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State of the U.S. Offshore Wind Industry
While the U.S. still lags behind Europe in offshore wind, 2023 will be the year it starts playing catch-up as the first two commercial-scale projects come to life off the New England coast.
This watershed moment is just the tip of the iceberg as U.S. market momentum has been building for years and dozens of projects are advancing through the permitting pipeline. U.S. states, who are the primary market drivers in the American market, have collectively called for nearly 85 GW of offshore wind power generation.
The first quarter of 2023 highlights just how quickly the U.S. market is moving and what it means for the supply chain. Procurement processes are open or advancing in four states, which could soon bring 10 GW of power generation under contract in the next few months. Tied to those financial agreements will be commitments to supply chain investments, including new component facilities for blades, nacelles, and towers. Other states are actively increasing their offshore wind commitments, with Maryland, for example, increasing its offshore wind goal from 2 GW to 8.5 GW. Others soon will, such as New York and Massachusetts.
Spurred by California's new 25 GW deployment goal, West Coast stakeholders are laying the groundwork for a dedicated supply chain for floating offshore wind development and 2023 has already seen a flurry of activity. The Port of Long Beach announced its $5 billion proposal for Pier Wind, a 400-acre wind turbine manufacturing facility that would become an important supply chain component for the emerging West Coast market. San Diego-based shipyard General Dynamics NASSCO signed an MoU with Spanish shipbuilder Navantia which would see the two jointly bid for floating offshore wind component manufacturing and floating foundation assembly contracts. And state leaders in California (and Louisiana) announced they would join the Federal-State Offshore Wind Implementation Partnership launched by the Biden-Harris administration in February 2022.
While 2023 is the year of the states, 2022 was marked by a substantial effort from the U.S. federal government to accelerate the development of the nation’s offshore wind industry. Last year, the Bureau of Ocean Energy Management (BOEM), the U.S. government agency responsible for offshore wind site leasing and project development, held its first lease auction for offshore wind project sites since 2018. Six areas off the coast of New York, five off the coast of California, and two off the coast of North Carolina were auctioned, opening up an area that could generate up to 11.5 GW and setting BOEM on a path to complete its internal goal of conducting seven lease sales by 2025. With these auctions conducted and over 15 GW of offshore wind power generation nearing permitting approval, the federal government is well on its way to achieving President Biden’s goal of deploying 30 GW of offshore wind by 2030 and the complementary goal of 15 GW of floating offshore wind by 2035.
If the states are providing the incentive and the federal government is providing the means, the U.S. Congress is providing the fuel. The Inflation Reduction Act (IRA) has the potential to remake the U.S. energy market with substantial tax credits for clean energy development (including offshore wind). New manufacturing tax incentives for the offshore wind industry will help the supply chain scale up to meet ever-increasing demand. The passage of the IRA followed a substantial infrastructure support package that is already seeing billions flowing into redeveloping ports and transmission lines, all of which benefit offshore wind development.
And while states actively lead the nation in 2023, the federal government has not been idle. New rules are being promulgated that modernize and streamline offshore wind development, ultimately reducing ratepayer costs, enhancing environmental protection, and ensuring greater worker safety. The federal government also plans on holding a lease auction in the Gulf of Mexico this summer, right in America’s offshore energy capital.
These findings come from the Business Network for Offshore Wind, a U.S. nonprofit organization that releases quarterly and annual reports on the state of the U.S. offshore wind industry. The Network also hosts educational programs for U.S. companies in the offshore wind industry and promotes the development of the offshore wind supply chain.
Despite many positive developments, The U.S. market is still hampered by a lack of sufficient investment in the supply chain, port and transmission infrastructure, and vessels, and more work is still needed to advance the supply chain to the level called for in the Supply Chain Roadmap for Offshore Wind Energy in the United States, published in January by the National Renewable Energy Laboratory in conjunction with the Network. To meet the nation’s 30 GW by 2030 goal and ensure a self-sufficient U.S. market, $22 billion in new investments is needed to breach key bottlenecks in vessel availability and logistical constraints. Congress must pass complementary permitting regulations to ensure the generous tax provisions do not go to waste when transmission projects fail to materialize.
No industry comes to life without hitting obstacles or bumps, and the U.S. offshore wind market is no different. However, now in 2023, the U.S. offshore wind market enjoys solid footing to build from.
