30 by 30: Five Challenges to Achieving 30 GW of U.S. Offshore Wind by 2030
The Biden administration announced a cross-department initiative in March 2021 to install 30 GW of offshore wind in the U.S. by 2030. The U.S. market for offshore wind when he made that declaration: <45 MW. At 0.1% of the 30 GW target, we have a long journey ahead. Here’s a look at the state of the U.S. offshore wind market and five key challenges that we must overcome to reach Biden’s goal over the next decade.
Offshore Wind Background
Offshore wind relies on the same core technology as onshore wind, but projects are located over water — most often in the ocean and near large population centers. Scaled offshore wind technology was first developed in Europe more than two decades ago and has been deployed globally since. The U.K. led the world in cumulative installed capacity until 2021, when China installed 17 GW of offshore wind in a single year.
Two basic offshore wind installation technologies exist: fixed and floating. Most offshore wind farms today are fixed, with foundations installed into the seafloor in shallow water (depths <200 feet). Although nascent, floating wind will enable offshore turbine installation in waters >200 feet, where building fixed foundations is challenging and expensive. Most floating concepts use existing turbine technology but are secured to the ocean floor via a series of moorings rather than the pilings used for fixed offshore installations.
Offshore Wind in the U.S.
Despite proven technology and scaled deployments in Europe and Asia, the U.S. has been a laggard in offshore wind, with only two modest sized utility-scale projects in operation. Offshore wind development in the U.S. has been limited due to a lack of federal permit awards and legal challenges faced by early projects. The high-profile lawsuits involving the Cape Wind project in the early 2010s set the industry back years before the project’s ultimate demise.
However, the Biden Administration’s decision to advance offshore wind permitting and target 30GW of deployment by 2030 has served as a critical signal of political support, opening the door for developers, labor, turbine OEMs, service providers, and state governments to coalesce around new offshore projects. The U.S. now has a robust offshore wind project pipeline focused in the northeast and mid-Atlantic, as shown below. Further, the second large scale U.S. offshore wind project, South Fork Wind off the coast of Rhode Island, received regulatory approval in late Nov’21. California’s topography necessitates floating offshore installations, so West Coast projects will require more time to develop as that technology matures.
Next Steps for U.S. Offshore Wind
Given offshore wind is a proven solution in Europe and Asia, permitting has opened up under the Biden Administration, and capital is anxious to support renewables, the focus for offshore wind in the U.S. now turns to execution: how will we get this done.
Our discussions with industry experts identified five key obstacles to scaling U.S. offshore wind deployment as summarized below.
1. Ocean Vessel Capacity and the Jones Act: Specially designed wind turbine installation vessels (“WTIVs”) or jack-up vessels are required to install offshore wind (see photo below). Crew Transportation Vessels (“CTVs”) and Service Operation Vessels (“SOVs”) that carry personnel and supplies to and from construction sites will also be required. Furthermore, the industry will be forced to comply with the Jones Act, which will add cost and complexity to the vessel procurement process.
- WTIVs are expensive ($500M+) and must be Jones Act compliant to be deployed in U.S. waters.
- Dominion Energy is building the only Jones Act compliant WTIV.
- However, as the U.S. offshore wind development pipeline grows, the demand for new WTIVs should materialize. An opportunity exists to develop consortiums that will pay the steep upfront costs for a Jones Act compliant WTIV once enough “offtake” demand exists.
- Developers are also exploring alternatives to using Jones Act compliant WTIVs whereby already built European WTIVs (non-Jones Act compliant) are stationed at offshore wind construction sites, and Jones Act compliant equipment handling vessels bring materials to and from the site.
- CTVs and SOVs are less expensive than WTIVs and can be repurposed from current use in the oil and gas industry.
2. Port Infrastructure: Ports will require additional investment to serve as staging areas for manufacturing, assembly, and transportation of large offshore wind components. Most current ports are too narrow and/or shallow for wind turbine staging.
- Most ports have hybrid public-private governance structures; therefore, port investments often include government input and funding. Several northeastern states have made sizable investments to expand port infrastructure, including:
- Connecticut: $235M investment to re-develop the State Pier into an offshore wind staging area.
- New Jersey: Investing $400M to build a 30-acre port along the Delaware River for assembling and deploying turbines.
- New York: Initiated $200M of grant funding for the development of offshore wind-friendly port infrastructure.
3. Wind Component Manufacturing Capacity: Achieving 30 GW of offshore wind in the U.S. is estimated to require $100B+ of expenditures, including 2,000+ turbines and towers ($44B), 2,000+ substation foundations ($17B), 8,000+ kilometers of cables ($13B), and 50+ offshore substations ($10B). Domestic manufacturing capacity must be scaled to meet this challenge.
- Major wind players have made recent investments in manufacturing capacity:
- Ørsted and Eversource, Sunrise Wind’s joint development partners, signed an $86M supply chain contract with Riggs Distler & Company to construct advanced turbine foundation components at the Port of Coeymans.
- Siemens is planning a $200M+ blade manufacturing facility in Virginia.
- Welcon and Marmen announced a tower and transition-piece manufacturing facility in the Port of Albany, with Equinor and NYSERDA.
- Ørsted and Eversource announced a $20M+ investment in a foundation manufacturing facility in Port of Providence, Rhode Island.
4. Grid Interconnect: Offshore wind requires substantial underwater and onshore transmission infrastructure to connect to the grid. $15B+ must be spent on transmission for northeastern states to achieve their climate goals by 2035.
- States are seeking to work with federal regulators and grid operators to share the costs of building offshore transmission. FERC is expected to play an important role in multiparty planning.
- In Apr’21, PJM opened a 120-day solicitation on behalf of NJ for qualified developers to submit transmission solutions for offshore wind. Similar solicitations are expected as transmission infrastructure is developed.
5. Skilled Labor: Specialized human capital is needed to develop, install, and maintain offshore wind farms. The prospect of additional employment is an important consideration for local government and community buy-in.
- An attractive opportunity exists to transfer human capital from offshore oil and gas development work into offshore wind given the similarities between skill sets.
- States like Maryland and Massachusetts are investing in programs to develop human capital.
Collaboration will be critical to tackling obstacles to offshore wind deployment as the scale of the problem and capital required cannot be solved by a single entity. We’re encouraged by the nascent alignment between state and federal governments, labor, OEMs, and developers, but more human and financial capital must be dedicated to the five obstacles above to make 30GW of offshore wind by 2030 a reality.