The European wind energy sector is well-developed and has overcome many difficulties and setbacks over several decades. This knowledge will be beneficial to the US offshore industry as it matures. There are numerous questions which will need answering around labor availability, risk and finance.
Several East Coast states are embarking on ambitious clean energy programs, with OW as a major component. This will involve large investments, both public and private, and the need for a skilled workforce.
Lessons from Europe
In the European OW industry 85% of the workforce is skilled. In the UK around 10,000 people are employed by the offshore wind industry, a figure that is projected to grow to around 36,000 by 2032. Source: Energy & Utility Skills' estimate using Cambridge Econometrics 2017 employment projections as a basis.
Many of these workers will be in demand because theirs skills are valuable. As the population ages, and existing workers retire, a skills gap could open. This suggests that, unless prompt action is taken by states' governments, there could be marketplace competition and therefore premium wages for people with these talents. NYSERDA's OW Master Plan acknowledges this and New York proposes allocating $15 million to workforce training and infrastructure enhancements.
Other states are aware of the issue and are creating their own training programs in cooperation with educational institutions. There are a wide range of skills required, which are different during the design, planning and construction phase, and the subsequent O & M of the commissioned wind farm, which should last at least 25 years.
If European precedents are followed, there will be crossover from the oil and gas sector, which has many of the skills, vessels and plants necessary to build the sector. Block Island had considerable input from organized labor. 30 New England companies were involved in the design, fabrication, and manipulation of the turbines and their foundations and infrastructure. This included 300 unionized electrical and ironworkers.
"These projects are highly complex and they're technical," says Matthew Morrissey, Vice President, Massachusetts Deepwater Wind (now Ørsted). "We think that offshore wind will not only be an opportunity for organized labor, but an opportunity for young people who want to get into the industry to benefit from the opportunities organized labor brings to a local economy."
There are a lot of risks that go into Offshore Wind projects and make the process of commissioning an array difficult from whatever perspective you have. Apart from the obvious dangers of the sea, there are price fluctuations, grid connection, legal and regulatory hurdles to overcome.
Labor availability is a risk, but not one of the major difficulties, compared to the other issues. NYSERDA looked closely at the financing options and the best practices across Europe, coming to a view on the most practicable solutions.
"NYSERDA believes that joint procurement of the generating assets and transmission and interconnection structures presents the most easily-implementable and feasible option for the initial 2018 and 2019 solicitations." It analyzed the options that contained an element of hedging against various risks, so that whatever legal and financial structure would be involved, it would have the greatest resilience against unforeseen circumstances.
As different PPAs and other type of agreements evolve during the growth of the sector it is likely that there will be two or three optimal structures for the implementation of OW projects which will balance risk and reward between the parties. New York's Green Bank may well act a lender or credit enhancement (guarantees, reserves, etc.) provider.
The NYSERDA Master Plan concludes, "It is, therefore, expected that adequate sources of finance will be available to enable construction of Phase I offshore wind projects, particularly if New York offshore wind energy projects are substantially similar to precedent transactions previously financed in the global marketplace."
The long experience available from Europe should help mitigate the risks in the marketplace, though they cannot be entirely neutralized.
The US has many differences with Europe; however there are sufficient similarities to suggest that the growing offshore industry there will thrive, giving such benefits as CO2 emissions reduction, cleaner air, and well-paid local jobs.
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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