Offshore wind leases in the US are ramping up, with three out of seven auctions that were targeted by the end of next year already completed, but developing a promised supply chain for the industry is proving more difficult.
Aiming to develop 30 gigawatts of offshore wind power by 2030, the US is not lacking in ambition. US President Joe Biden’s administration is also targeting 15 GW of floating wind by 2035.
These targets are well under way, with the California lease auction in December adding potentially 4.6 GW of offshore wind energy to the pipeline. However, onshore ports and manufacturing capabilities are already proving insufficient to accommodate the projects, creating bottlenecks.
California is expected to be a key region for offshore floating wind projects, but only one port is preparing itself for floating wind marshalling and installation.
Although other ports in the state could support the supply chain, none has been identified to provide focus or specialisation in servicing large floating turbines and substructures for the wind sector.
California’s lagging infrastructure development highlights the broader global situation where supply chains for floating wind are “barely in existence”, Kevin Banister, president of TotalEnergies SBE US, told the Floating Wind Solutions conference in Houston this week.
“We’re seeing stepping stone projects [that lay the groundwork for commercial scale project development] being introduced in different parts of the world, and trying to avoid the risk of going to multi-gigawatt floating projects in areas where there’s tremendous uncertainty,” he said.
“There’s a needle that we need to thread that allows these technologies to get to scale.”
Where’s the money?
Developers are concerned about how the US government is using money from lease auctions. Industry movers say the money should be put back into the offshore wind supply chain by supporting port conversions and other supply chain issues.
“There are huge sums being spent that maybe could be allocated in a slightly better way. There were huge sums of money spent at the New York Bight, for example, almost $4.5 billion, and that goes to the general fund,” Banister said.
“There’s an argument now that the money generated should be spent in relation to the industry.”
The New York Bight auction last year put $4.37 billion into US coffers while the US Department of Transportation awarded $100 million in grants to renovate ports for offshore wind development.
Banister said the Department of Energy’s Floating Offshore Wind Shot, which intends to reduce the cost of floating offshore wind energy by at least 70% to $45 per megawatt-hour by 2035, is ambitious, but requires a government-wide effort to make this happen and to provide clarity on how it will be achieved.
Smaller developers targeting offshore wind rarely have the financial wherewithal to address this gap, especially for floating wind. Even in regular operations and maintenance, smaller companies are teaming up with larger companies, sometimes oil and gas companies, to support the funding.
“I think there’s a real synergy between smaller developers like us who have been able to be nimble and the capital that those entities bring,” Banister said.
Adrienne Downey, country manager for the US and Canada at pure-play floating offshore wind developer Hexicon, added: “These are long gestation projects — 10 years — and 1 GW will cost $5 billion, maybe more, given the current state of supply chain affairs.
“To be able to weather that time frame and foster those resources takes patient capital and insightful capital and it takes the ability to work on extremely complex and multi-faceted projects.”
Expertise in raising and applying capital, project execution and navigating the policy aspects of resource management makes oil and gas companies prime candidates to gain a share of the growing offshore wind market in the US, but challenges remain.
Upcoming auctions in the next 12 to 18 months will offer plenty of opportunities: the Gulf of Maine and the Central Atlantic are major floating offshore wind areas that can build out the infrastructure that is developing in New England, while offshore Oregon may need support in initiating supply chains.
In a region such as the Gulf of Mexico, oil and gas companies can take advantage of their existing offshore and onshore infrastructure and supply chains to make a real impact on the industry. It is partly for this reason that the Gulf has been identified as potentially a key region for offshore wind paired with green hydrogen hubs.