After many false starts, the US offshore wind market has established strong roots for a solid future. But as markets evolve from the current northeastern and Mid-Atlantic niches, new opportunities and challenges arise.
The US offshore wind market has long been seen as not fully realizing its important potential. The technological potential of offshore wind is more than double the country’s total annual electricity sales, and it has long been seen that the United States has the potential to become a major player in the global offshore wind market. But until recently, that promise hadn’t come true.
But there is reason to change this view in the last 12 months and be more optimistic.
Two major OCS projects with a capacity of approximately 940 MW have reached FID and have begun onshore construction. Projects over 15 GW have been federally licensed and the project capacity of 17.5 GW ensures off-take commitments from the state. Potential GWs were signed by the end of this year and long-term lease plans for the Gulf of Mexico, the Central Atlantic Ocean, Oregon and Main Bay were being developed for auctions by the end of 2024 with turbine components, foundations and cable plants in the United States. Ships at the Jones Act wind farm are being built, accelerating the development of offshore wind farms.
This article discusses key themes, opportunities, and challenges for upcoming US wind power. These themes are covered in detail in the US Monthly Offshore Wind Report and Online Project Database.
- Listen to Phil Lewis on MaritimeReporterTV discussing opportunities and challenges with the US offshore wind market.
$ 167 billion spending to provide over 51 GW
There are different views on how much offshore wind will be deployed in the coming decades, from 23 GW by 2050 to 110 GW by 2050.
Bullish View-The White House aims to deploy 30GW of offshore wind by 2030. In addition, the government plans to “unlock the route,” which will reach a capacity of approximately 110 GW by 2050, or approximately 9% of total US electricity generation. In 2050.
A year ago, questions were raised about this goal. However, there have been many changes in the year to create the conditions for offshore wind power in the United States.
- Two major projects with a capacity of about 940 MW have reached FID and have begun onshore construction.
- To date, a federal lease has been awarded that has the potential to support an estimated 40 GW of offshore wind. Federal agencies are planning additional leases to support at least 6 GW awarded this year, with additional lease sales including the potential for several gigawatts in the Gulf of Mexico, the Central Atlantic Ocean, the Pacific Ocean, and Maine by 2024. It is planned.
- Ten large-scale developments with the potential to exceed 15 GW have been federally licensed. In addition, the government promises to complete a permit review of at least six projects, equivalent to at least 4GW of capacity, by 2025.
- The 17.5 GW project capacity secured off-take commitments from the state and identified future requirements above 18 GW.
- The developers were recently selected for a new Mid-Atlantic offshore lease capacity of at least 11GW.
Conservative view: The US EIA forecast assumes that by 2030, 10 GW of offshore wind will be connected to the grid and by 2035, 23 GW of offshore wind will be connected. Since then, EIA has predicted no offshore wind-based growth. By 2050, offshore wind will account for about 2% of US electricity generation, based on EIA figures.
Based on current development, this seems a bit conservative.
Our view: By 2030, 27 GW of capacity will be grid-connected, and by 2035 it is projected to be about 50 GW. In the long run, we predict that 110GW of installed capacity will be achievable by 2050. Our forecasts are based on developer plans, BOEM leasing and permitting activities, and state commitments and planned off-takes. Details can be found in the latest US Offshore Wind Monthly Report.
The following table provides forecasts of fixed investment, annual operation and maintenance costs, and decommissioning costs over their useful lives, depending on the timing of the final investment decision by the middle of the next decade.
FID Timing Prediction of CAPEX, Annual OPEX, and DECEX
Source: Intelatus Global Partners
The final investment decision for offshore wind capacity near 30 GW is expected to be made within the next five years.
The current forecast for long-term FID is for projects near 22 GW, but this number is increasing almost every month as new capacity possibilities are opened up for development. In the long run, more than $ 300 billion in capital investment required by 2050 is expected to develop additional 60GW potential.
Forecast of offshore wind capacity development
Source: Intelatus Global Partners
Confidence in the U.S. wind outlook continues to grow
2022 has already shown market confidence in the US wind sector and is expected to continue this trend due to three factors:
FID was created for the potential of offshore wind power near 1GW-after many false launches of commercial wind farms, the first two commercial-scale offshore wind projects were licensed and financially It was closed and construction started. Due to the project authorization process, no more FIDs are expected in 2022, but from next year onwards, multiple FIDs will be in place.
Lease Price Inflation-At the New York Byte Auction in February, developers promised to pay a record $ 4.4 billion in six leases. The price effectively means the option payment to secure the right to evaluate and develop the wind farm in the lease. The price paid per MW of potential capacity was about six times the average paid for three Atlantic leases in 2019. This is the last federal offshore wind lease sale. One developer’s bid was nine times the 2019 rent.
Developers are investing heavily in supply chain infrastructure and are doing well. In a March 2021 statement, the White House “targeted one or two new US plants for each major wind power plant component, such as wind turbine nacelles, blades, towers, and foundations, and. Submarine cable “.
At the time, this was a bit optimistic, but through state procurement requirements and support, several major component factories are now being built, providing ongoing opportunities for the domestic supply chain. Plans for construction and investment in O & M ports also mean that the ground has been destroyed and the project is underway.
The foundation for offshore activity to first peak in 2023-2026 is in place
Achieving the targets of 27 GW by 2030 and 110 GW by 2050 will make the United States an important global offshore wind market. However, developers of US projects need to explain that global offshore wind capacity and supply chain competition has increased significantly during the same period.
Project activity in the United States will reach its first peak between 2023 and 2026. This is in line with the surge in solid project activity in Europe and East Asia and the intensification of competition for limited supply chain resources.
- Since the first commercial turbines went live in the early 1990s, more than 28 GW of offshore wind has been installed in the UK and Europe to date. The UK is aiming to reach 40 GW by 2030, and the European Union is aiming for at least 60 GW by 2030 and 300 GW by 2050.
- Today, China, the world’s largest offshore wind market, has outsourced more than 10 GW alone in 2021. The state’s plan is to add another 75 GW of capacity by 2025.
- Elsewhere in Asia, Japan, South Korea and Taiwan aim to roll out more than 33GW by 2030.
- Outside of Europe and Asia, new markets are expected to enter Australia and South America.
Global supply and demand for offshore construction vessels is currently balanced or in some cases oversupplied, but from around mid-2010 there may be a shortage of wind turbines and foundation vessels, heavy lift ships and cable laying vessels. Expected. Without new vessels, it is expected that there will be some impact on project costs and schedules.
More details on the US wind farm construction schedule analysis can be found in the US monthly offshore wind report.
Lack of investment in Jones Law vessels
In a March 2021 White House statement on offshore wind, one ambition was “building four to six specialized turbine-equipped vessels at US shipyards, each $ 250- $ 500 million. Was to achieve “equivalent to the investment of.” Achievement of this goal is currently behind schedule.
To date, only one Jones Law wind turbine installation vessel has been built. Without additional domestic supply, developers would need to secure installed vessels from the international market–as one developer has already done for the project. However, while the international supply of wind turbine-equipped vessels is growing, the growth of suitable large vessels remains relatively slow, with supply expanding in the global market around mid-2010. At the same time, offshore wind power installation activities in the United States are expected. At the peak.
The only other Jones Law-compliant construction vessel committed to date is the wind farm scour protection / bedrock installation vessel.
Construction of service-operated vessels (SOVs) and crew transport vessels (CTVs) is expected to be significant. Both are used in the long-term operation and maintenance phase of wind farms and must comply with Jones Law. So far, it has been announced that one SOV is under construction, but the other SOV has been shown to be in the pipeline. Three vessels are already in operation in the CTV segment, and five CTV construction contracts have recently been announced. Despite construction activity, domestic supply and SOV and CTV are well below the forecast for demand.
An important opportunity brought about by floating offshore wind power
Nearly 60% of the technical potential of the United States lies in the most well-developed waters of floating offshore wind turbines.
Possibility of offshore wind technology due to water depth
Source: Intelatus Global Partners, NREL
Federal agencies are pursuing offshore leasing in California, Oregon, Maine Bay, and several other locations featuring floating offshore wind solutions. The first lease will be auctioned this year.
However, few are aware that five floating offshore wind projects are currently underway in the Atlantic and Pacific Oceans. Three are in state waters and two are in federal waters. These projects represent supply chain opportunities and challenges. This requires a different supply chain approach than the current Northeast and Mid-Atlantic pipeline bottom fixation projects. The main differences are summarized in the following table.
Offshore transmission solutions are evolving
To date, US offshore wind projects have deployed the same single-line or radial connectivity solutions that are common in many of the world’s offshore wind capacity. In this concept, the developer is responsible for building the connection between the offshore wind farm and the onshore grid interconnect points.
However, different states and federal agencies are considering different options to accommodate the grid interconnection of numerous offshore wind farms over the next few years. One of the approaches being studied is similar to the approach adopted by some North Sea markets. In an offshore integrated transmission network, an independent transmission system operator collects the power generated by individual offshore wind farms and injects capacity into the onshore grid through a large offshore network. Power transmission cable. Some decisions regarding the new approach are expected to be finalized within a year.
Details of all forecast projects can be found in the report.
For more information on the US offshore wind market forecast, please visit: www.intelatus.com Alternatively, contact Michael Kozlowski (+1 561-733-2477) or Philip Lewis (+44 203-966-249).
https://www.oedigital.com/news/495870-what-to-expect-from-the-us-offshore-wind-market-this-year What to expect from the US offshore wind market