US Offshore Wind

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5th Annual· June 18-19, 2020 · Hynes Convention Center, Boston

Info Bite – Sizing Up US Offshore Wind Markets

 
Overview of US OW Targets

 

It is hard to overstate the level of excitement surrounding the US offshore wind industry in 2019. After years of false starts and broken promises, there is not only steel in the water but also a growing wave of federal and state-level support for offshore wind. As of June 2019, seven states on the East Coast had committed to building more than 20 GW of capacity by 2035. In a sign of how support is growing, around 5 GW of that 20 GW of capacity was pledged after January 2019.

“Offshore wind has market support and momentum in state houses that just won’t quit,” says Stephanie McClellan, executive director for the Special Initiative on Offshore Wind at the University of Delaware’s College of Earth, Ocean and Environment.

Bloomberg New Energy Finance, the analyst firm, is predicting a gradual ramp-up of 1 GW to 2 GW of capacity a year in 2021 and 2022. The pace of development is expected to pick up as developers bring down permitting process timelines from between seven and 10 years to between five and seven. “

Here is how the states commitments are shaping up:

Other regions are increasingly looking to get a piece of the action. The rapid pace of state-level announcements yields a constantly changing picture of market opportunities. Because of that, what follows is a selection of highlights rather than a detailed view of each potential market.

 

This chapter specifically looks at markets on the east coast, since the western seaboard will be dominated by floating foundation turbines that are the subject of a later section of the report.

 

Massachusetts

While a growing number of East Coast states are making important moves in support of offshore wind, the Commonwealth of Massachusetts is arguably the most advanced in terms of its vision and actions. Early efforts to embrace offshore wind were instigated by Patricia Haddad of the Massachusetts House of Representatives in response to the loss of jobs and tax dollars from coal-fired plant closures.

“We said to people, watch what has happened in Europe,” says Haddad. “We’ll stabilize our energy costs and we can have jobs and a brand-new industry.”

As in other East Coast states, the development of offshore wind in Massachusetts is being led from the top. Governor Charlie Baker has pushed through policy actions putting the state in pole position to lead the development of offshore wind in the US, says Kathleen Theoharides, Secretary of the Massachusetts Executive Office of Energy and Environmental Affairs.

Vineyard Wind and adjacent lease areas. Source: BOEM.

“Governor Baker’s leadership on clean energy and climate change has been recognized not just because of our state actions and success, but because of our collaboration with other states [and] with the industry to drive solutions to this challenge,” she says.

The state’s policy on offshore wind is based on a desire to source low-carbon energy at low cost while diversifying the generation portfolio and creating jobs and industrial leadership. “In the absence of federal guidance, state-based initiatives continue to be the best recourse we have for preventing the worst effects of global climate change,” says Senator Marc Pacheco, chair of the Massachusetts Committee on Global Warming and Climate Change.

State goals saw Massachusetts pass offshore wind-friendly energy bills in 2016 and 2018, and to approve construction of the 800 MW Vineyard Wind project, which is expected to create 3,600 direct and indirect jobs over its lifetime. Vineyard Wind, which as of October 2019 was still going through the permitting processi, has demonstrated the value of the Massachusetts tender process by achieving a 65% reduction in costs compared to the state’s previous non-competitive procurement plan, says Baker.

“The first project that was proposed for the Commonwealth represented a very expensive approach to establishing a foothold in offshore wind and really didn’t establish the kind of enthusiasm this second approach has led to,” he says.

Vineyard Wind also prompted other states to move forward with similar plans, he says. Rhode Island selected a 400 MW proposal from Deepwater Wind, Connecticut procured 300 MW, also from Deepwater Wind, New York increased is procurement goal to around 9 GW by 2035 and New Jersey increased its 2030 commitment to around 3.5 GW.

The initiatives amount to “a really healthy competition among all of the states,” says Baker.

Meanwhile, Massachusetts has issued a second solicitation, attracting bids from Mayflower Wind, Bay State Wind and Vineyard Wind.ii Based on the state’s experience to date, Massachusetts has published a report recommending a 1.6 GW increase in its offshore wind capacity goal, to 3.2 GW.

The report recommends new solicitations in 2022 and 2024. There is reason to proceed with the recommendations because “offshore wind delivers in the winter and is close to load,” says Massachusetts Department of Energy Resources Commissioner Judith Judson.

Massachusetts increasingly sees offshore wind procurement in terms of improving state resilience to climate-change-related events, Baker says. The state is also keen to support research and development into energy storage. “One of the things we are looking forward to is how storage can take offshore wind to the next level,” says Baker.

Massachusetts is also putting in place offshore wind-friendly legislation, for example proposing a separate bidding process for transmission lines.iii

i David Foxwell, Riviera, July 12, 2019: Vineyard Wind project bumps up against permitting issues. Available at https://www.rivieramm.com/news-content-hub/news-content-hub/xcv-55539.

ii Noah Asimow, Vineyard Gazette, September 16, 2019: In Race for Offshore Wind, Three New Bids. Available at https://vineyardgazette.com/news/2019/09/16/race-offshore-wind-farms-around-marthas-vineyard-continues.

iii Nadja Skopljak, Offshore Wind, September 25, 2019: Anbaric Backs Massachusetts Offshore Wind Development. Available at https://www.offshorewind.biz/2019/09/25/anbaric-backs-massachusetts-offshore-wind-development/.

New York

New York Governor Andrew Cuomo’s Green New Deal proposal envisages a 100% carbon-free electricity sector by 2040, with a goal of 70% renewables by 2030. “Offshore wind is a critical component in reaching those ambitious goals,” says Doreen Harris, large-scale renewables director at the New York State Energy Research and Development Authority (NYSERDA). “We’ve been actively advancing multiple paths.”

The state is aiming for 9 GW of capacity by 2035, which as of October 2019 was the largest offshore wind procurement goal in the US.i “New York is the center of gravity as far as procurement targets and goals are concerned,” says Adrienne Downey, principal engineer for Offshore Wind at NYSERDA.

“Before Connecticut made its announcement, we were able to say we were larger than all the other states combined.”

i Wood Mackenzie, press release, July 18, 2019: New York awards Equinor, Sunrise Wind major offshore wind contracts.

 

New York offshore wind lease areas and potential port facilities. Source: NYSERDA, June 2019.

NYSERDA’s first offshore wind solicitation saw 1.7 GW of capacity going to Equinor and Sunrise Wind, a joint venture between Denmark's Ørsted and US utility Eversource, in July 2019.i Permitting and approval for this solicitation is expected to last through to 2023, with manufacturing running from 2020 to 2024, construction and installation starting 2022, and commissioning happening in 2024.

In the meantime, New York will be pumping $200m into ports, the largest investment of any state.

New Jersey

New Jersey was the first US state to seriously consider offshore wind, although initial procurement plans a decade ago ran aground. However, “within the last year we’ve done more than we had in the 10 prior years,” says Sara Bluhm Gibson, director of the Office of Clean Energy at the New Jersey Board of Public Utilities.

Before the NYSERDA award, New Jersey had the largest single-state solicitation in the US, for 1.1 GW, which was awarded to the Danish developer Ørsted.ii

i Hayden Baker, Stuart Caplan and Alberta Waingort, Lexology, June 28, 2019: New York Adopts the Nation’s Most Aggressive Clean Energy Goals. Available at https://www.lexology.com/library/detail.aspx?g=9028350f-d4e3-4313-acf3-e691b39496e1.

ii Karl-Erik Stromsta, Greentech Media, June 21, 2019: Orsted Wins New Jersey’s First Offshore Wind Solicitation. Available at https://www.greentechmedia.com/articles/read/breaking-rsted-wins-new-jerseys-first-offshore-wind-solicitation#gs.p04r7r.

New Jersey inputs into the East Coast pipeline. Source: Maciek Bury, New Jersey Economic Development Authority, June 2019.

The state is also developing a strategic plan for offshore wind, taking into account its impact on areas such as economic development and fishing. “Governor [Phil] Murphy has shown a strong commitment to offshore wind as well as clean energy,” says Bluhm Gibson.

As of June 2019, the New Jersey Board of Public Utilities was mulling proposals for 3.5 GW of offshore wind, to be procured in 2020 and 2022. “We will be acting on that soon,” Bluhm Gibson says.

All the signs are that New Jersey is now taking offshore wind very seriously. “We see a once-in-a-generation opportunity for economic growth,” says Maciek Bury, senior project officer for offshore wind at the New Jersey Economic Development Authority.

 

Virginia

Interest in offshore wind in Virginia dates back to around 2008, when a test project was mooted in state waters. This project, based on the only research lease that has been awarded by BOEM, is now moving forward and should host two 12 MW turbines from 2020. It will be followed by a full-scale build-out of a wind energy area covering 112,800 acres.

In September 2019, Virginia’s Governor Ralph Northam signed an executive order for 2.5 GW of offshore wind by 2026, which Dominion Energy has already made a play for.i Virginia also sees itself as making a potentially significant contribution to the supply chain, since the state is home to more than 500,000 military veterans, aged 17 to 64, who represent a work-ready pool of potential employees for offshore wind operations.

i Nadja Skopljak, Offshore Wind, September 19, 2019: Dominion Energy Proposes to Build Largest US Offshore Wind Farm. Available at https://www.offshorewind.biz/2019/09/19/dominion-energy-proposes-to-build-largest-us-offshore-wind-farm/.

Number of direct jobs in shipbuilding and ship repair in 2017, by state. Source: Department of Mines, Minerals and Energy, Commonwealth of Virginia, June 2019.

“Virginia has a strong workforce advantage,” says John Warren, director of the state’s Department of Mines, Minerals and Energy. “Virginia has by far the biggest trained maritime workforce. They are a perfect fit.”

 

Connecticut

The Commonwealth of Connecticut is viewed as a relative newcomer to offshore wind, passing a bill in June 2019 to procure up to 2 GW of capacity.i The state has started looking to offshore wind procurement after having experienced supply chain issues with natural gas around 10 years ago, along with transmission difficulties in sourcing hydro power from Quebec, Canada.

Connecticut gets around 50% of its electricity from nuclear power, which itself faces uncertain economics in the US energy market. State lawmakers see offshore wind as complementing this baseload generation capacity while at the same time bringing economic prosperity through the supply chain.

“Connecticut is perfectly positioned in a number of ways for offshore, in that we have two great ports, Bridgeport and New London, both deep-water and unobstructed,” says Commonwealth Senator Paul Formica.

The state is attracting investment into these ports, with Ørsted and Eversource poised to invest $93m in New London’s State Pier.ii And it has increased the freight line capacity to New London. “We’re positioned to develop a strong supply chain with freight but also adjacent to a river. New London is a great city,” Formica says.

In October 2019, the Connecticut Department of Energy and Environmental Protection confirmed its request for proposals had attracted three bids, from Vineyard Wind, Mayflower Wind and Constitution Wind, a joint venture of Ørsted and Eversource.iii The bids included proposals for a range of wind farms, starting at 400 MW and going up to

1.2 GW in the case of Vineyard Wind.iv

Maryland

Maryland’s Clean Energy Jobs Act became law in May 2019, increasing the state’s renewable portfolio standard (RPS) from 25% by 2020 to 50% by 2030v. At the same time, the offshore wind carveout within the RPS was upped almost fourfold, to 10% of total in-state electricity sales or around 6.7 million MWh a year.

This equates to around 2 GW of installed capacity, says Sam Beirne, wind and energy storage program manager at the Maryland Energy Administration. Ørsted has confirmed it will be deploying 12 MW turbines from GE Renewables at a 120 MW Maryland project due for commissioning in 2022.vi

 

Canada

Beyond the US, offshore wind also represents an emerging opportunity in Canada, according to Elisa Obermann, executive director of Marine Renewables Canada. “It’s early days,” she says. “There aren’t any policy signals or market drivers to bring on offshore wind in Canada, but we do have the longest coastlines in the world and really strong wind resources.”

Canada’s electricity mix, by province. Source: Marine Renewables Canada, June 2019.

Canada also has a strong oil and gas heritage and a leading position in tidal energy. The country has a policy focus on addressing greenhouse gas emissions, with a target of 30% reductions on 2005 levels by 2030. Canada’s electricity supply is mostly based on hydro generation, which makes up 59% of the mix, with a further 15% coming from nuclear and 7% from non-hydro renewables.

Recent initiatives that could lead to the development of an offshore wind industry include a new legislative framework for offshore renewables, an Emerging Renewable Power Program, an Atlantic Canada Clean Power Roadmap, and studies and data gathering. “Canadian companies are already working internationally in offshore wind,” says Obermann. “We have decades of experience in offshore that could provide solutions and opportunities for collaboration.”

i HJ Mai, Utility Dive, June 6, 2019: Connecticut passes bill to procure up to 2 GW of offshore wind power. Available at https://www.utilitydive.com/news/connecticut-passes-bill-to-procure-up-to-2-gw-of-offshore-wind-power/556331/.

ii Cate Hewitt, CT Examiner, October 2, 2019: State Pier Operator Boosts Connecticut Port Authority Plans for New London. Available at https://ctexaminer.com/2019/10/02/state-pier-operator-boosts-connecticut-port-authority-plans-for-new-london/.

iii Phil Hall, Daily Voice Plus, October 2, 2019: Three bids submitted for Connecticut’s offshore wind source. Available at https://dailyvoiceplus.com/fairfield/fairfield-business-journal/energy/three-bids-submitted-for-connecticuts-offshore-wind-source/776800/.

iv David Weston and Ros Davidson, Windpower Monthly, October 1, 2019: US offshore majors submit Connecticut proposals. Available at https://www.windpowermonthly.com/article/1661144/us-offshore-majors-submit-connecticut-proposals.

v Conor Ryan, PV Tech, April 11, 2019: Maryland’s Clean Energy Energy Jobs Act passes, sets 50% renewables goal by 2030. Available at https://www.pv-tech.org/news/marylands-clean-energy-energy-jobs-act-passes-sets-50-renewables-goal-by-20

vi Iulia Gheorghiu, Utility Dive, September 23, 2019: Orsted taps GE for 50% more efficient turbines in New Jersey, Maryland offshore wind projects. Available at https://www.utilitydive.com/news/orsted-taps-ge-for-50-more-efficient-turbines-in-new-jersey-maryland-offs/563475/.

The US offshore wind market is probably the most rapidly-developing renewable energy sector in the world. Follow #USOW20 for the latest news and expert opinions.

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