The fast-evolving US offshore wind market – which analysts recently described as having undergone a ‘sea change’ – will be discussed in a couple of presentations at the 2019 Offshore Wind Journal Conference on 5 February 2019.
The offshore wind pipeline in the US, projected growth by state, commercial opportunities, and US regulatory issues such as Jones Act compliance will be addressed by Business Network for Offshore Wind executive vice president Ross Tyler and Winston & Strawn maritime practice partner and chair Charlie Papavizas.
As recent analysis by the Institute for Energy Economics and Financial Analysis (IEEFA) noted, the sums paid in the lease sales last month in coastal waters off Massachusetts for three federally owned tracts that didn’t sell at an auction in 2015 ‘signal a sea change’ in how US offshore wind generation potential is now perceived.
IEEFA analysts Karl Cates* and Seth Feaster** said the winners of the auction – who emerged after 32 rounds of bidding over two days – have global energy-industry pedigrees that bring market-making heft. Equinor Wind is the US arm of the Norwegian oil major formerly known as Statoil. Mayflower Wind Energy is a Shell/EDP Renewables partnership. Vineyard Wind is a joint venture between Copenhagen Infrastructure Partners and Avangrid Renewables, an American company that is part of the Iberdrola Group, the biggest single owner of renewable energy assets globally.
“Much of the momentum around offshore wind is driven by companies with expertise in offshore oil platform activity, an advantage that brings a certain synergy,” they noted. “The industry has proven profitable at scale in Europe after having worked through environmental and other complications to become a major piece of the electricity-generation sector.
"This year, construction is scheduled to begin off Massachusetts on a 160,000-acre, 800-MW project called Vineyard Wind (owned by its eponymous company) that is helping set market trends driven by technology advances and cost advantages. Vineyard Wind has agreed to produce electricity for an average price of US$0.085 per kilowatt hour (kWh) for 20 years, a price that defied most expectations and comes in at about a third of what wind-powered energy costs at Block Island Wind Farm, a small installation that to date is the only operating offshore wind power producer in American waters.”
As IEEFA’s analysts noted, the Vineyard Wind price is also striking relative to New England wholesale power price spikes. The most recent monthly data from ISO New England, the regional grid operator, shows wholesale prices topping US$0.085 per kWh six times in November alone, exceeding US$0.10 three times, and going as high as US$0.16 per kilowatt hour.
“Massachusetts policymakers are pushing wind power for several reasons,” they noted. “It brings generation diversification and economic benefits and is environmentally friendly, and it can be a buffer against fossil-fuel price volatility.”
As they also noted, awareness around the business proposition for offshore wind is growing state by state through public and private initiatives that are gaining momentum regardless of leadership political leanings, from Texas, already on the vanguard in land-based wind generation, to New Hampshire, where a governor known mainly for his conservative bona fides is now asking for an offshore wind study.
The potential of offshore wind in the US is huge, according to a joint assessment produced two years ago by the federal Energy and Interior departments. That analysis put it at 10,800 GW of capacity, which translates to 44,000 terawatt-hours, something on the order of 14 times current electricity usage in the US. The federal Office of Energy Efficiency and Renewable Energy estimates, for instance, that if just 1% of realistic offshore potential is tapped, it would produce enough electricity to supply 6.5M households.
“As the feasibility of offshore wind becomes apparent, governments in states that can benefit are noticing, and the competition is heating up to lure offshore construction companies, turbine manufacturers and a host of support industries,” said IEEFA.
The Offshore Wind Journal Conference in London on 5 February 2019 will address key issues including global market developments, increasing turbine sizes, floating offshore wind and industry regulations. Book your place now.
*Karl Cates (firstname.lastname@example.org) is a research editor for IEEFA. **Seth Feaster (email@example.com) is an IEEFA data analyst.