US offshore wind opportunities in 2018

By: Jason Deign, for New Energy Update

The US offshore wind sector ended 2017 on a slightly ironic note. Plans for Cape Wind, which was supposed to have been the country’s first offshore wind farm, were finally shuttered after a long period of uncertainty.[1] But prospects for the rest of the market looked better than ever. 

With East Coast states vying to build local industries around offshore wind, and continuing interest in projects on the West Coast and Great Lakes, MAKE Consulting now forecasts 2.3 GW of capacity through to 2026.[2] This white paper provides an update on the main market hotspots.

 New York State: planning a $6bn industry

 January 2018 saw New York Governor Andrew M Cuomo calling on the Long Island Power Authority (LIPA) to approve a 90 MW, 15-turbine project called the South Fork Wind Farm, which is scheduled to be operational by 2022, while setting out ambitious further plans. Cuomo proposed what was said to be “an unprecedented commitment” to develop up to 2.4 GW of offshore wind power by 2030, enough for 1.25M homes, as part of moves to reach a Clean Energy Standard of 50% of electricity from renewable sources.[3] South Fork, to be located 30 miles southeast of Montauk, will be the nation’s largest offshore wind farm, he said. LIPA was due to vote on the project in January 2018.[4]

“The fact that it met a particular need in the community helped it get started,” said Thomas Falcone, LIPA’s CEO.  Cuomo also called on state agencies to help in development efforts for around 800 MW of capacity in a 79,000-acre lease area located 17 miles off the Rockaway Peninsula. [5]

Statoil Wind US, the American offshore wind development arm of Norway’s state-owned oil company, was declared the provisional winner of the lease in December 2016 after submitting a USD$42.5M auction bid. It was Statoil’s first offshore wind lease in the U.S.[6]  Local news reports stated that a January 2018 master plan for offshore wind would outline ambitions for creating an industry worth $6bn and employing 5,000 people by 2028. The plan foresees developing more than 1 million acres of seabed at least 21 miles from land.[7]

New York State is planning to auction at least 400 MW of offshore wind in 2018 and a similar amount in 2019, reports said.[8] The master plan, which was originally due for publication in December 2017, aims to create offshore wind opportunities in New York Harbor, the Hudson River and off the coast of Long Island. The state is making the commitment in a bid to build scale and cut costs.[9]  As part of the master plan consultation process, New York State asked the US Bureau of Ocean Energy Management (BOEM) to identify and lease at least four wind energy areas capable of hosting a minimum of 800 MW of development apiece.[10]

Greg Matzat, Senior Advisor at the New York State Energy Research and Development Authority, said the US Merchant Marine Act of 1920, or ‘Jones Act’, was not expected to pose significant challenges in terms of installation vessel availability.

“In our installation vessel study, we’ve undertaken a concept design, received multiple cost estimates from US shipyards and presented a business case that shows building a vessel, given the project pipeline developing here, is all very doable,” he said. Liz Gordon, Director of the New York Offshore Wind Alliance, an advocacy group, said that the political willingness to build a viable offshore wind pipeline was a positive step for the industry. “We are working together to create a large-scale regional market and we are very, very encouraged,” she said. “I think the political momentum has shifted.”

 Massachusetts: hopeful despite setback

Offshore wind interests are hopeful that a Massachusetts mandate for utility firms Eversource, National Grid and Unitil to procure 1.6 GW of offshore wind by 2027 will come good despite a setback in the first auction within the state’s 2016 energy diversity law.  In January 2018, the state passed over Deepwater Wind’s proposed Revolution Wind utility-scale offshore wind farm, planned to be paired with an energy storage system, in favor of a hydroelectric power project from Northern Pass Hydro.[11]  An April 2018 decision on a second auction looks certain to kick-start the Massachusetts market, though, since the contest is restricted to offshore wind. It involves three developers: Deepwater Wind, Bay State Wind and Vinyard Wind.[12]  All three hold leases awarded in 2012 by the BOEM for a high wind-potential area off the coast of Martha’s Vineyard in Massachusetts.

Getting the developments into the water would put Massachusetts back on track in creating an industry that the state originally hoped to lead in the US. In 2010 it offered a lease to developer Energy Management for the creation of what was supposed to be America’s first offshore wind farm, the 460 MW Cape Wind. In 2015, and following protracted local opposition to the project, the power companies NStar and National Grid cancelled their Cape Wind offtake agreements. Energy Management finally confirmed it was cancelling the project in December 2017.[13] Later developments have helped instill confidence that Massachusetts can ultimately become a strong market for offshore wind, though. In particular, the request for proposals (RFP) process recently pursued in Massachusetts “is a turning point for offshore wind in the US because it’s a European-style solicitation,” said Erich Stephens, CEO of Vineyard Wind. “In some ways, it’s the first point where the US has been invited to the grown-up table.”

All bidders are planning to base their operations at the Port of New Bedford’s New Bedford Marine Commerce Terminal[14], the first US multi-purpose facility specifically designed to support the construction, assembly and deployment of offshore wind projects.[15] Managed by the Massachusetts Clean Energy Center, the 29-acre facility has 21 acres of heavy-lift capacity including uniform loading of up to 4,100 pounds per square foot (psf) and crane loads of up to 20,485 psf.[16] Massachusetts also boasts a Wind Technology Testing Center (WTTC) offering a full suite of certification tests for turbine blades up to 90 meters long. The WTTC’s principle technical team includes blade engineers from the National Renewable Energy Laboratory.[17]  “Our objective is to make it as easy as possible for this industry to locate and do business in Massachusetts,” said Bill White, Senior Director for Offshore Wind Sector Development at the Massachusetts Clean Energy Center. Aileen Kenney, Vice President of Permitting and Environmental Affairs at Deepwater Wind, predicted that “in a few years, we’ll be competing for port space.”

California: expectations cut by the Navy

Plans to develop up to 112 GW of offshore wind resource potential on the coast of California hit a roadblock in January 2017 when it emerged the US Navy had declared a large portion of sea off San Luis Obispo County would be off limits to developers. Responding to a request from BOEM, the Navy signaled that more than 23M acres of ocean could not be developed. The area includes a site, 15 miles off Morro Bay, which the BOEM was getting to ready to offer as a commercial lease for a floating wind farm of up to 1 GW.[18]

The lease was originally solicited by Trident Winds, a Washington state developer, and was going to be offered up for auction with Statoil Wind US also in the running. The location was chosen for its easy access to a Pacific Gas and Electric grid connection on shore.[19] As of January 2018, the Navy was said to be reviewing its original decision, potentially allowing development in previously off-limits waters.[20] This would help California meet a 50% renewable portfolio standard target by 2030. “Even though the market is ready to meet its obligations, additional energy will be needed to meet 50%,” said Alla Weinstein, CEO of Trident Winds. If the Navy decision stands, though, Californian offshore wind development might have to be restricted to Humboldt Bay, in the north of the state. Wind conditions there are better, but a grid connection could add $1bn to project costs.[21] In December 2017, local news outlets reported Humboldt County’s Redwood Coast Energy Authority had signed a memorandum of understanding with Principle Power, a floating wind plant developer, to create a 15-turbine, 120 MW project 20 miles offshore.[22] If the plan takes off, it could potentially take advantage of the grid connection and infrastructure at the Humboldt Bay Nuclear Power Plant[23], which was shuttered in 1983.[24]

Experts agree that developing offshore wind in California is likely to be fraught with permitting complications. “The limiting factor in California is the siting and permitting process,” said Jim Lanard, CEO of developer Magellan Wind. Joan Barminski, Pacific Regional Director at the BOEM, admitted that “there are a lot of entities in the state, as well as the federal government, who are part of the permitting process.” She said California was noted for its “jealous guardianship of the ocean.” Because of this, few observers foresee commercial-scale offshore wind becoming a reality in California before 2025. “I think that’s actually pretty aggressive when you look at the fact there are no leases out there yet,” said Knut Aanstad, President at Statoil Wind US.

Great Lakes: slow but steady progress

The Lake Erie Energy Development Corp. (LEEDCo) has put back estimates for the start of construction of its 20.7 MW Icebreaker Wind project from 2019 to 2020 in view of the slow pace of permitting. Offshore wind development on the Great Lakes is under state control rather than being dependent on a federal body such as the BOEM. Nevertheless, Icebreaker Wind still has to complete a Department of Energy environmental impact assessment and obtain a US Army Corps of Engineers dredge and fill permit, which is expected to take up to the second quarter of 2018.

LEEDco is working with the Ohio Power Siting Board on state-level permitting and Lorry Wagner, LEEDco’s president, said he was hopeful it would be “more or less aligned with the federal process on timing.” In parallel, LEEDco is finalizing work on a suction bucket foundation design that can be signed off by the certification body DNV GL and put out to tender at the end of 2018.  Construction is currently scheduled to begin around June 2020 and finish in November the same year, with six MHI Vestas V126 3.45 MW turbines going into the water 8 miles north of Cleveland.[25] LEEDco, which is developing Icebreaker in partnership with Fred Olsen Renewables, is expecting to use the Port of Cleveland as the base for construction and operations.

Wagner acknowledged that one of the challenges facing construction would be to gain access to Jones Act-compliant vessels small enough to enter the Great Lakes but large enough to carry out installation duties. “We’ve gone out to the market and talked with numerous construction and installation firms so when we go out to bid we have three or four methods that will work,” he said. LEEDco is currently the most advanced developer in terms of Great Lakes offshore wind plans, but Wagner noted Lake Erie alone has the potential for up to 50 GW of capacity. In the medium term, the development of up to 5 GW was “reasonable,” he said.

Maryland: beefing up supply chain

Maryland, which is aiming to build up supply chain capabilities on the Lower Eastern Shore[26] after its Public Service Commission signed off support for two offshore wind farms, owned by US Wind and Deepwater Wind’s Skipjack Offshore Energy[27]. US Wind has told a Senate Finance Committee that its 268 MW project, 17 miles off Ocean City, could create up to 7,000 jobs. The company plans to run operations and maintenance out of Ocean City, with a laydown and handling facility at Tradepoint Atlantic in Baltimore.[28] Deepwater Wind, meanwhile, is expecting to submit permit applications for the $200M, 120 MW Skipjack project, located 19.5 miles northeast of Ocean City, in 2019. The company is investing in steelworks and port facilities in the Greater Baltimore area.[29]

New Jersey: back in the game

New Jersey, which in 2010 launched an ill-fated Offshore Wind Economic Development Act with the aim of creating 1.1 GW of offshore capacity and is now seeing renewed interest from developers including Fisherman’s Energy, Ørsted (formerly DONG Energy) and US Wind.[30] In January, coinciding with a change of governor, lawmakers reintroduced offshore wind development legislation with an increased target of 3.5 GW. Ørsted has already begun surveying for a 1 GW project, while US Wind holds rights to a lease area of up to 1.5 GW.[31] The Ørsted project, Ocean Wind, would be built 10 miles off the coast of New Jersey, with construction slated for the early 2020s.[32]

Other opportunities US offshore wind market expansion

Alongside Rhode Island’s 30 MW Block Island project, the first in US waters, several other states are moving ahead with plans for offshore wind.

Connecticut

In Connecticut, the Department of Energy & Environmental Protection issued a draft notice of RFPs for offshore wind projects of at least 2 MW, with contracts scheduled to be submitted for Public Utilities Regulatory Authority approval in fall 2018.[33] In September 2017, the Acadia Center, an advocacy group, noted that Connecticut had lagged behind neighboring states in promoting offshore wind, but had leasing areas that could potentially provide enough generation to cover the entire state’s electricity use.[34]

North Carolina

Oregon-based Iberdrola Group subsidiary Avangrid Renewables is planning a 1.5 GW project sited 27 miles off the coast of Kitty Hawk[35], North Carolina, after winning an offshore lease from the BOEM[36] with a $9.1M bid. Avangrid executives have said it could take between eight and 12 years to complete the project, putting commissioning well beyond 2020.[37]

Virginia

In July 2017, Dominion Energy announced a partnership with Dong Energy (now Ørsted) to create a 12 MW demonstration project that is 27 miles off Virginia Beach. The project is scheduled to start construction in late 2020.[38] Research by BVG Associates shows that five ports in Virginia have the potential to support offshore wind activities, with the Portsmouth and Newport News Marine Terminals having the highest level of port readiness.[39]

NOTE: This article was produced in conjunction with the 3rd Annual US Offshore Wind Conference and Exhibition, June 7-8 at the Boston Park Plaza Hotel. Join us and 1000+ delegates, 50+ speakers, 45+ sponsors and exhibitors for 2 days of exclusive market updates and networking. Read more: http://bit.ly/USOffshoreWind-Boston

References

[1] Jeff St John, Greentech Media, December 6, 2017: Cape Wind’s Demise Comes Amidst a Resurgence for US Offshore Wind. Available at https://www.greentechmedia.com/articles/read/in-cape-winds-demise-lessons-for-resurgent-u-s-offshore-wind#gs.f4TYzWo.
[2] Ibid.
[3] New York State, press release, January 10, 2018: Governor Cuomo Presents 25th Proposal of 2017 State of the State: Nation’s Largest Offshore Wind Energy Project Off Long Island Coast and Unprecedented Commitment to Develop up to 2.4 Gigawatts of Offshore Wind Power by 2030. Available at https://www.governor.ny.gov/news/governor-cuomo-presents-25th-proposal-2017-state-state-nations-largest-offshore-wind-energy.
[4] Ibid.
[5] Ibid.
[6] Statoil, press release, December 16, 2016: Statoil wins offshore wind lease in New York. Available at https://www.statoil.com/en/news/statoil-wins-offshore-wind-lease-new-york.html.
[7] Mark Harrington, Newsday, January 28, 2018: NYS offshore wind energy plan envisions $6 billion industry by 2028. Available at https://www.newsday.com/news/region-state/offshore-wind-energy-1.16404365.
[8] Ibid.
[9] Ibid.
[10] New York State Energy Research and Development Authority fact sheet, 2017: Harnessing the Power of Possibility. Available via https://www.nyserda.ny.gov/All-Programs/Programs/Offshore-Wind.
[11] Jennett Barnes, SouthCoast Today, January 25, 2018: New Bedford-based wind farm gets a ‘no’ for state contract. Available at http://www.southcoasttoday.com/news/20180125/new-bedford-based-wind-farm-gets-no-for-state-contract?start=11.
[12] Ibid.
[13] St John, Cape Wind’s Demise Comes Amidst a Resurgence for US Offshore Wind.
[14] Ibid.
[15] Massachusetts Clean Energy Center website: New Bedford Marine Commerce Terminal. Available at http://www.masscec.com/facilities/new-bedford-marine-commerce-terminal.
[16] Ibid.
[17] Massachusetts Clean Energy Center website: Wind Technology Testing Center. Available at http://www.masscec.com/wind-technology-testing-center.
[18] John Lindt, The Tribune, January 26, 2018; Will the Navy sink plans for wind farms off Morro Bay? Available at http://www.sanluisobispo.com/news/local/environment/article196861249.html.
[19] Ibid.
[20] Ibid.
[21] Ibid.
[22] KIEM-TV News Channel 3, December 11, 2017: RCEA exploring offshore wind farm. Available at  http://kiem-tv.com/2017/12/11/rcea-exploring-offshore-wind-farm/.
[23] Lindt, Will the Navy sink plans for wind farms off Morro Bay?
[24] Wikipedia, June 25, 2017: Humboldt Bay Nuclear Power Plant. Available at https://en.wikipedia.org/wiki/Humboldt_Bay_Nuclear_Power_Plant.
[25] LEEDco website: The Project: Icebreaker Wind. Available at http://www.leedco.org/index.php/about-icebreaker.
[26] Gray Hughes, Delmarva Now, January 11, 2018: Local companies get funds to help build offshore wind industry, careers. Available at http://www.delmarvanow.com/story/money/2018/01/11/loffshore-wind-industry-maryland/1024560001/.
[27] Maryland Public Service Commission press release, May 11, 2017: Maryland PSC Awards ORECS to Two Offshore Wind Developers. Available at http://www.psc.state.md.us/wp-content/uploads/PSC-Awards-ORECs-to-US-Wind-Skipjack.pdf.
[28] David Foxwell, Offshore Wind Journal, January 30, 2018: Maryland offshore windfarm could create 3,000 jobs with 4,000 more in O&M phase. Available at http://www.owjonline.com/news/view,maryland-offshore-windfarm-could-create-3000-jobs-with-4000-more-in-om-phase_50627.htm.
[29] Michelle Froese, Windpower Engineering & Development, January 30, 2018: Deepwater Wind strengthens Maryland team and accelerates development of its Skipjack Offshore Wind Farm. Available at https://www.windpowerengineering.com/business-news-projects/deepwater-wind-accelerates-development-skipjack-offshore-wind-farm/.
[30] Joe Ryan, Bloomberg, October 24, 2017: Developers Plan Wind Farms Off Jersey as Christie Era Ends. Available at https://www.bloomberg.com/news/articles/2017-10-24/developers-plan-wind-farms-off-jersey-shore-as-christie-era-ends.
[31] reNEWS, January 12, 2018: NJ targets 3.5GW offshore. Available at http://renews.biz/109793/nj-targets-35gw-offshore/.
[32] Bobby Magill, Bloomberg BNA, January 29, 2018: Statoil, States Helping Offshore Wind Gain Footing in U.S. Available at https://www.bna.com/statoil-states-helping-n73014474789/.
[33] Connecticut Department of Energy & Environmental Protection, December 15, 2017: DRAFT NOTICE OF REQUEST FOR PROPOSALS FROM PRIVATE DEVELOPERS FOR CLEAN ENERGY. Available at http://www.dpuc.state.ct.us/DEEPEnergy.nsf/c6c6d525f7cdd1168525797d0047c5bf/c5b302de4d16dcdc852581f70059cdbd/$FILE/2017.12.15_FINAL%20Draft%20RFP.pdf.
[34] Kerry Schlichting, Acadia Center, September 20, 2017: The Offshore Wind Opportunity in Connecticut. Available at http://acadiacenter.org/wp-content/uploads/2017/09/Acadia-Center_CT-Offshore-Wind-Opportunity_9_20_2017.pdf.
[35] Roger Drouin, E360, January 11, 2018: After an Uncertain Start, U.S. Offshore Wind Is Powering Up. Available at http://e360.yale.edu/features/after-an-uncertain-start-u-s-offshore-wind-is-powering-up.
[36] Avangrid Renewables press release, October 13, 2017: Avangrid Renewables Statement on finalization of BOEM Offshore Lease — North Carolina (Kitty Hawk). Available at http://www.avangridrenewables.us/rel_17.10.13.html.
[37] Lauren Ohnesorge, Triangle Business Journal, April 25, 2017: Avangrid CEO: Offshore in North Carolina coming ‘well beyond 2020’. Available at https://www.bizjournals.com/triangle/news/2017/04/25/avangrid-ceo-offshore-in-north-carolina-coming.html.
[38] Kirk Moore, WorkBoat, August 3, 2017: Two offshore wind deals could be milestones. Available at https://www.workboat.com/news/offshore/two-offshore-wind-deals-milestones/.
[39] Virginia Department of Mines, Minerals, and Energy website, 2015: DMME COMPLETES OFFSHORE WIND POWER PORT READINESS EVALUATION. Available at https://www.dmme.virginia.gov/DE/OffshoreWindPortEvaluation.shtml.