Annual investments in US offshore wind the sector could exceed $15 billion by the mid-2020s, according to new research by Rystad Energy, the Oslo-based research firm.
Installed offshore wind capacity in US waters could reach 20GW by 2030, according to Rystad.
“Such a trajectory means capital expenditure in US offshore wind will likely exceed those in US offshore oil and gas within the next five years,” said Rystad.
“There are currently 6GW of offshore wind projects in the US that have been sanctioned for development, requiring collective investments of more than $20 billion over the next five years,” Tim Bjerkelund, head of New York consulting at Rystad, added.
Continued support from US regulators “would certainly signal an energy revolution and offshore suppliers should take note,” he said.
By comparison, Rystad expects annual expenditure on US offshore oil and gas projects to average $14.8 billion between 2020 and 2025.
Much of the US’s offshore wind pipeline is currently concentrated off the US northeast, where there are onshore land constraints and large load centres, such as New York and Boston.
“This is reminiscent of problems faced by European countries, and the states in the northeast have wisely picked up the same playbook,” Bjerkelund said.
Supply chain
“The US has in fact leapfrogged — they’re adopting the entire learning curve from Europe,” Bjerkelund added.
Developing a US supply chain is crucial. Without local manufacturing of major components, much would be imported from as far afield as Denmark and France.
“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,” Bjerkelund added.
Bjerkelund did note sector leader Ørsted already has a memorandum of understanding with EEW, the German foundation manufacturer, to help establish a factory in New Jersey for monopile foundations.
But the US needs to prove a project pipeline is viable, rather than just consisting of two or three preliminary projects, while many others remain tied up in red tape.
Costs
Bjerkelund said that US offshore wind should achieve grid parity within 10 to 15 years.
The price of US offshore wind-generated electricity is coming down quickly.
According to official contracts filed with Massachusetts in mid-February, electricity from the 804MW Mayflower project, a joint venture of Shell and EDPR Offshore North America, will cost a low $0.058/kWh.
In nominal terms, the Mayflower price is within 10.6% of the average of the 5.5GW of projects successful in the UK’s latest subsidy allocation in September 2019, according to a Wood Mackenzie analysis.
Further afield
In the US, the far deeper waters off California are being eyed for floating wind projects.
The Department of Defence has staunchly objected to wind development in key tracts because of navy operations.
A compromise is reportedly in the works to allow wind development to proceed off parts of the central California coast if a moratorium is enacted elsewhere, according to recent reports.
An auction for the offshore region may be held this year.
