APRIL 22, 2019 GTM
The U.S. is home to some of the world’s largest offshore wind zones and most ambitious targets. What does that mean for supply chain investors?
Over the past two years, states along the U.S. East Coast have announced increasingly ambitious targets to build offshore wind projects.
In January of this year, to cite the most consequential recent example, New York nearly quadrupled its offshore wind target to 9,000 megawatts by 2035.
But what do the gigawatts’ worth of state-level commitments mean for companies unsure whether to commit resources to become part of the supply chain for offshore wind projects?
In January of this year, to cite the most consequential recent example, New York nearly quadrupled its offshore wind target to 9,000 megawatts by 2035.
But what do the gigawatts’ worth of state-level commitments mean for companies unsure whether to commit resources to become part of the supply chain for offshore wind projects?
A new report from the Special Initiative on Offshore Wind (SIOW) at the University of Delaware aims to provide “first-of-its-kind granularity” into the U.S. offshore wind supply chain. The report forecasts 18.6 gigawatts of U.S. offshore wind procurements through 2030, which represents a $68.2 billion opportunity for suppliers.
Potential supply chain investors need “a much greater level of clarity and transparency on the U.S. market and how it is likely to unfold, especially in the near term,” Stephanie McClellan, SIOW director and report author, told Greentech Media in an interview.
McClellan said research from SIOW going back to 2015 affirms that “the quickest way, and the most impactful way, to reduce the cost of energy for offshore wind was providing market visibility to the industry.”
If projects are seen as one-offs, with no visible pipeline, she said, “We are likely to have very limited competition, not only among developers but in the supply chain for folks like turbine manufacturers and other [original equipment manufacturers] who might say, ‘If we don’t know that there’s a market there, why should we spend our time there when we could spend our time in Europe?’”
Moving beyond big targets and lease areas
Here’s how the report breaks down the $68.2 billion U.S. offshore wind build-out through 2030. The market is likely to install at least:
- 1,700 offshore wind turbines and towers (worth $29.6 billion)
- 1,750 offshore wind turbine and substation foundations ($16.2 billion)
- 5,000 miles of power export, upland, and array cables ($10.3 billion)
- 60 onshore and offshore substations ($6.8 billion)
In addition, the market is likely to see $5.3 billion invested in marine support, insurance and project management activities.
The report provides a state-by-state, year-by-year forecast for offshore wind power contracting. Connecticut and New York, for instance, are each forecast to schedule procurements totaling in the hundreds of megawatts every two years through 2030.
In talking to suppliers, McClellan said, she would often hear, “We know the lease areas. We know how much acreage has been leased. We know the project developers who have leases. We have seen timelines of proposed projects and their estimated time for operating and being in the water. And we know the large [state] goals.”
But, they added, “None of that means anything to us in trying to understand what it means in terms of a business opportunity.”
McClellan said the supply chain report is intended to close that gap and answer questions such as: “Will there be a big boom-and-bust cycle? Are there going to be a lot of turbines or foundations or substations procured in the early years but maybe there might be a five-year dry period?”
“We were responding to the supply chain’s need for that kind of information, so they can go back and make the business case to their companies, to their management,” according to McClellan.
“Visibility and a better understanding of the timing and pace of projects allows companies to seriously consider diversifying into the industry, and to make human capital and equipment investments required to establish a U.S.-based offshore wind supply