Challenges and Opportunities for the US Offshore Wind Market to Reach 2030 Goals

Foundation installation of what is set to be the first utility-scale offshore wind farm in the US recently began at Vineyard Wind 1 off the East Coast. The project is expected to go into service as early as the end of this year, generating enough energy to meet the demand of over 400,000 homes and businesses across the Commonwealth of Massachusetts. 

With the momentum around US offshore wind only continuing to grow, bolstered by the support of the Inflation Reduction Act, it is certainly an exciting time to be reaching such a milestone. 

To guide the trajectory of those advancements and match the industry’s ambition, the US Department of Energy (DoE) has recently released its Offshore Wind Energy strategy, a comprehensive summary of its efforts to deploy 30 GW of offshore energy by 2030. However, staying on track has proved challenging. Obstacles in key areas have the potential to hold back the pace, efficiency, and longevity of development.

Streamlining both the Bureau of Ocean Energy Management’s (BOEM) leasing and project permitting processes requires attention for the US to truly accelerate its plans. Currently, the journey from initial identification of lease prospects to installation completion can span up to 8-10 years, presenting significant time and resource drainage that makes project financing more challenging. 

By optimizing the roadmap from identification to installation, it is possible to enhance the viability and attractiveness of offshore wind projects. One major step forward would be to streamline the permitting process by consolidating requirements — these currently take approximately 5 years, and involve around 40 permits across federal, state, and local agencies. 

Although the US is making considerable strides towards its offshore wind objectives, it remains a relatively new and evolving market, hindered by differing and fragmented local content requirements in each state. Initially established to support the growth of the US workforce and supply chain, these requirements inadvertently lead to project delays that impede the overall goals and DoE’s NOW and FORWARD pillars. 

The NOW and FORWARD pillars are intended to lower the cost of electricity generated by offshore wind; inconsistent local content requirements, in addition to other challenges, make it harder to bring down the overall costs of offshore wind. 

In order for the industry to be sustainable over the long term, it’s crucial to establish a domestic supply chain, as well as much needed workforce development to ensure there are enough skilled workers to meet 2030 goals. Massive investment in apprenticeships and training will need to happen soon, but there is widespread uncertainty regarding whether this will materialize in time, highlighting the potential need for flexibility in approaches to local content.

An additional challenge is the Jones Act, first passed in 1920 to safeguard the American shipping industry against foreign competition. The Act stipulates that only US vessels are permitted to transport materials between port and project site. This often forces developers to rely on local barges for turbine and blade installation. Given that the offshore wind industry will require a minimum of five to seven high-quality wind turbine installation vessels (WTIVs), this remains a major obstacle as construction lags far behind offshore deployment plans. 

These vessels are costly to construct. Currently, there is only one Jones-Act compliant WTIV currently under construction. Limited access to such vessels can result in substantial installation delays and cost increases, as developers seek alternative and less efficient methods. Therefore, exploring modifications of the Jones Act compliance rules, or considering alternative strategies, is essential.  

The Offshore Wind Energy Strategy released by the DoE is a remarkable and commendable initiative that focuses the nation’s sights on achieving its ambitious offshore wind targets. The start of construction on Vineyard Wind 1 is a turning point for the industry, marking a long-awaited achievement. Challenges lie ahead, and the path to success will not be easy. Nonetheless, industry collaboration between developers, government, and independent experts will be crucial for developing innovative solutions to overcome these hurdles, helping to unlock the vast potential of the American coast. 

Lars Andersen is President - Americas at K2 Management, which delivers owner's engineer, project management, due diligence, and engineering roles on offshore wind projects.

K2 Management | www.k2management.com