national deployment goal of 30 GW by 2030 is also shown in the figure. The two forecasts suggest that the U.S. market has the potential to reach 30 GW by 2030 considering that both BNEF and 4C Offshore estimates have continued to increase annually in past years. However, the size and speed of buildout are likely to depend on BOEM’s ability to permit multiple projects in parallel, the availability of installation vessels and port infrastructure, onshore and offshore grid planning and upgrades, and evolving market demand.

The forecasts predict that most of the future offshore wind energy deployment out to 2030 will occur on the East Coast in states with currently existing or planned offshore wind energy procurement goals. Only 4C Offshore’s forecast includes commercial-scale floating projects before 2030 in the United States, which are predicted to be deployed in California and Maine. Conservatively, the forecasts do not explicitly include the creation of new offshore wind lease areas, which are likely to be necessary to support existing state procurement targets.

State Procurement Policies

The U.S. offshore wind energy market continues to be driven by an increasing amount of state- level offshore wind procurement activities and policies (Figure 9). In aggregate, these activities now call for deploying at least 39,298 MW of offshore wind capacity by 2040. These commitments are shown in Table 8. Virginia, Massachusetts, and North Carolina added new procurement policies in 2020 and the first part of 2021. The Virginia Clean Energy Economy Act set a 5,200-MW offshore wind energy goal by 2034. An Act Creating a Next Generation Roadmap for Massachusetts Climate Policy set a 5,600-MW goal by 2035. North Carolina Governor Roy Cooper’s Executive Order 218 set a goal of 2,800 MW offshore wind by 2030 and 8,000 MW by 2040.

States that have adopted offshore wind energy policies listed in Table 8 do not necessarily use offshore wind resources in federal waters off their own state. For several projects (e.g., Revolution, Skipjack, South Fork), deployment is being planned in a WEA adjacent to the state that will receive the power. Projects consider the most favorable offtake options, generally in a state where the anticipated value of offshore wind energy is highest and the most favorable power purchase agreements (PPAs) can be negotiated.

COVID-19 Impacts

The COVID-19 pandemic shocked global economies in 2020. However, the impact of potential delays on the global offshore wind energy industry was relatively limited, because most countries categorize the energy sector as an essential service and allowed ongoing construction activities to continue despite lockdowns in other areas of the economy (International Energy Agency 2020a, 2020b). Furthermore, a number of countries enacted policy changes to enable flexibility in qualifying for key incentive programs; for example, the United States extended the Continuity Safe Harbor for projects that began construction in 2016 or 2017 (Internal Revenue Service 2020) and then subsequently passed a COVID-19 tax relief package that allows offshore wind energy projects that begin construction before 2026 to qualify for a 30% investment tax credit (U.S. Congress 2020b). As a result, there was no significant reduction in the amount of offshore wind capacity installed in 2020 relative to pre-COVID forecasts (International Energy Agency 2020a).

It remains possible that the COVID-19 pandemic may still adversely impact the construction timelines of planned offshore wind energy projects going forward, as some predevelopment activities such as permitting and environmental surveying have been delayed (International Energy Agency 2020a). Effects on U.S. projects include Ørsted’s announcement that delays in the Revolution Wind, Ocean Wind, Skipjack, and Sunrise Wind projects can be attributed (in part) to the impacts of COVID-19 (Durakovic 2020c). The full effects of the ongoing COVID pandemic are not yet certain.

Other Regional Developments

Over the course of 2020 and early 2021, a number of other offshore-wind-energy-relevant developments occurred:

Maine. The University of Maine’s New England Aqua Ventus I entered into a joint venture with Diamond Offshore Wind (Mitsubishi Corporation) and RWE Renewables to deploy a single 10- to 12-MW wind turbine mounted on a floating, concrete semisubmersible foundation in 2023 (University of Maine 2020). Additionally, Governor Mills announced a plan to develop the nation’s first floating research array in the Gulf of Maine to support commercial-scale floating offshore wind energy development (Maine 2020).

Rhode Island. Governor Raimondo issued Executive Order 20-01 in January 2020, which aims to meet 100% of Rhode Island’s electricity demand from renewable energy by 2030. As part of that effort, National Grid will issue a 600-MW offshore wind energy solicitation in 2021 (Rhode Island 2020).

New Hampshire. The state senate passed SB 151-FN, which directs the state’s utilities to hold a competitive solicitation to procure up to 800 MW of offshore wind capacity by 2028 (New Hampshire 2021).

North Carolina. Avangrid submitted a COP for an initial 800-MW phase of its Kitty Hawk project. It is unclear what entity will procure the power and if the project will inject that power into the North Carolina grid or a neighboring state.

Louisiana. Governor Edwards announced plans to work with BOEM to develop an intergovernmental taskforce for offshore renewable energy (BOEM 2020b). The Gulf of Mexico has the potential to generate a significant fraction of the region’s electricity, especially in western Louisiana and Texas (Musial and Greco 2020).

New York Great Lakes Feasibility Study. The New York Department of Public Service issued Order 15-01168, directing NYSERDA to complete a feasibility study for offshore wind energy to be deployed in the Great Lakes (Lake Erie and Lake Ontario) by the end of 2021 (NYSERDA 2020).

California. State representative Chiu introduced AB 525, which would direct the California Public Utilities Commission and other agencies to evaluate and quantify the maximum feasible capacity of offshore wind energy to achieve reliability, ratepayer, employment, and decarbonization benefits and to establish offshore wind energy planning goals for 2030 and 2045 (California 2021). Besides the proposed legislation, the California Public Utilities Commission is also looking for ways to update its offshore wind assumption used in integrated resource planning processes. As part of this effort, NREL developed detailed wind resource and technology cost assessments for floating offshore wind turbines potentially deployed in California between 2019 and 2032 (Beiter et al. 2020b; Optis et al. 2020). The Schatz Energy Research Center also completed a comprehensive analysis of potential floating offshore wind options in northern California (Severy et al. 2020).

Oregon. State representative David Brock Smith introduced HB 3375, which aims to establish 3 GW of commercial-scale floating offshore wind energy projects within federal waters off the coast of Oregon by 2030 (Oregon 2021).

Global Overview

Total Global Pipeline

The global capacity of the operating and announced development pipeline for all offshore wind energy projects in 2020 is 308 GW, compared to approximately 230 GW that was reported in 2019. The uptick is primarily attributed to more Asian projects entering the planning phase.

The global project pipeline illustrates that most of the world’s installed projects and those under advanced development are in Europe, but the majority of the world’s potential future capacity is in Asia. Looking at project status, there are approximately 52 GW of approved projects in the global pipeline, almost equal to the amount of capacity currently installed and under construction combined. If all the approved capacity is constructed, the dramatic expansion of the global market will require the further expansion of global supply chains and manufacturing capabilities, and a larger, more robust installation and support vessel fleet.

Offshore Wind Energy Technology Trends

Offshore wind energy technology is maturing rapidly in Europe and Asia. Larger wind turbines, advanced controls, supply chain optimization, increased competition, and system wide design approaches have contributed to much of the recent offshore wind energy cost declines over the past few years, which in some cases have enabled zero-subsidy project bids. New technology, such as floating offshore wind, is also enabling new markets to evolve.

An important new trend is accelerated growth in Asian offshore wind energy markets, especially China. Over the next few years, China is expected to lead globally in total offshore wind energy deployment. In the near-term, Asian wind turbines are not expected to be deployed in U.S. or European markets. However, because of their increasing global market share, Asian offshore wind deployment is beginning to impact global market averages.

Future Outlook

Global offshore wind energy deployment is expected to accelerate in the future, with forecasts from 4C Offshore and Bloomberg New Energy Finance indicating a seven-fold increase in global cumulative offshore wind capacity to 215 GW or more by 2030 (BNEF (2020a), 4C Offshore (2021)). As part of that predicted surge, the U.S. offshore wind energy market continues to expand, primarily driven by increasing state-level procurement targets in the Northeast and mid-Atlantic, an increased number of projects clearing major permitting milestones, as well as growing vessel, port, and infrastructure investments needed to keep pace with development. Moreover, a new national target of 30 GW of offshore wind energy by 2030, set in March 2021, could help illuminate the potential for future U.S. market growth. As the number of projects in the advanced permitting and approval phases now exceeds 11 GW, the first phase of U.S. development is well underway. However, despite the new national offshore wind energy deployment goal, fluctuating policy support, stakeholder concerns, constrained global supply chains, and land-based grid limitations pose challenges that could potentially temper the industry’s progress.

Over the next few years, the frontiers for offshore wind energy development in the United States are likely to expand from the North Atlantic into other regions; each with their own challenges. In the near-term, new WEAs are likely to be identified in the Gulf of Maine where deeper waters require floating offshore wind technologies. In the Gulf of Mexico, wind speeds tend to be lower and hurricane risks need to be addressed, but regulatory activity has been initiated for possible leasing by the end of 2022. On the Pacific Coast and Hawaii, floating offshore wind energy Call Areas are advancing toward commercial leasing. Although markets in these regions may not reach their full stride for a decade, actions taken today could support future deployments. The Biden Administration’s 30-GW-by-2030 goal could also set the industry on a trajectory to deploy 110 GW of offshore wind energy in the United States by 2050 (The White House 2021a). This level of offshore wind energy deployment would be a substantial part of a comprehensive decarbonization strategy to combat climate change.

The complete report can be accessed here