15 Jul 2022
By Declan Slattery
Bold action comes from bold ambition, and ambitions don’t come much bolder than the United States’ plan to scale-up offshore wind capacity from 42 megawatts to 30 gigawatts by 2030. That goal will require windfarms across almost the entire coastline. As yet, there are no commercial-scale offshore windfarms operational in the country.
This goal will require an unprecedented pace of development. The US is not allowing itself the luxury of the multi-decade timescales European pioneers like the UK have followed. That’s okay though, because the US is not starting from zero; it can build on the expertise and technology developed in Europe to accelerate the roll-out. After all, if any country has proven its ability to deliver on supersize projects, it’s America.
How exactly then, can America incorporate the best of the European offshore wind industry to meet its ambitions? It helps to be specific, so let’s focus on supporting installation infrastructure and supply chains.
The Problem of Ports and Vessels
Installing and commissioning turbines offshore requires a variety of specialized vessels, ranging from wind turbine installation vessels (WTIVs) to jack-ups, crew transfer vessels, and cable laying vessels. These, in turn, rely on specialist port infrastructure shoreside to load, service, and deploy them.
The US has a shortage of the necessary specialized vessels. An obvious solution would be to source them from elsewhere, but this avenue is restricted by the Jones Act, which prevents foreign-built, -owned, or -manned vessels from transporting goods between US ports, hindering the import of fleets from more mature markets. Although the first Jones Act-compliant WTIV wind farm service operations vessel is projected to be sea-ready by 2023, the tight timelines involved in installing 30GW by 2030 makes it unlikely that a new compliant vessel supply will suffice. Even if the order book balloons tomorrow, designing and commissioning such vessels is itself a multi-year undertaking. However, the challenge is surmountable. Indeed, the Jones Act has been in place since 1920; in that time, another offshore industry with similarly complex requirements has thrived – the Gulf of Mexico oil and gas sector.
Possible workarounds include operating out of Canada for projects in the Northeast, or relying on US-flagged barges. The Jones Act applies from port-to-port, so components could, for example, be transported by barges from the shore to waiting WTIVs that have sailed from Europe or Asia.
Such solutions come with ingrained inefficiency; they don’t obviate the need for investment in US specialist vessels, but they can make the short-term pain less acute.
Onshoring the Offshore Supply Chain
Currently, the US also lacks a fully-established domestic supply chain for offshore wind; relying on an internationally dispersed and disparate supply chain could also impede development. Capital projects worldwide – and not just in the offshore wind sector – are suffering from materials shortages at the time of this writing, and that problem is harder – and more expensive – to manage when suppliers are extremely remote.
As an added incentive to build out the domestic supply chain for the sector, local economies can be bolstered by local content and skilled employment opportunities. This is particularly important in the US, which takes pride in supporting a healthy ecosystem of independent service and equipment suppliers, such as those which are so prevalent in the Gulf of Mexico and in the onshore oil and gas sector.
Fortunately, there are signs that elements of the US offshore wind supply chain are clicking into place. Homegrown giants and specialists have rich expertise earned abroad to bring to bear at home. Then there are other companies doing the reverse – taking expertise developed in far-flung home markets and applying it to the States. These not-so-newcomers have made strides in manufacturing subsea cables out of the US, with other major players poised to leverage expertise built in US onshore wind, US offshore oil and gas, and European offshore wind to move quickly in the space.
This appears to be a winning combination – a balance of American companies supplying American projects, with specialists from abroad plugging the gaps and creating American jobs in the process. However, there is a significant stumbling block in this regard, as it can be difficult for foreign companies to know where to base their US operations. Different states apply different offshore licensing rules, employment law, taxes, and incentives, all of which creates a level of uncertainty; the day after you make a decision, another state may announce an even better deal, leading to decision paralysis. In time, this problem will fade as different areas generate a critical mass of certain businesses and become the de facto centers of gravity for their respective niches – but time is of the essence, and an expedited solution would help maintain momentum.
All Eyes on Martha’s Vineyard
There is an urgent imperative to integrate and simplify buying services across a complex, far-flung international supply chain. US developers could benefit from neutral conveners capable of bringing together an ecosystem of equipment, and providing an integrated end-to-end offering from equipment sourcing to operation.
In this context, it will be instructive to watch the progress of the 800MW Vineyard 1 project off the coast of Martha’s Vineyard – “a project that the industry has long treated as a harbinger of the industry’s fortunes” and the first commercial scale offshore wind farm in the US.
The US can benefit from Europe’s more mature offshore wind market, which has been able to join up everything from supply chains to design and engineering – both by sourcing services and components directly, and by looking to its development for instruction. If it can get the balance right, the nascent US offshore wind industry could become a tremendous source of jobs and wealth for the country, and even bring that lofty 30GW by 2030 target within reach.
Declan Slattery is Chief Financial Officer at Motive Offshore Group Ltd. From equipment design and build, to inspection and testing, through to equipment mobilization and operation, Motive offers all the ‘tools’ necessary to complete your project successfully and on time, along with a friendly, knowledgeable team 100% invested in delivering your solution.
Motive Offshore | www.motive-offshore.com
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