Energy analyst Rystad Energy says the level of capital expenditure in offshore wind projects in the US could outstrip that in offshore oil and gas by the mid-2020s
Recent analysis from Rystad suggest that 20 GW of offshore wind will be installed in the US by 2030 and annual investment in the sector could exceed US$15Bn by the mid-2020s. “Such a trajectory means capital expenditure in the US offshore wind industry will probably exceed that in the country’s offshore oil and gas industry in the next five years,” said the firm.
Rystad Energy head of consulting New York Tim Bjerkland said, “There is currently 6 GW of offshore wind in the US that has been sanctioned for development, requiring collective investment of more than US$20Bn over the next five years. In comparison, Rystad Energy expects annual expenditure on US offshore oil and gas projects to average US$14.8Bn between 2020 and 2025.
“Assuming continued support from regulators, many more projects will be sanctioned in the coming years and we expect to see annual investment in the sector exceed US$15Bn by the middle of the decade. That would signal an energy revolution offshore suppliers should take note of.”
The northeast of the US has depended on imported energy for decades, said Rystad, either importing it from other states or from other countries. Renewable energy could offer a solution, but wind and solar projects are land-intensive, which poses problems in areas of high population density such as the northeast of the country.
“This is reminiscent of problems faced by European countries. In response, states in the northeast of the US have wisely used the same playbook. Benefiting from the technological developments and cost efficiencies in the North Sea, these states are adopting lessons learned and are rapidly rolling out targets for a much higher share of renewables, particularly offshore wind, in their power mix.”
Rystad believes that, despite needing a new supply chain to be developed, projects such as Vineyard Wind are expected to see costs close to levels achieved in European projects. “This bodes well for an industry that is still in its infancy in the US,” it said.
“According to the Energy Information Administration, the potential for offshore wind in the US is 7,200 TWh. If all of this were to be realised, it would equate to hundreds of projects similar to those that have already been sanctioned, each requiring investment of around US$3Bn on average.
“The emergence of offshore wind as an industry in the US is truly exciting. The energy transition is taking place now, not through small-scale projects, but via utility-scale projects that require billions of dollars in investment.
“US suppliers should take note. This new industry could outgrow offshore oil and gas in only a few years’ time, providing lots of new opportunities.”