The U.S. offshore wind industry is at a tipping point. While there is currently just 30 MW of offshore wind installed around the US coastline, the pipeline is predicted to be 25 GW by 2035. The market outlook is also changing rapidly. At the end of 2017, only 400 MW of offshore wind projects had announced a power offtake mechanism. By the end of 2019, we expect that figure to be close to 7 GW.
A growing market
So, what is driving this change? One key element has been the efforts of a few individual states to stimulate in-state production of renewable energy. For example, many states in the Northeast either don’t have space for wind or solar facilities or only have space far from the load centres. This has led to a huge push toward offshore wind in Massachusetts, Rhode Island, Connecticut, New York, New Jersey, Maryland and Virginia.
The phase out of federal investment tax credits has also undoubtedly contributed to recent decisions by states to procure offshore wind, as has the continued downward trend in the cost of offshore wind.
State vs. federal
The lack of a comprehensive energy policy in the U.S. means that states are free to determine their own renewable energy pathways. However, it also results in tension between the speed at which the states want to move and the drawn-out Federal government processes.
The Federal government – specifically the Bureau of Ocean Energy Management (BOEM) – is one of the most important stakeholders in the early phases of an offshore wind project. With regulatory control over the outer continental shelf, the BOEM is the gatekeeper– identifying and leasing the wind energy areas, approving construction and operations plans, and giving final approval for the design and installation of each offshore wind farm.
Unfortunately, some projects are currently facing delays in the approval process. This is a concern for developers, turbine OEMs, vessel owners, and other supply chain stakeholders globally. Additionally, many developers who are trying to enter the U.S. market have not been able to advance because of the limited availability of wind energy areas. Lack of certainty and clarity are significant challenges to an industry trying to gain a foothold, especially given the ambitious state targets.
Global experience, local voices
Global offshore wind experience is invaluable to the U.S. market, and will allow the local industry to take advantage of the technology advances and lessons learned elsewhere. Yet it is paramount that developers have a strong local presence and remain flexible because the industry in the U.S. may not mature the same way it has globally.
American stakeholders have not yet been exposed to commercial-scale offshore wind, and their concerns carry significant weight with decision makers. Given the strong role that the states are playing in the industry’s momentum, they need to ensure that local stakeholders are heard and will reap the benefits of offshore wind – the jobs, infrastructure development and clean energy.
A land of opportunity
The U.S. market certainly poses challenges and risks: the supply chain is not mature, supporting infrastructure is needed, and federal policies are still under development. However, individual states continue to drive the agenda forward, and with $70 billion (around €63 billion) worth of investments projected over the next decade, the U.S. wind industry has significant momentum. This momentum will tip the U.S. industry scales, allowing offshore wind to grow, thrive and be an integral part of the nation’s clean energy future.