Even as it pushes forward to develop U.S. offshore wind energy—with a lease auction now set in the Gulf of Mexico by year end, an accelerated “earthshot” for floating wind technology and nearly $10 billion in investment into the sector last year—the Biden administration goal to have 30 GW of domestic wind facilities in operation by 2030 may fall short based on current project trajectory, says a key advocacy group.
Long-term offshore wind energy targets set by states rose 79% in 2022, and investments in the market tripled to $9.8 billion, with about $4.4 billion directed to port infrastructure, supply chain development, and transmission, said the Business Network for Offshore Wind in its 2023 market outlook.
Much impetus came after California moved headlong into the market—with the state announcing a new goal last year of 25 GW of offshore wind generation by 2045 and the US Interior Dept. completing the first auction for federal lease sites off the deep-water Pacific coast that brought bids from five teams that could produce 4.6 GW. A much larger lease auction also occurred in New York in early 2022, and a smaller one in North Carolina, with the Business Network noting a total of 11.4 GW of ocean area leased for future development. It said at least six projects are finalizing environmental review.
“From surging investments to cutting-edge floating turbine technology on the West Coast, passage of the landmark Inflation Reduction Act, and federal regulatory efforts that bring more certainty to permitting, 2022 kicked the American offshore wind industry into full throttle,” said Liz Burdock, the group’s CEO.
Offshore wind-related contracts in 2022 rose by 36%, with most awarded to U.S. companies, said its report, as the first two commercial-scale projects, Vineyard Wind off Massachusetts and South Fork Wind off New York, are under construction set to deliver 932 MW of generation to the grid, possibly starting by year end.
Action in the Gulf of Mexico
The U.S Interior Dept. propelled the 2023 outlook earlier this month, announcing the intended Gulf of Mexico auction by year-end for up to three leases in previously designated shallow water areas off Louisiana and Texas covering hundreds of thousands of acres. “There is no time to waste in making bold investments to address the climate crisis,” said Secretary of Interior Deb Haaland.
One proposed lease off Lake Charles, La. would have about 1.2GW of capacity, at minimum, with two offshore of Texas near Galveston, projected to generate between 1.17GW and 1.2GW. Erik Milito, president of National Ocean Industries Association claimed, in a statement, an already “amazing synergy between offshore oil and gas and offshore wind,” stemming from involvement of the former’s supply chain in the latter’s current infrastructure in some east coast areas.
Agencies used marine spatial planning technology to assess the Gulf ecosystem to determine development areas with the least environmental impact and conflict with other users.
A 60-day comment period on the planned auction, including on bid credits that would support workforce training and supply chain development, as well as fisheries compensation, began on Feb. 24.
The effort keeps the administration on track to meet its goal of having seven new leasing areas set and 16 completed project environmental reviews by 2025, said the Business Network. Massachusetts, New Jersey, New York, and Rhode Island will launch or finalize new rounds of offshore wind procurement this year, while the number of projects with financial backing grew by at least 25% in 2022, it noted.
The Business Network also points to federal funding and incentives from the 2022 Inflation Reduction Act, including a 30% investment tax credit, intended to spur offshore wind output for other industrial uses that include production of green hydrogen, with one venture announced last year in Louisiana, as well as green ammonia manufacture and carbon sequestration projects,
"We are excited to have the offshore wind industry in the Gulf," Louisiana Gov. John Bel Edwards told attendees of a federal-sponsored sector conference on Feb. 23. It "will bring great opportunities and, quite frankly, challenges," he added, pointing to "transition from past energy sources and reducing our carbon footprint. Our CO2 emissions are highest in the US."
But Edwards said Louisiana is “the only Gulf state” to set a net-zero emission goal by 2050. “We're already seeing a lot of interest from developers for placing turbines,” he said. “We are well used to breaking new ground in offshore energy." Observers note potential use in the U.S. to decarbonize Gulf oil and gas operations, similar to efforts now underway in the North Sea.
As part of the Administration offshore wind push, the US Depts. of Energy, Interior, Commerce and Transportation held a two-day inaugural Floating Offshore Wind Shot Summit to advance technology deployment and meet a goal to cut its costs by 70% by 2035. “We are positioning ourselves not just to catch up and seize the lead, but really to forge the frontier of a new technology,” Ali Zaidi, White House climate adviser told attendees.
As much as two-thirds of U.S. offshore wind potential is in water deeper than 60 m that requires floating turbine platform technologies, including the west coast, Gulf of Maine, and parts of the Gulf of Mexico. Floating is already being deployed in the North Sea in Europe to reduce the lifetime carbon footprint of upstream oil & gas operations and similar uses are envisioned for the US Gulf.
Noting 60% of Maine residents who still depend on oil for energy and the “stranglehold that fossil fuel has on our state,” Gov. Janet Mills told Windshot summit attendees that she seeks legislation to mandate 100% clean energy by 2040, up from previous state goals of 80% by 2030 and 100% by 2045, and that public comment is under way for a new state offshore wind “roadmap that identifies 80 Maine companies ... that are primed for growth in this industry."
The state plans an offshore wind research array in the Gulf of Maine, with the Interior Dept. approving its plan this month for 10 turbines, each about 15MW, in a 9,700-acre area.
Other states also are eyeing deeper water. Georges Sassine, vice president of the New York State Energy Research and Development Authority, said that in seeking to meet a 9GW offshore wind goal by 2035, "we are working to launch a new master planning effort looking at deeper waters more than 60 m that will unlock new areas for New York."
Rough Waters Ahead
But the Business Network warned that the Biden 30 GW by 2030 goal could be short by 10 GW, according to comments reported in sector publication Recharge.
Andrew Berg, an offshore wind analyst for S&P Global Commodity Insights said that permitting remains the biggest industry challenge, noting a 10-year, or longer, development window. In 2023, offshore wind capital costs are expected to increase due to rising prices of raw materials such as steel, aluminum and polyethylene in 2020 and 2021, he told S&P Global.
While the Inflation Reduction Act's investment tax credit may help some developers to deal with inflation and other cost uncertainties, how much is unclear as more projects near financial close. Already, two offshore Massachusetts projects face delays and other fallout in efforts announced last year to renegotiate contract terms.
Others raise concern over global competition to build larger turbines, particularly spurred by Chinese manufacturers, with recent negative impacts on some producers' profitability. Adrienne Downey, principal engineer at floating wind developer Hexicon, noted the "serious problems" in comments to Windshot summit attendees. "You can build a 10-12 MW onshore turbine but it's cost inefficient. We are at risk if we keep the focus on bigger turbines."
Burdock noted that “as the industry makes the transition from demonstration to commercialization amid global economic uncertainty, we must double down on a national industrial strategy, building up an offshore wind supply chain and manufacturing base in the U.S.”
Susan Margulies, assistant director for engineering at the National Science Foundation told the Windshot summit that it is researching manufacturing potential for new materials and working with DOE and industry "to inform new turbine design and better system efficiency," such as the effect of wind on rotor stability.
But floating offshore wind challenges also include building transmission systems.
DOE released new analysis that identifies deployment knowledge gaps that must be addressed to successfully connect West coast offshore wind to land grids. Done by Pacific Northwest National Laboratory, it covers how offshore wind transmission could be constructed, such as underwater transmission cables that might have to extend up to 65 miles from shore, with viable routes not yet defined. DOE also is leading a new 20-month federal study, funded with $100 million from the Inflation Reduction Act, on how to build out transmission networks, federal officials said.
Floating wind proponents emphasized, however, that time is of the essence. "We don’t have the luxury of waiting for new technology," said Hexicon's Downey "We have to do the hard work of deployment at the same time."
Leif Delp, a senior advisor to Norway-based developer Equinor who had a project management role on the UK's pioneering HyWind floating offshore wind project said "you have to go for big scale to get suppliers to mobilize." He said Equinor is "not waiting for costs to come down. We are investing," noting innovations that include smart turbines and seafloor substations. While noting size advantages, turbine scaleup "will hit a roof [when] it will be too expensive to install, operate and maintain."
David Aqui, a principal consultant at floating wind technology firm Kent, said in the U.S. "it is encouraging to see larger scale initiatives, but we haven’t done enough demo projects."
Added Habib Dagher, executive director of the University of Maine Advanced Structures and Composites Center, which is developing the VolturnUS floating wind platform for the planned Maine research project: “We have a climate crisis and need to move with what we have now."
He emphasized that "local communities must reap benefits of fabricating locally. We have to turn bridge builders into hull builders. Innovation will continue to happen."