Supply chain investment in the US offshore wind market is made more challenging by the structure of the market in America, according to a representative of leading wind turbine manufacturer Siemens Gamesa Renewable Energy
Siemens Gamesa head of government affairs North America Abby Watson told a 19 April webinar hosted by the Global Wind Energy Council and American Clean Power that a surge in demand for offshore wind turbines globally was driving demand for supply chain investments worldwide, increasing competition for investments and where they will go.
“Booming demand globally drives a lot of competition for the investment capital you need to establish a supply chain,” Ms Watson told the webinar. “Beginning in 2025, there is a huge jump in what we are expecting to see in global installations of offshore wind. It goes from around 13 GW in 2024 to more than 20 GW in 2025 and continues to increase from there.
“As an OEM, something we are trying to grapple with is the US isn’t really a 30-GW market by 2030. It’s actually a 9-GW market in New York, and a 7.5-GW market in New Jersey and a 5.2-GW market in Virginia.
“The leadership in those states was so important to getting those commitments and to getting the industry off to the right start. But the challenge we have as an OEM is that each of the states is approaching local content in a fragmented way.”
Ms Watson said that approach “has the potential to put the US at a disadvantage” relative to other markets if OEMs can’t find a way to aggregate demand, to support the business case they need to make for investment.
“States’ desire for local content is a piece of complexity that we need to navigate. A new supply chain facility for a major OEM can cost anything from eight to nine figures. There’s a need to recover that cost over a certain amount of production.
“If you are competing in another state that doesn’t recognise your content as being local content, that means you are competing with global supply, from a facility that may be already fully depreciated, where costs have been recovered.
“It’s a very dynamic equation that OEMs need to balance when we look at the cost for transportation, the cost for real estate to develop a supply chain facility and ensure that it has long-term viability.
“The last thing anyone wants to see if for supply chain investments to be under-utilised,” Ms Watson told the webinar. “That’s something we are working on in partnerships with our customers and state-level stakeholders, trying to find the best solution to create a long-term sustainable business case.
“I think some of the action we have seen in some states about recognising regional benefits of supply chain development are really encouraging. We have seen an MoU between the governors of Maryland, Virginia and North Carolina and Virginia recently updated some of its legislation to recognise the importance of wind turbine components manufactured in the US, as well as in Virginia.
“These are encouraging developments, and we are looking forward to working with the administration as well, on Federal-level programmes that can help with everything from workforce development to establishing that baseline infrastructure we need. All of those pieces in combination can help make that business case much more sustainable.”
In February 2021, Siemens Gamesa chief executive Andreas Nauen confirmed the company is considering a blade manufacturing facility in the US and is also considering working with partners on other components for offshore windfarms, such as towers.
In a webcast for the company’s Q1 2021 results, Mr Nauen highlighted the importance of local economic benefits from offshore wind and of job creation.
He said it was important to ‘localise’ production and explained that Siemens Gamesa is addressing how best to do so, beginning with Dominion Energy’s 2.6-GW project off the US east coast, for which Siemens Gamesa’s SG 14-222 has been selected. Turbine installation for the project is due to be completed by 2026.
“There is already a huge expectation (in the US) about local jobs,” he told the webcast, “but unfortunately these are very often state-by-state jobs,” Mr Nauen said.
“Other states are also looking at offshore wind and we are looking at how we can localise certain equipment, but in the end we have to strike a balance between being very competitive and at the same time creating local jobs. It remains to be seen with the additional momentum the new administration will put into offshore wind, how that will play out.
“Up to now we have focused on a blade facility in Virginia, then potentially equipment like towers, which we don’t produce ourselves, which we could localise together with partners.”
As first highlighted by OWJ in February 2020, Siemens Gamesa has been considering a blade fabrication facility in the Hampton Roads area.
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