As part of government plans for a green transition, the U.S. has been rapidly developing its renewable energy capacity in recent years. While several sectors have taken off, the offshore wind industry has faced several challenges in establishing wind farms off coasts around the U.S., largely due to financial issues in the wind sector and equipment failures. So, with massive financial incentives coming from the Inflation Reduction Act (IRA) and other climate policies, will the U.S. be successful at establishing its offshore wind industry?
There are ambitious plans to grow the offshore wind capacity of the U.S. significantly in the coming years, with several international wind energy majors announcing investments in the sector. The U.S. is expected to invest around $65 billion in offshore wind by the end of the decade, which would support the creation of approximately 56,000 jobs. There is around 56 GW of wind energy currently under development across 37 leases, which could power around 22 million homes. Around 14 GW of this offshore wind capacity is expected to be up and running by 2030, 30 GW by 2033 and 40 GW by 2035. Several states have plans to develop offshore wind farms, including New Jersey, New York, Massachusetts, Rhode Island, Connecticut, and Virginia.
In addition to state investment in the wind sector, since the creation of the IRA climate policy, the U.S. has attracted high levels of foreign investment in the sector. Norway’s Equinor is developing the two-part Empire Wind project in New York State, aimed at establishing 810 MW of power in phase one and 1,260 MW in phase two. Empire Wind 1 will be the first offshore wind project to connect to the New York City grid. Equinor is also investing in the South Brooklyn Marine Terminal, to establish New York’s first offshore wind hub. The Norwegian firm was also selected in the first-ever U.S. floating offshore wind auction to develop a 2 GW wind farm on the Outer Continental Shelf offshore California. Once operational, it could power as many as 1.7 million homes in the state.
The Danish wind turbine manufacturer Vestas will supply the equipment needed to run Equinor’s Empire Wind project. The firm already has a strong foothold in the U.S., having supplied much of the equipment for the country’s onshore wind farms. Josh Irwin, the Senior Vice President of Offshore Sales at Vestas North America, stated “Ensuring the long-term viability and sustainability of the U.S. offshore market relies heavily on the safe, timely and successful execution of the first wave of projects and this landmark project is a crucial step towards putting turbines in the water… We look forward to delivering an existing, reliable product and partnering with Equinor to help New York achieve its ambitious offshore wind energy goals and provide resilient wind energy to its communities”.
While there is strong interest in the development of the U.S.’s offshore wind capacity, the industry has faced several hurdles in getting projects off the ground. The U.S. was a slow adopter of offshore wind, developing just four wind farms with a total capacity of 242 MW by 2024. In 2023, inflation, supply chain issues, and other macroeconomic problems resulted in the cancellation or renegotiation of around half of all proposed offshore wind projects in the U.S., despite strong support from the government to develop the sector. There are also concerns lingering over the industry in the run-up to the presidential elections, as former President Donald Trump has said he will bring an end to offshore wind if elected.
The Danish wind operator Orsted, which was an early investor in U.S. offshore wind, announced this month that it would be delaying its 704 MW Revolution Wind project off Rhode Island and Connecticut from 2025 to 2026, following poor quarterly earnings results with $575 million in impairment losses. Orsted decided to delay the project because of soil contamination at an onshore transformer station.
Within the last month, the U.S. government also called off a planned Gulf of Mexico offshore wind auction due to a lack of investor interest. Meanwhile, construction on the country’s first major offshore wind project was halted because of a shattered turbine blade that led pieces of fibreglass to wash up on nearby beaches. Vineyard Wind, jointly by Copenhagen Infrastructure Partners and Iberdrola-controlled Avangrid, reported on 13th July that a blade on one of its 13.7MW GE Haliade X turbines was damaged, sending debris into Massachusetts' coastal waters, which led to beach closures. This has prompted greater scepticism around the potential for the U.S. offshore wind industry, with several challenges continuing to plague the sector.
As a late adopter of offshore wind, the U.S. has faced a plethora of challenges in developing its wind power capacity in recent years, despite the favourable climate policies and financial incentives in place. Rising inflation and other economic issues, as well as supply chain disruptions, have interrupted development since the Covid-19 pandemic, challenges which were further exacerbated by the poor performance of several international wind majors and equipment failures. Now, with uncertainty surrounding the upcoming presidential elections, it is unlikely that the country’s offshore wind sector will thrive until greater stability is assured.
By Felicity Bradstock for Oilprice.com
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