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U.S. offshore wind industry set to takeoff

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Driven by state-level support and commitments to purchase carbon-free wind energy by east coast utilities, some of the largest proven development companies in the world have begun investing heavily in America’s next big energy play – offshore wind.

Based on data compiled by ABB’s Velocity Suite research team, the eastern seaboard could be home to roughly 24 gigawatts (GW) of capacity by 2035.  Most of the projects are in early-stage development.

Currently, only 2.2 GW have met most permitting requirements, while about 2.0 GW have applications pending.  Most of the projects are targeted for operation (11.4 GW) in 2025, with Massachusetts and New York leading the way.

Source: ABB Ability Velocity Suite

The only commercial operating offshore wind project in the country is Ørsted’s Block Island Wind Farm, located 3 miles southeast of Block Island, RI, which came online in December 2016.  The only offshore wind farm currently under construction is the relatively small (12 MW), Coastal Virginia Offshore Wind Project, expected online in 2021 – jointly developed by Ørsted and Dominion Energy.

States leading the way

Working closely with power distributors, several states have begun awarding developers with offshore contracts through auctions and tenders – Massachusetts (3.2 GW) and New Jersey (3.5 GW) by 2030, and New York (9.0 GW) by 2035. 

Along with the recent state-level proposal requests, an additional key indicator of future growth in the U.S. offshore wind industry is the upcoming wind auctions and tenders scheduled for 2020 and 2021.  Some of these include:

  • Maryland 2 (400+ MW)
  • New York 2 (800 to 1,200 MW)
  • New Jersey 2 (1,200 MW)
  • Maryland 3 (400+ MW)
  • Massachusetts 3 (800 MW)

Danish corporation Ørsted has been exceptionally active in the U.S. market with commitments to build more than 10 GW of offshore wind capacity along the coast of seven eastern states by 2030. 

The company’s development profile includes:

  • Block Island Wind Farm (RI) – 30 MW, 5 turbines, currently the only operating offshore project in the U.S., online in December 2016
  • Revolution Wind – (RI/CT) 400 MW to RI, and 300 MW to CT, a joint venture with Eversource, awarded and expected online in 2023
  • South Fork Wind Farm (NY), 130 MW off the coast of Long Island, awarded and expected online in 2022
  • Sunrise Wind (NY), 880 MW, joint venture with Eversource with support from Con Edison and New York Power Authority (NYPA), awarded, expected online in 2024
  • Ocean Wind (NJ) 1,100 MW, with support of PSEG (25%), awarded and expected online in 2024
  • Skipjack Wind Farm (MD/DE), 120 MW, awarded and expected online in 2022
  • Coastal Virginia Offshore Wind (VA) 12 MW, awarded with Dominion Energy, expected online in 2021
  • Bay State Wind (MA), 800 MW in development jointly with Eversource
  • Constitution Wind (CT), 400 MW, in development jointly with Eversource
  • Garden State Offshore Energy (NJ), in development jointly with PSEG – the project has secured BOEM lease which consists of up to 96,000 acres, enough to build 1.2 GW of capacity

What needs to happen?

The only projects that will ultimately be built have been granted development rights in specific lease areas with viable off-take contracts with utility companies.

Project approval depends on more than two dozen federal, state, and local permits/authorizations including the primary approval of the lead federal agency, the U.S. Department of Interior’s Bureau of Ocean Energy Management (BOEM), which is currently holding up projects as the agency studies the overall impacts of the recent rapid development of several projects announced simultaneously.

How fast developers can navigate through the federal permitting process and how fast the supply chain infrastructure can be built will determine the real time scale for when projects can be built.

Economic benefits galore

Along with the economic development associated with the actual projects is the economic potential of building out the necessary supply chain facilities to support both the construction and ongoing maintenance of towers, turbines, undersea cables, power lines, and substations.   

Bigger infrastructure is needed including the largest crane ships and deep-water ports to service the construction and ongoing maintenance of the huge wind farms.

Massachusetts on the fast track

On October 30, 2019, Mayflower Wind Energy LLC, a joint venture of Shell New Energies US LLC (Shell) and EDPR Offshore North America LLC (EDPR) was selected by state utilities in coordination with the Department of Public Utilities (MA DPU), to deliver 800 MW of carbon-free power to Massachusetts.

The project will be located about 20 miles south of Nantucket in lease area OCS-A 0521, with an expected energize date in 2025.  Mayflower Wind submitted four proposed projects including:

  • Project 1 – 408 MW
  • Project 2 – 804 MW Low Cost Energy, expected to deliver the lowest cost offshore wind energy ever in the U.S.
  • Project 3 – 804 MW Infrastructure and Innovation, proposal included strategic investments in port infrastructure, technology, and innovation
  • Project 4 – 804 MW Massachusetts Manufacturing, included everything in Project 3 plus the ability to establish the state as the offshore supply chain for export opportunities within the U.S. and globally

The “Low Cost Energy Proposal” was selected to move forward and begin contract negotiations.

Mayflower Wind lease area

Source: image courtesy of Mayflower Wind at www.mayflowerwind.com 

Back in 2016, Massachusetts enacted renewable energy legislation called “An Act to Promote Energy Diversity” that authorized up to 1,600 MW offshore wind.

Earlier this year, the state selected the Vineyard Wind I Project (800 MW) and approved contracts for up to 1,090 MW from the New England Clean Energy Connect (NECEC) transmission project, a 145-mile high-voltage direct current (HVDC) power line designed to bring hydropower from Quebec, through Maine, and into Massachusetts.  The transmission project has been issued a Certificate of Public Necessity and Convenience (CPNC) with a final decision anticipated by the end of 2019.

The 800 MW Vineyard I Project has been delayed while awaiting the release of the BOEM impact study.  The delay in getting federal approval is expected to push the project’s start date by about six months.  When constructed, the Vineyard project will be the first large-scale offshore project (with 84 turbines) in the U.S. 

Based in New Bedford, MA, Vineyard Wind is 50% owned by Copenhagen Infrastructure Partners (CIP) and 50% by Avangrid Renewables.  

Additional state legislation passed in 2018 calls for Massachusetts state officials to study the impact of an additional 1,600 MW of offshore wind over and above the 1,600 MW authorized in 2016 and recently approved.

Driven by the need for carbon-free power to meet state renewable energy goals, the nascent U.S. offshore wind industry is finally in a strong position to take off.

Kent Knutson's picture

Thank Kent for the Post!

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Discussions

Matt Chester's picture
Matt Chester on Nov 11, 2019 6:31 pm GMT

It's been a frustratingly slow process, especially as European markets have really taken off with regard to offshore wind. Do you think, though, that'll provide an avenue for the uptake stateside to increase at a more rapid rate, as technological hurdles have already been overcome elsewhere and we can just adopt those best practices? Or are the installations in each new region sufficiently unique that there's not too much to learn?

Kent Knutson's picture
Kent Knutson on Nov 11, 2019 7:13 pm GMT

Building offshore wind projects is a lot like building LNG infrastructure.  It takes big players with financial clout.  That's why the current wave of project developers includes corporations like Shell, EDP, Orsted, Avangrid, Copenhagen Instrastructure Partners, Dominion Energy, PSEG, Eversource, Con Edison and NYPA to name some.  The development of the supply chain infrastructure is an equally massive undertaking that requires significant capital.  With backers like those listed above, the chances for offshore projects to move to FID (Final Investment Decision) are high.  Today's technology is always improved from yesterdays.  Interesting times ahead . . . all pretty much driven by state plans to reduce their carbon footprint.  Now it's a wait and see moment as the BOEM approval study is completed and federal permiting moves forward.    

Matt Chester's picture
Matt Chester on Nov 11, 2019 10:27 pm GMT

Thanks for the reply, Kent.

Interesting times ahead . . . all pretty much driven by state plans to reduce their carbon footprint.  Now it's a wait and see moment as the BOEM approval study is completed and federal permiting moves forward. 

States have shown time and again to be the real leaders in clean energy policy, here's to hoping the federal government doesn't obfuscate it all

Charley Rattan's picture
Charley Rattan on Nov 12, 2019 11:04 am GMT

Thanks Kent for an informative assessment of the East Coast offshore situation.

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