Wind

'Out of reach' | US to fall far short of Biden's 2030 offshore wind goal, say industry experts

BNEF, S&P and WoodMac concur that nation will miss nation's official target by up to 8.5GW on deteriorating project economics and supply chain woes

Major market research firms have revised their 2030 US offshore wind capacity outlooks downward, far short of President Joe Biden's 30GW goal, citing insufficient infrastructure, supply chain bottlenecks, and worsening macroeconomic conditions.

The official target released in early 2021 “appeared out of reach from the beginning”, according to BloombergNEF, which lowered its outlook to 23.1GW in its 1H 2023 Offshore Wind Market Outlook published this summer. This represents an 11% decline from last year.

“Anticipated delays caused by the difficult macroeconomic environment and associated contract revisions drive the decrease in our forecast,” it noted.

Wood Mackenzie also lowered its forecast of cumulative capacity to 21.5GW, with senior wind energy analyst Samantha Woodworth citing ongoing contract renegotiations and Rhode Island's failure to attract developers to its now cancelled round 2 procurement tender, among other factors.

This contrasts with last year when it was an outlier in predicting the US would reach 34GW by 2030.

Some 9.3GW of capacity in market-leading states Massachusetts, New Jersey, and New York is in some form of contract renegotiation.

The Equinor-BP partnership developing over 3GW for New York as well as Orsted with its 920MW Sunrise Wind are seeking additional funding to offset surging inflation and financing costs.
Orsted’s 1.1GW Ocean Wind 1 has successfully clawed back federal investment tax credits from New Jersey with the help of industry supporter governor Phil Murphy, whose helped push a law to do this through the legislature.
The US Inflation Reduction Act passed last year earmarks billions of dollars in incentives for renewable energy, including generous investment tax credits that, with adders included, could amount to 40% or more of offshore wind project capex.

New Jersey offtake contracts stipulate the value of tax credits be returned to ratepayers.

The Shell-EDF joint venture (JV) behind the 1.5GW Atlantic Shores project also for New Jersey is reportedly seeking similar relief.

Meanwhile, Iberdrola-controlled Avangrid and Shell-Ocean Winds JV are seeking to cancel their projects totalling 2.4GW for Massachusetts due to unfavourable economics.

They are hoping to resubmit their projects, presumably at higher prices, into the state’s round 4 tender.

New Jersey, New York, and Rhode Island also issued solicitations for up-to a combined 15GW capacity, with New York attracting a record six bidders submitting over 100 proposals for some 4.7GW of capacity on offer.

These, combined with Maryland's raising its target to 8.5GW, put some lift into forecasts that otherwise might have come in even lower.

These latest tenders include adjustments for inflation and other hedges against further deterioration in market conditions.

Among the various factors, BNEF added the “enduring lack of clear route-to-market in states like California, Maine, New Hampshire, Oregon, Hawaii, North Carolina, and Louisiana, also dampened our longer-term outlook.”

S&P Global lowered its July 2023 outlook on 2030 cumulative installations a steep 14%, from 25GW last year to 22GW.

Its downward revision is “largely due to supply chain and workforce constraints, notably insufficient installation vessels in the 2020s,” according to Andrew Berg, senior research analyst for S&P Global’s commodity insights division.

Noting that the US currently has only a single Jones Act compliant wind turbine installation vessel (WTIV) under construction and set to enter service by the end of this year, and the three-year build time for a WTIV, “it is not possible to meet 2030 targets with only US-dedicated WTIVs,” Berg told Recharge.

The Jones Act is US maritime law that prohibits foreign-flagged vessels from calling in at consecutive ports or points in US waters, including offshore wind turbines.

“Alternative strategies, such as using feeder-barges with European vessels, are more costly and susceptible to delays given demand for vessels in other markets,” he added.

Despite the grim news facing the sector, the outlooks brightens in the longer term as bottlenecks are uncorked.

WoodMac sees the Biden 30GW goal being realised by 2032, while S&P forecasts 47GW by 2035.

BNEF here also outdoes its peers, seeing some 53.2GW of cumulative capacity in US waters by 2035.

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Published 9 August 2023, 21:31Updated 2 October 2023, 16:39
AmericasUSBloombergNEFWood MackenzieS&P Global Market Intelligence