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Outlook ‘surprisingly positive’ for US offshore wind energy

It’s certainly been an active few months in the US offshore wind energy space.

Despite some lingering issues, fundamentals look surprisingly positive in the context of what has happened over the past twelve months. In fact, the biggest concern for developers and the supply chain will be any negative impact on offshore wind development as a result of the upcoming presidential election.

So why are they so positive?

The basis for optimism is found in federal plans to offer leases this year with a capacity of at least 22 gigawatts (GW) at 16 locations in the central Atlantic, the Gulf of Mexico, the Gulf of Maine and Oregon.

Furthermore, eight further leasing rounds have been identified between 2025 and 2028/29, which would align with the Inflation Reduction Act 2022 (IRA) regarding agreements to only offer offshore wind leases when a certain number of oil and gas leases had been offered . in the previous one-year period.

It should be noted that the lease ambitions include both bottom-mounted and floating assets. In addition to the approximately 11 GW in the five awarded floating wind leases in California, Oregon offers a potential of almost 2.5 GW and the Gulf of Maine 11.5 GW. There are other floating wind leasing plans in the Atlantic, Pacific and Gulf of Mexico. This pipeline gives developers and the supply chain great confidence to invest in the production and construction capacity needed for floating wind energy.

So far, six more projects have been authorized on the Outer Continental Shelf (OCS) for a capacity of 6.2 GW. Of these, one (South Fork) is connected to the electricity grid, Vineyard aims to have all turbines connected to the electricity grid by the end of the year and offshore construction has started for two major projects (Revolution and CVOW-C).

Nearly 18.5 GW is currently in the federal permitting process, with 6.5 GW expected to be permitted this year.

As for the states buying the offshore electricity, we have seen a wave of contract cancellations and new requests in recent months.

  • New Jersey opened the 2024 tender to procure between 1.2 GW and 4 GW of offshore wind energy, with a commissioning date of 2032. In addition to the 2024 tender, New Jersey is considering three additional semi-annual solicitations, from 2026 through 2030, involving each 1.2-4 is awarded. GW, depending on the results of the previous application. The respective target commissioning dates are 2034, 2036 and 2038.
  • Recently, New York has witnessed many changes in offshore wind energy. To start, New York canceled three projects tentatively selected to provide power, but in May the state published its request for offshore wind energy by 2024 for at least 2.6 GW. We expect the three canceled projects to be favorites to win awards.
  • The Maryland Legislature passed a bill that would allow state agencies to increase the size of projects with existing procurements and set a path for further requests.
  • Lawmakers in Delaware are debating whether to pass a law allowing offshore wind energy procurement.
  • As previously noted, in October 2023, Connecticut, Rhode Island and Massachusetts signed an MoU to collaborate on the 2023 offshore wind request, with each state holding its own tender. Connecticut has requested a capacity of up to 2 GW, Massachusetts 3.6 GW and Rhode Island 1.2 GW. Across all states, states plan to purchase up to 6.8 GW of offshore wind capacity. The process is underway.
  • North Carolina, Louisiana, California and Oregon all have offshore wind procurement goals.

This activity translates into our forecast to more than 70 upcoming, short-term, medium-term, longer-term and future projects representing a CAPEX opportunity of more than $420 billion and annualized operations and maintenance OPEX of approximately $9.8 billion .

We review all projects in the pipeline in our 117-page forecast and market report.

Outside the US, Canada is advancing its offshore wind energy ambitions. In the North Atlantic Ocean, the Province of Newfoundland and Labrador has identified 77 wind permit areas with a theoretical potential of 94.5 GW, which include both bottom-fixed and floating wind locations. Nova Scotia has identified six potential offshore wind energy development areas, all no closer than 25 kilometers from the coast, for future research into offshore wind energy development. The theoretical potential of the areas amounts to over 34.5 GW. The six locations contain both bottom-mounted and floating wind potential.