Report: Outlook ‘surprisingly positive’ for US offshore wind

Offshore workers

NEW YORK – The market outlook for US offshore wind energy is “surprisingly positive,” according to a recent report by consulting firm Intelatus Global Partners.

The report acknowledged that “it has certainly been an active few months in the U.S. offshore wind space.”

Despite some ongoing issues, the company says “fundamentals look surprisingly positive in the context of what has happened over the last 12 months.”

The report indicated that “the main concern of developers and the supply chain will be any negative effects of the upcoming presidential elections on the development of offshore wind energy.”

The company says the foundation for the report’s optimism can be found in federal plans to offer at least 22 gigawatts (GW) of power leasing this year at 16 sites located in the mid-Atlantic, Gulf of Mexico, Gulf of Maine and Oregon.

In addition, eight other leasing rounds have been identified for the period 2025-2028/29 “which should be compliant with the Inflation Reduction Act 2022 (IRA) as they relate to arrangements offering offshore wind leasing only where a certain amount of lease oil and gas (were) offered in the previous one-year period.

It is important to note that rental plans include both fixed-bottom and floating capacity. In addition to the approximately 11 GW contained in California’s five floating wind lease awards, Oregon offers nearly 2.5 GW of potential and 11.5 GW in the Gulf of Maine. Further leasing of floating wind farms in the Atlantic, Pacific and Gulf of Mexico is planned. This pipeline gives developers and the supply chain significant certainty to invest in the production and construction capacity required for floating wind farms.

In consultation with federal agencies, construction permits have so far been issued for six projects on the Outer Continental Shelf (OCS) with a capacity of 6.2 GW. Of these, one (South Fork) is connected to the grid, Vineyard intends to have all turbines connected to the grid by the end of the year, and two large projects (Revolution and CVOW-C) have started construction offshore. Currently, nearly 18.5 GW is in the federal permitting process, of which 6.5 GW is planned to be permitted this year.

As for states purchasing offshore electricity, the report noted that “there has been a flurry of contract cancellations and new orders over the past few months.”

The report indicated that the state of New Jersey announced a tender for 2024 for the purchase of 1.2 GW to 4 GW and offshore wind energy with a commissioning date in 2032. “In addition to the orders for 2024, the state of New Jersey anticipates three additional tenders organized twice a year, from 2026 to 2030, each awarding between 1.2 and 4 GW, depending on the results of the previous tender. Appropriate target commissioning dates are 2034, 2036 and 2038,” the report reads.

As for the Empire State, “New York has seen a lot of changes in offshore wind procurement.” Initially, New York canceled three projects that had been provisionally selected to provide power, but then in May the state announced a 2024 offshore wind tender for at least 2.6 GW. “We anticipate that the three canceled projects will be favorites to win awards,” the report reads.

The Maryland Legislature has passed a bill that effectively allows state agencies to increase the size of projects under existing procurements and sets a path for future procurements. Elsewhere, Delaware lawmakers are debating whether to pass a bill allowing energy from offshore wind.

In New England, Connecticut, Rhode Island and Massachusetts signed a memorandum of understanding last October to cooperate on a 2023 offshore wind tender, with each state organizing its own tender. Connecticut has applied for up to 2 GW, Massachusetts 3.6 GW, and Rhode Island 1.2 GW. In total, states plan to acquire up to 6.8 GW of offshore wind capacity. The trial is ongoing.

North Carolina, Louisiana, California and Oregon have offshore wind purchase targets.

This activity translates into more than 70 future short-term, medium-term, long-term and future projects that we forecast represent potential capital expenditures of more than $420 billion and annual operating and maintenance costs of approximately $9.8 billion.

Intelatus says it reviews all projects in the pipeline in its 117-page forecast and market report.

31/05/2024