The Biden administration wants to spark an American boom in offshore wind power, growing the industry from less than 1 gigawatt today to 30 GW by the end of the decade – enough to serve 10 million homes.
But executives are increasingly concerned that a myriad of challenges facing the sector are pushing that goal out of reach: permits are too slow, leases are too expensive, equipment is scarce and the inflation is skyrocketing, they say.
The mix of trepidation and excitement was on full display at the ACP Offshore Windpower conference in Providence, Rhode Island, last week, where 2,000 delegates gathered to discuss the future of the industry.
“I think you could paint a picture – if there continue to be significant delays and projects already underway are pushed back – then it will be harder to meet that 30 by 30 target,” said said Molly Morris, new US. head of offshore wind at Equinor, the Norwegian energy group.
The offshore wind industry, powered by offshore turbines, is well established in Europe. The US federal government and coastal states have more recently embraced the technology, with President Joe Biden making it a pillar of his drive to decarbonize the nation’s power grid and put it on a path to net-zero emissions.
Turbine blades are set to start spinning next year at the 800-megawatt Vineyard Wind development off the coast of Massachusetts, the first commercial-scale offshore project in the United States. Dozens more are expected to follow as investors rush for a slice of the action.
Permitting was a central concern for many developers gathered at the Providence event, who said environmental reviews needed to be faster and done with more consistency and transparency.
“Our concern is that this could end up being a very difficult bottleneck,” Morris said. “If we don’t get these projects that are at the forefront. . . licensed, so it’s very difficult to really get that industry off the ground.
Executives also pointed to problems with the rental process. An auction for a section of federal waters off New York and New Jersey in February generated high bids totaling $4.4 billion, more than any offshore oil and gas sale. But some developers said the high price saps capital and makes it difficult to make a profit.
Companies such as Equinor and Denmark’s Orsted pulled out of the bidding process as prices rose. David Hardy, head of Orsted’s North American operations, told the Financial Times at the time that the auction was a “missed opportunity”.
“I don’t think it’s healthy to have these super high rental prices,” said Mark Mitchell, senior vice president for project construction at Dominion, a US utility company building an offshore wind farm. off the coast of Virginia. “Right now that money is just coming in, and it’s not necessarily benefiting the customers who end up taking that power.”
Dominion is also embroiled in a regulatory stalemate over Virginia’s insistence on a performance standard that would require it to cover replacement power costs if the wind farm underperforms targets. The company has threatened to end what it describes as “unsustainable” costs associated with the supply.
The Biden administration says it is working with developers to address issues as it seeks to grow the industry “from the ground floor.” Amanda Lefton, director of the US Office of Ocean Energy Management, said, “We have significantly evolved our processes and continue to do so.”
“We will absolutely meet this administration’s targets for 30 gigawatts of offshore wind by 2030. We are also ready to go well beyond that,” she told the FT.
Equipment availability is a growing challenge for the industry — a problem exacerbated by some states’ insistence on using local parts and labor as a condition of winning power sales contracts.
“There are only a limited number of resources available that can support the size of turbines that we will be installing here in the United States,” said Amy McGinty, offshore construction manager at turbine manufacturer Vestas. “Whether it’s ships, cranes, transport capacity, plant capacity, we have to make commitments now. . . for the projects we will be building in 25, 26, 27 and beyond.
US law prohibits the use of foreign-flagged vessels to transport parts between domestic ports. That restriction could be tightened under legislation being considered in Congress that would also require installation ships, which operate away from ports, to also be manned by U.S. sailors. Developers say this could stop the industry in its tracks.
“I think people have to weigh all the factors to make sure there are transition times to make sure you don’t immediately lock up the market,” Mitchell said. “Because these big ships and resources, they just don’t get traded overnight. You have to have time to do it. »
For OEMs, global inflationary pressures add to concerns. “We’re in this industry that’s taking off like a rocket,” said Steven Dayney, head of offshore wind business at turbine maker Siemens Gamesa. “Yet many of us across the value chain are struggling to do that at a profit that allows us to continue investing . . . Technology.”
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