Attendees at ‘Financing Wind Offshore’ in Boston last week were quietly optimistic, even though the Biden administration’s target of 30GW installed offshore wind by 2030 now looks out of reach. That positivity will be needed in the year ahead.
US offshore wind experts believe the Biden administration’s goal of 30GW installed capacity in the country’s waters by 2030 is out of reach. The question now is how far short the country falls. That was the verdict of the professionals at our ‘Financing Wind Offshore’ conference last Thursday.
We polled attendees at the conference in Boston to find out how optimistic they are about the prospects of a sector that has taken a hammering in the last year, due to inflation, supply chain disruption and vocal opposition. This has caused high-profile problems for developers and led Ørsted to cancel the 2.3GW Ocean Wind 1 & 2 complex on 31st October. Other projects are still in doubt.
Over half of attendees (58%) said they expected less than 10GW of offshore wind to be operational in US waters by 2030, with a further 40% expecting between 10GW and 20GW. Only 2% predicted more than 20GW by 2030 and none over 30GW. This is far short of the federal government’s target, but still strikes us as fairly bullish given the commercial challenges of the last 12 months.
Respondents were most positive about the prospects for offshore wind off the coast of New York, where Ørsted has this week installed the first turbine at the 130MW South Fork Wind project. Fifty-nine percent of attendees said they expected New York to have the most offshore wind capacity installed in its waters by 2030, ahead of Massachusetts (27%) and Virginia (8%). This may reflect how fast New York has reacted to market uncertainty: it is due to open a new offshore wind solicitation on 30th November, with bids due in January, so stalled projects can secure off-take deals at higher prices.
Finally, just over half of attendees (51%) expected GE Renewable Energy to be the turbine maker with the largest market share by 2030, ahead of Vestas (29%) and Siemens Gamesa (17%). GE has taken an early lead as turbine supplier for the 800MW Vineyard Wind 1, which is due to be commissioned by mid-2024, but each firm in the ‘big three’ has won headline-grabbing orders. For example, Siemens Gamesa is preferred supplier to the 2.6GW Coastal Virginia project by Dominion Energy, and said its plans would not be affected by its recent cancellation of a planned $200m blade factory in Portsmouth.
There are still reasons to be optimistic about offshore wind in the US – and those in the industry will need all of those positive vibes as more legal challenges surface.
Those of us who’ve watched US offshore wind for the last decade will be well aware of the saga of the 468MW project Cape Wind. This scheme was first mooted in 2001 and developer Energy Management Inc. won more than two dozen legal battles. However, Cape Wind was eventually weighed down by this litigation, which caused delays that led to the project defaulting on its power purchase agreements in 2015. It never recovered and was pronounced dead in 2017.
The project is long gone but the lesson of its failure remains highly relevant. Offshore wind developers can win all the legal fights at projects, but still see projects fail if their opponents delay them for long enough. Delays can cause developers to run out of money, contracts, political support, benign economics, or the will to fight.
This is why the threat of legal action by conservative think tanks Heartland Institute and the Committee for a Constructive Tomorrow against Dominion Energy’s 2.6GW Coastal Virginia scheme should put the industry on alert. The pair said they are filing legal action against the Bureau of Ocean Energy Management and National Marine Fisheries Service’s approvals for the projects, which they claimed are in breach of the Endangered Species Act because of the potential harm to North American whales.
This should concern developers and investors because the challenge is about more than one scheme. Rather, the think tanks said it is about “the Biden administration’s plan to industrialize the ocean”, which shows they want to create a legal precedent that would derail other schemes too.
As well as judges and policymakers, the think tanks are looking to influence Dominion shareholders by stressing how the firm’s share price has halved since August 2022 and promising that it would rebound if Coastal Virginia is axed.
This also coincides with the increased use of fake scientific studies and images to discredit offshore wind. In Australia, the editor of a scientific journal has this month warned that anti-wind objectors are using a fictional report, reportedly produced by the University of Tasmania, to discredit the offshore wind sector; while the think tank Texas Public Policy Foundation has reportedly used fake images produced by artificial intelligence too.
We enjoyed hearing from all of the expert speakers at ‘Financing Wind Offshore’ last week. However, there can also be no doubt that the current woes facing the sector have only empowered the industry’s critics ahead of an expected Biden-Trump presidential fight in 2024, which is set to include much discussion about the Biden administration’s ‘green’ plans.
The 30GW by 2030 target may be out of reach, but there’s so much for those in the industry to fight for.
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