A new industry is evolving in the U.S. in the form of offshore wind. Exciting projects are actively under development along the East Coast, tapping into the vast potential for the renewable, clean energy source in this country. Yet the industry is still in its infancy relative to the decades-old, thriving European offshore wind market. With will and support from many quarters (both nationally and internationally) to ramp up renewables, what will it take to get the offshore wind market sector off the ground in the U.S.?
Among our prime East Coast assets are nearly nonstop wind, passive tectonics – leading to a wide continental shelf with plentiful “good geology” – and shallow waters off the main East Coast electrical load centers. The challenging geology and seafloor conditions off the West Coast position the area a bit behind the East Coast in this market sector, but the developing technology for floating platforms can serve that market well.
Among our prime challenges and opportunities are a lack of infrastructure and stateside manufacturing of the very large offshore wind components. This is an outsized and heavy industry; one turbine blade is the length of a football field. We need harbors, laydown facilities, strong quaysides, facility acreage and manufacturing facilities to support the build-out of the offshore wind farms. We also need very specialized ports where the various components can be assembled before being taken out for erection.
Identifying and fitting out these facilities takes time – and money. In the early projects at least, these large components will be coming from overseas, which makes the East Coast the best place to help the industry find its U.S. sea legs. This is further supported by the over 25 GW of offshore wind projects that are currently in the queue – but more about that later.
First, the commercial fishing industry, one of the strongest challengers to offshore wind, must be reassured that the big towers in the middle of their fishing grounds won’t bring attendant navigation issues, gear damage or worse – job displacement. Fishing is actually prohibited at some European wind farms.
Many U.S. sport and recreational fishers are already on board. They know that the wind farm infrastructure can provide good habitat for many species. The federal Bureau of Offshore Energy Management (BOEM), developers and states have conducted studies that point to only minimal impact to marine resources. The industry’s goal to allow commercial fishing in these areas – regulated by the U.S. Coast Guard – seems, then, to be achievable.
The current size of the market is a bit of a challenge. Physically, this may be an outsized industry, but it’s a completely new, developing market in the U.S. To attract the critical supply-chain players, the sector needs a long-term pipeline of work to create buyers for the suppliers and manufacturers.
Five Eastern states – Massachusetts, New York, New Jersey, Maryland and Virginia – are planning to issue a total of 25 GW of offshore wind power solicitations through 2035. These state-led projects will create the pipeline needed to woo the players – the factories and the related marine infrastructure. Although much of the manufacturing expertise and capacity resides in Europe today, we anticipate the industry becoming more U.S.-centric over time due to the establishment of a strong and predictable U.S. pipeline.
While we are leaning on Europe in these early days, we will not be doing all business the European way. The differences between the U.S. and European governments translate into differences in how the players engage and the market evolves. In Europe, the marine infrastructure improvements are typically funded by federal governments. Here, the states and industry players, not the federal government, are key drivers of infrastructure development and, as such, assume more risk than their European counterparts. The developers are responsible for ensuring that environmental impact assessment methodologies provide relevant and reliable information needed to support the permitting process.
This decentralized landscape makes it unclear who is responsible to bank the shoreside infrastructure needed to support the construction of our 25 GW of offshore wind energy by 2035. Hundreds of millions of dollars will be needed for ports and harbors in the next few years to build out the wind farms. Who will pay? Will it be individual states? Original equipment manufacturers? Developers? Others? Will there be tax incentives? Grants? The source of the capital will, in large part, determine the final cost of this energy to consumers, as well as the ultimate locations of related ports and manufacturing facilities.
Despite these challenges, evidence of a viable market abounds. The currently planned 25 GW is likely to increase in the next several years – keeping pace with the maturity of the market over time. The federal government identifies, approves and puts out bids for leases, which are located in federal waters over three miles offshore, and developers are willing to pay a lot of money for these BOEM leases. Three recent leases off the coast of Massachusetts went for $135 million each – up from the previous $40 million high for a BOEM lease. That’s a huge investment, which we believe underscores the developers’ confidence of the developing East Coast offshore wind market.
While the number of lease areas up and down the coast drives the pipeline, holding one of these high-priced BOEM leases is no guarantee of a project. It is up to individual state entities to solicit power purchase agreements or issue offshore wind renewable energy credits.
In addition, lease holders must prepare bids in response to state solicitations. States typically evaluate bids based on energy cost, local content requirements and/or environmental sustainability. In the recent Massachusetts solicitation, only one of three bidders has been awarded a power purchase agreement.
BOEM has its lease sights set on New Jersey and New York, which are both planning significant solicitations through 2030 and 2055, respectively. So, a healthy pipeline of large projects seems a sure bet along the East Coast.
That’s great news for the job market. Offshore wind creates plentiful employment for decades – both white and blue collar. The broad industry labor infrastructure includes science and engineering, vessel operators and repairs, ship hands, port operators, manufacturing, wind turbine repairs, and operations and maintenance.
How can we get there from here? For starters, developers and suppliers can, indeed, learn a few lessons from Europe:
- Communicate constantly and honestly with the public and stakeholders, especially during the permitting phases. Listen and respond to the information and recommendations provided during public meetings. The public doesn’t need to know every detail, but keep them updated as you make progress. This will go a long way in getting projects through the federal, state and local permitting process.
- While it may not always be possible, find ways to work with the commercial fishing industry to be responsive to their needs and concerns. As one of the industry’s biggest opponents, it’s crucial to do this from the outset.
- Make it easy and economically viable for manufacturing to come to the U.S. – by grants, tax incentives, job training programs and shoring up the shore, literally. Domestic manufacturing will enable affordable energy production.
Once we have learned from our European colleagues, it is up to us to make this industry achieve its full potential. We have the skills, know-how and workforce to fully support this new-to-the-U.S. industry. With the states creating an early, strong and predictable pipeline of large-scale projects, as well as assisting in funding the infrastructure, the domestic offshore wind market sector will take off – and there are no good reasons to turn back. After all, who doesn’t want jobs, clean energy and an overall reduction in our dependence upon fossil fuels?
Richard Baldwin is a principal consultant at global environmental consulting firm Ramboll. He can be reached at firstname.lastname@example.org.