Wind

Climate bill 'makes the economics work' for US offshore wind shipbuilding: Crowley exec

Speaking exclusively to Recharge, Crowley's head of wind energy said that tax incentives included in the IRA will spur initial shipbuilding investment

Artist's rendition of Crowley-Esvagt service vessel.
Artist's rendition of Crowley-Esvagt service vessel.Foto: Crowley
  • Tim Ferry

The looming shortage of offshore wind vessels in the US market could be eased by the Inflation Reduction Act (IRA) passed last year, according to marine service pacesetter Crowley.

The law offers $369bn in tax breaks and other federal incentives to jumpstart renewable energy development, including a tax deduction equal to 10% of the value of a vessel built for use in the offshore wind industry, if certain requirements are met, that would bring the costs more in line with those worldwide.

A shortage of specialised offshore wind vessels is a key bottleneck facing the industry, with lack of shipyard capacity and higher costs of domestic shipbuilding contributing to an absence of new contracts.

Speaking exclusively to Recharge, Bob Karl, senior vice president and general manager, Crowley Wind Services, said, “The IRA really starts to levelise some of those costs and make it more of an apples to apples versus apples to oranges comparison [with global suppliers],” he said.

It helps “find a way to make the economics work,” he added.

His comments come as Crowley has teamed with Danish offshore wind service provider Esvagt to jointly build and operate a service operations vessel (SOV) for operations and maintenance (O&M) of Dominion Energy’s contentious 2.6GW Coastal Virginia Offshore Wind (CVOW).

The developer and Virginia regulators recently ended a months-long dispute regarding costs and performance guarantees that will now see the project go forward.

Crowley and Esvagt, operating as joint venture (JV) Crest, will design and engineer the 289-foot (88-metre) SOV capable of housing up to 80 mariners and offshore wind technicians.

“What I love about the IRA is it’s not only extending tax credits for the renewable industry, but it’s allowing for the credits to go to the manufacturers and shipyards.”

The contract was signed with turbine OEM Siemens Gamesa, which will supply CVOW with 176 of its 14MW machines.

Crowley declined to release costs, but the National Renewable Energy Laboratory (NREL) estimates new-build SOVs between $50m-$100m.

The vessel will be built by Fincantieri Marine Group at its shipyard in Sturgeon Bay, Wisconsin, and it will go into service in 2026.

“The SOV market is one of the most interesting and important markets for our company,” said Marco Galbiati, CEO of Fincantieri.

It’s the third SOV contract signed in the US sector and points to an offshore wind-driven boom in shipbuilding as projects near approval and construction and the Treasury Department continues to issue guidance how developers and suppliers can access tax incentives in the IRA.
NREL forecasts the US offshore wind sector will need multiple specialised vessels to meet President Joe Biden’s administration target of 30GW by 2030. These include five wind turbine installation vessels (WTIV), four cable laying ships, two rockdumpers, and more than 13 SOVs.

While the IRA may impact some aspects of the offshore wind vessels market, it is unlikely to spur investment in WTIVs, however.

Only one WTIV is under construction in the US, the Charybdis, being built by Keppel AmFELS at its Brownsville, Texas yard, likewise for Dominion Energy.
The Charybdis is estimated to cost over $500m -- compared to around $350m for similar vessels built in Asia.
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Published 18 January 2023, 20:24Updated 18 January 2023, 20:24
AmericasUSSiemens GamesaDominion EnergyCVOW