The U-turn of the U.S. Administration’s energy policies under President Joe Biden sets the stage for a flourishing U.S. offshore wind industry, as the federal government looks to speed up environmental reviews to make offshore wind a significant contributor to the new clean energy goals. In the United States, offshore wind hasn’t really taken off, with just two small offshore wind farms in operation with less than 50 megawatts (MW) of combined capacity. To compare, Europe has 113 offshore wind farms in 12 countries installed, with 25 gigawatts (GW) of total offshore wind capacity.
The U.S. is smashing records in onshore wind, solar, and storage installations, with records for each of those in 2020, according to the American Clean Power Association.
But offshore wind has been considerably lagging behind, also because of lengthy environmental reviews from federal agencies and the weighing of pros and cons of having offshore wind installations within sight of beaches or in areas of commercial fishing.
Federal Policy Change
But now, President Biden set offshore wind as a priority policy in one of his first executive actions to tackle the climate crisis. While pausing new oil and natural gas leases on public lands or offshore waters, President Biden directed the Secretary of the Interior to identify steps that can be taken to double renewable energy production from offshore wind by 2030.
If compared to the current production, this is really a low bar, the Wall Street Journal notes.
But the radical shift of energy priorities could incentivize more projects as a growing number of U.S. states on the East Coast, just think of New York, are setting ambitious clean energy targets.
States have established more than 29 GW of offshore wind procurement targets to date, while developers plan to bring online 9.1 GW of offshore wind by 2026 by developing 13 offshore wind projects, according to the American Clean Power Association.
The 800-MW Vineyard Wind project, 15 miles off the coast of Martha’s Vineyard, is set to become the first large-scale offshore wind farm in the United States and start delivering energy in 2023.
The Bureau of Ocean Energy Management (BOEM) said earlier this month that it would resume the environmental review of the Vineyard Wind project. The entire review was canceled late last year by the Trump Administration following a request from Vineyard Wind developers to pause the process to see if the design needed tweaking after they switched turbine suppliers.
“Offshore wind has the potential to help our nation combat climate change, improve resilience through reliable power, and spur economic development to create good-paying jobs,” said BOEM Director Amanda Lefton.
The developers of Vineyard Wind, a joint venture between Avangrid Renewables and Copenhagen Infrastructure Partners (CIP), said after the federal review process was resumed:
“We look forward to working with the agency as we launch an industry that will create thousands of good paying jobs while also taking meaningful steps to reduce the impact of climate change.”
Smoother Permitting Processes Could Create $166-Billion Industry
With supportive policies and smoother leasing and permitting processes, offshore wind development could generate a lot of value for the U.S. economy and create thousands of jobs, Wood Mackenzie said last year in research commissioned by sector associations.
Smoother processes of leasing and permitting of offshore wind projects could facilitate up to US$166 billion in offshore wind investment in the United States by 2035, the research said. The potential for the U.S. offshore wind industry is enormous, if the right policies are in place, according to sector associations.
Wood Mackenzie expects that almost 25 GW of offshore wind capacity will be added in the U.S. through 2029.
“States have already selected 9 GW of capacity, accounting for more than 70% of forecast build through to 2026. And in New England and New York, 80% of wind build over this period will be located offshore,” WoodMac said in a report in June 2020.
“Offshore wind can be deployed on a large scale, making it a powerful tool for policymakers to pursue more ambitious clean energy targets,” Max Cohen, principal analyst at Wood Mackenzie, said.
What’s more, the U.S. offshore industry also offers opportunities to major European oil players, Cohen added.
Big Oil Bets Big On U.S. Offshore Wind
Some of Europe’s Big Oil, eager to show their low-carbon energy commitments and expand clean energy portfolios, have already moved to seize these opportunities.
BP made in September its first move into the offshore wind market with a strategic partnership in U.S. offshore wind assets with Equinor in a deal worth US$1.1 billion.
BP bought 50 percent in Equinor’s Empire Wind and Beacon Wind assets off Long Island and offshore Massachusetts, respectively, and the strategic partnership will develop up to 4.4 GW from those two offshore wind projects. The two supermajors will also jointly seek other U.S. offshore wind opportunities.
Equinor and its partner BP were selected last month for the largest-ever U.S. offshore wind award to date to provide New York State with offshore wind power from the first and second phases of Empire Wind and Beacon Wind totaling 3.3 GW of power to the state.
“The U.S. East Coast is one of the most attractive growth markets for offshore wind in the world,” Equinor’s CEO Anders Opedal said.
With supportive policies at the state and federal levels, U.S. offshore wind could become an even more attractive growth market.
By Tsvetana Paraskova for Oilprice.com
More Top Reads From Oilprice.com:
- Can Exxon Bounce Back From A Disasterous 2020?
- The Oil Deal That Could Break Up Iraq
- How Bad Was Big Oil’s Earnings Season?