Against the backdrop of new energy pressure from Russia, U.S. and European officials and company executives meeting in late April at an Atlantic City, NJ business conference on offshore wind energy touted its potential to propel transition from fossil fuel dependence. But they acknowledged still nagging project and market uncertainties and need for government support to meet lofty deployment targets for this decade and beyond.
“Vladimir Putin's invasion of Ukraine has shown us that the world cannot depend on petro-dictators, on autocrats for our energy needs,” U.S. Energy Secretary Jennifer Granholm told the International Offshore Wind Partnering Forum conference April 27, sponsored by the Business Network for Offshore Wind. “We have a long way to go to match the 4,500 turbines dotting the coastline of Europe, but we’ll get there. We are on a war footing and you are the army we need.”
Her European peer Kadri Simson, EU Commissioner for Energy, said that while bumped-up U.S. shipments of liquefied natural gas (LNG) would help Europe's energy situation “in the short term, [it] is committed to its longer term transition to clean energy.”
The Biden Administration has set a 30-GW goal for U.S. offshore wind deployment by 2030, with the EU targeting double that or more. The fuel crisis in Europe prompted by the Ukraine war “only signals to both the EU and the U.S. that we must accelerate,” said Granholm.
Growing global interest in offshore wind project development was visible at this year’s conference, with some 2,800 attendees more than doubling the total of last year’s event, and similar growth clearly evident at the Atlantic City Convention Center’s exhibition hall, with construction unions, engineering firms and other sector companies among more than 200 exhibitors from 25 countries.
Attendees got good news with the U.S. Interior Dept. announcing April 27 that it seeks public comment on a plan to open six new Atlantic Ocean areas south of Delaware for potential lease, possibly within one year, totaling about 3.9 million acres. Another 1.2 million acres off Oregon also is eyed. Based on feedback that would include impacts voiced by other ocean users, the actual lease sites would be smaller than areas now designated. A public comment period on the proposal will end June 28.
A federal lease auction already is set for May 11 off the North Carolina coast, with another expected for sites off California by year end, the department has said. California moved the needle further with its May 6 release of its first state draft plan calling for 3 GW of floating offshore wind by 2030 and up to 15 GW by 2045. Alla Weinstein, CEO of joint venture offshore wind developer Castle Winds and a pioneer in the California market, said the federal lease planned in the Morro Bay area later this year could meet most of the 2030 target.
Amanda Lefton, director of Interior's Bureau of Ocean Energy Management, told conference attendees that “ensuring we have a pathway to advance projects and lease sales is my No. 1 priority,” noting the need to “inspire confidence ... that offshore wind is here to stay.”
Industry executives gauged the market’s path following the unexpected $4.4-billion windfall to the department in leasing 488,000 ocean acres in the New York Bight south of New York City in February. Some industry executives and media such as S and P Global speculate the auction total was accelerated by private equity-backed developers eager to enter the market, although risky because of the longer wait for a return on investment.
That sale “was a moment,” said Doreen Harris, president and CEO of the New York State Energy Research and Development Authority. “We need to build on it.” She said the state, which already has a nation-leading goal of 9 GW of offshore wind by 2035, soon will hold a new solicitation for up to 4.2 GW, likely to be mostly from the New York Bight area.
New York also is starting work on its next master plan that could expand its deployment target to 20 GW by 2050 and extend development into deeper water off the state’s coasts, says a report in Recharge, which could require use of floating wind turbines. New York has five offshore wind projects totaling 4.3 GW now in active development.
“It’s time to see this industry become part of the economy,” said Sam Eaton, executive vice president for Americas offshore wind at German developer RWE. “Our board gave us $4 billion because there’s a real business case to be made.”
Gains and Pains
But regulators and firms remain concerned about efforts to expand and upgrade for offshore wind connection a U.S. transmission network designed to accommodate fossil fuel sources.
Richard Glick, Federal Energy Regulatory Commission chairman, told attendees that the agency’s new proposed rulemaking on grid transformation announced last month does not address current interconnection challenges that have delayed clean energy project deployment. He said the agency’s next rule “out soon” will focus on the issue for wind and solar projects.
Joseph Fiordaliso, president of New Jersey’s Board of Public Utilities, said his agency has already received 80 proposals from 13 developers under a unique joint program with regional grid operator PJM Interconnection to meet the state's 7.5 GW offshore wind goal by 2035, with some projects underway and set to operate by 2024 or 2025.
He said his worst nightmare “is that we’re generating energy in the ocean and we have no place to plug it in. We’re doing this because the U.N. said it’s code red for humanity.” Fiordaliso said the state has “done its homework” to insure cost impact on ratepayers “is as minimal as possible.”
Stating that offshore wind is “no longer an incredibly expensive science experiment,” Clint Plummer, CEO of developer Rise Light and Power, said “renewables are beating traditional transmission in head-to-head competition as technology advances. But “my biggest concern is the confluence of inflation and supply chain cost,” he told conferees. “Energy must be affordable.”
North Carolina Gov. Roy Cooper told attendees that the state intends to be a U.S. offshore wind leader, claiming a deep talent pool and strengths in advanced manufacturing. He said funds for port improvements are included in the state budget recommendation and that the state will seek federal funding for transmission improvements. "We will get this done," said Cooper. "You can be sure my state is applying for every penny of federal money for grid improvements that we can get our hands on."
Meanwhile, New Jersey Gov. Phil Murphy also touted his state's leading role, promising to make it “the east coast capital of offshore wind.”
He told attendees that leading industry developer Ørsted, which won two major projects in the state since 2019, will be the first tenant of a $500-million wind farm assembly factory now being built on the Delaware Bay in Salem County. Design-build firm Burns & McDonnell also said it won two EPC contracts for the onshore substations and cabling for the 1.1-GW Ocean Wind project off Cape May County, being built by Ørsted and state utility firm PSEG Corp. New Jersey contractor JINGOLI Power has been awarded a separate underground cabling contract.
The state also is building a $250-million turbine monopile production plant along the Delaware River. “This truly is a vision turning into reality,” said Murphy, emphasizing also that regional offshore wind energy development “is where interdependence can lead to independence” from non-U.S. fuel sources.
David Hardy, president of Ørsted North America, told attendees that the administration's 30-GW offshore wind deployment goal can be met if “we stay on track,” but noted uncertainty related to whether or how soon Congress will approve federal production tax credits and other incentives. “This is not just about green power, it’s about a national green economy and jobs across the U.S.,” he said. “Work is finally coming to fruition and we must keep the momentum growing.”
Laura Beane, president of the North America unit of wind turbine maker Vestas, said it’s a “nervous time for offshore wind to build a sustainable industry. It hasn’t been free from boom and bust cycles that have defined the clean energy sector. Now is the time to future proof the industry and propel the U.S. as an international leader.”
Firms committing to US factories "need demand certainty to use a facility for its lifetime, said Steve Dayney, North America offshore wind head for turbine maker Siemens Gamesa, "We don't want to invest hundreds of thousands of dollars in a facility that's obsolete after the first project. What we build must have a long term future. There are benefits to this industry of regional investment."
The company has committed to spend $200 million to build the first US offshore wind turbine plant in Portsmouth, Va. to support component needs for Dominion Energy's planned $9.8-billion, 2.6 GW project off Virginia Beach.
Noting similar trends abroad, Dan McGrail, CEO of trade group RenwableUK, said “while market fundamentals are positive, there still is not sustained profitability in the supply chain.”
Rich Voorberg, North America president of manufacturer Siemens Energy, also noted the need to “shorten permitting cycles” and stated shortfalls in engineering capability. “We don’t have enough engineers to do these projects,” he said. “Renewables are not free. We must have backup to make this sector economically viable.”
Granholm was optimistic that Congress will reauthorize the financial incentives, “especially in light of the imperative to be energy secure right now.” She said she is “obsessed with the permitting challenge. We have to figure out how to collapse the permitting time.” Granholm noted a DOE study on the issue that is set for release “soon.”
Noting similar challenges in Europe and claiming offshore wind has “faced disproportionate risks,” UK representative McGrail, CEO of U.K. trade group RenewableUK, called for making permitting and licensing “a conveyor belt approach,” but also one that still protects the environment.
Gilles Dickson, CEO of WindEurope, a Brussels-based trade group, told attendees that In the Netherlands, "they are farming mussels for the first time in 100 years" in offshore wind farm areas.
Meanwhile, related to US workforce needs, the National Offshore Wind Institute at Bristol Community College in Massachusetts and OPITO, an energy industry safety and skills organization, last month signed an agreement to boost training for projects serving the state.
The Energy Dept. predicts offshore wind energy will employ 43,000 people on the eastern seaboard alone by 2030.