After years of false starts and delays, US offshore wind is finally gaining momentum, fuelled by innovation in turbine technologies, greater economies of scale and increased political support – at least at the state level. New York, in particular, is ideally placed to benefit and serve as an economic and financial hub for US wind over the next decade.
This is according to the latest findings outlined by industry intelligence service A Word About Wind in its Finance Quarterly Q2 report. The report forms the latest analysis published exclusively for its rapidly expanding international membership of energy developers, financiers and investors.
This financially focused, quarterly investor report series provides an exclusive insight into key M&A transactions, data on the most notable deals of the past three months, economic country forecasts and unrivalled investment analysis, four times a year.
Ahead of A Word About Wind’s first US conference next month, this edition focuses on the US wind market, and that of New York in particular, and reveals that 2.4GW of wind PPAs were agreed in the first quarter of 2018 – making it the busiest quarter for PPAs in the US since 2013.
While the Trump administration and its tax reforms have given rise to considerable uncertainty, for instance, this has been more than compensated for by the initiatives of state governments in New York, New Jersey and Massachusetts, among others.
However, market challenges such as the Jones Act, which requires that goods shipped between US ports be carried on ships that are US-built, US-flagged and US-crewed, have the potential to disrupt the pace of growth. In addition, the proposed 25% tariff on steel – the major raw material in wind turbines – could well result in increased turbine prices.
Nevertheless, the outlook for US offshore wind remains positive. As one of the world’s largest financial centres, New York is well placed to attract investors’ interest and capital and position itself as a regional leader in offshore wind. And it has already set itself the ambitious target of generating 50% of its electricity from renewable sources and having a total offshore capacity of up to 2.4GW by 2030.
Significantly, the New York State Energy Research & Development Authority is aiming to encourage investors to back offshore wind projects that cost more upfront than other clean energy schemes. It formed the New York Green Bank in 2014, which is interviewed in this report, to fund renewables projects in the state, and the bank is now capitalised with $1b, of which it has invested $457.5m to date.
While wind has so far been a minority interest, as more and larger projects are mooted, the Bank has the potential to play a key role in future commercialization of the US offshore wind sector.
“For years the US offshore wind industry lay dormant, but it is now beginning to wake up and stands to benefit from greater cost efficiencies and technological advances,” said Richard Heap, Editor, A Word About Wind.
“But it’s also becoming increasingly clear that strong political buy-in at the state level will have a make or break effect on overcoming potential regulatory and economic stumbling blocks. New York in particular has pushed itself to the fore in terms of its commitment to creating a profitable environment for US offshore wind, and this will be crucial to the success of the wider industry.”
The investor report also contains interviews with David Burton, partner at the New York office of law firm Mayer Brown, on the impact of President Trump’s tax reforms on the sector; with Steve Lockard, president and chief executive of blade specialist TPI Composites and incoming chair of the American Wind Energy Association; and with the founders of recently-launched Skyline Renewables.
There is also in-depth coverage and analysis of the most notable M&A, PPA and project finance deals in wind in the last quarter, as well as a look back at the most significant stories in the offshore sector worldwide.
Adam Barber, Managing Director, The Tamarindo Group, of which A Word About Wind forms a key part, commented: “US offshore wind currently has much to shout about, and competition between the states is driving the growth of the sector and its supply chain.”
“New York is in a strong position to capitalise on its status as a global financial centre and continue attracting greater investment in offshore wind, but can expect to be pushed hard in its bid to become the leading hub for wind by New Jersey and Massachusetts, which will this month announce the results of its 2017 request for bids of up to 800MW. With so much activity and potential in the market, we’re looking forward to discussing all these issues and more at Financing Wind New York next month.”
Financing Wind New York will take place at 237 Park Avenue in Midtown on 30th May. For further information, and to obtain a copy of Finance Quarterly, please visit: https://http://www.awordaboutwind.com/reports/finance-quarterly-q2-2018/
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