A supportive offshore wind industry sees Biden’s 2030 goal as ambitious – S&P Global

Denmark's rsted owns the first offshore wind project in the U.S., the 30-MW Block Island wind farm. The industry is now bracing for exponential growth. Source: Scott Eisen/Stringer via Getty Images

Although the offshore wind industry is enthusiastic about the new presidential administration's early efforts to kick-start projects, some are skeptical the U.S. can meet Joe Biden's goal to build 30 GW of offshore wind by 2030.

In online conferences over the past two weeks, offshore wind advocates, wary after years of mixed signals from the federal government, now see momentum gathering toward commercialization. In addition to announcing the 30-GW goal, the Biden administration has also completed the environmental impact statement for the nation's first major offshore wind proposal. Executives for Iberdrola SA subsidiary Avangrid Inc. on May 4 said the 800-MW Vineyard Offshore Wind Project is on track to start producing power in 2023. Avangrid Renewables LLC is developing the project with Copenhagen Infrastructure Partners K/S. The Biden administration is expected to make a decision on the project in May.

"There have been a couple of what I would consider false starts for the U.S. offshore industry," Ethan Zindler, head of Americas at BloombergNEF, said at a panel held by the American Council on Renewable Energy. "This is not that. I think we are really, truly at the beginning of a major growth phase for U.S. offshore."

The U.S. Department of the Interior's Bureau of Ocean Energy Management has taken initial steps to prepare environmental statements for rsted A/S and Public Service Enterprise Group Inc.'s planned 1,100-MW Ocean Offshore Wind Farm off the coast of New Jersey. BOEM did the same for rsted and Eversource Energy's proposed 704-MW Revolution Wind Offshore project off the coasts of Massachusetts and Rhode Island. Preparation of the statements triggers public comment periods that inform the companies' construction and operations plans.

But Zindler and others do not anticipate that the U.S. can meet the 30 GW-by-2030 goal. BloombergNEF projects that the U.S. can reach 23 GW by decade's end. Anything beyond that will require a transformation of BOEM's permitting process, as well as coordination between states, federal agencies and grid operators to build out an ocean grid.

"That would mean BOEM would really have to step on the gas to get to 30 GW," Zindler said. "We're talking really a lot more work."

Conversely, he said, BOEM must also ensure that any permits can withstand legal challenges. The commercial fishing industry has been vocal in its opposition to offshore wind farms.

Overall, BOEM wants to accelerate new lease sales and complete 16 construction and operations plans by 2025, representing 19 GW of offshore wind capacity. Recently, BOEM opened up the prized New York Bight area between Long Island and New Jersey, and a lease sale is anticipated for late 2021 or early 2022.

A critical issue for the industry has been regulatory certainty. The Trump administration several times delayed a final decision on the Vineyard Wind project.

But however fast the federal government moves, it must also coordinate with grid operators and states to connect offshore wind to interconnections onshore. There are 33.1 GW of state targets through 2035.

BOEM promises certainty

Amanda Lefton, BOEM's new director, said in an interview with S&P Global Market Intelligence that the administration is taking an "all-government approach to solving offshore wind," which features more coordination between U.S. agencies.

"We know that what's going to be really important is for us to have a more certain process for the industry, for other ocean users, and really for our federal partners to ensure that we have the process for advancing offshore wind that ensures that we are both doing this efficiently and expeditiously as well as responsibly," she said.

Lefton added that BOEM is "taking a hard look" at how to update regulations with respect to renewable energy to ensure a quicker route to market for developers. "There is certainly a lot of opportunity," to advance projects faster, she said.

BOEM is evaluating more options for lease sales in the Carolinas, Gulf of Maine and the Pacific, where conflicts with the military have hampered development.

California aims to catch up

For the nation to reach the 30 GW goal, the West Coast would need to play a larger role. California has been leading the renewable energy boom in the U.S., but not on offshore wind, and it has set no state target.

State lawmakers introduced Assembly Bill 525 to set a target of 10,000 MW of offshore wind by 2040. But the specific target was stripped from the bill, which has made it through several committees.

"We haven't seen the clear state leadership in California that we've seen on the East Coast," Brandon Burke, vice president for policy and regulatory engagement for the Business Network for Offshore Wind, said at the ACORE conference.

At another virtual conference held by the trade group Offshore Wind California, participants agreed the Golden State state needs to set a capacity target to give the industry a path toward building floating offshore wind projects.

"If you don't have a target, you don't know what you need to have in place ... you have to break that circle. That's not only supply chain; but you're also talking grid, investment, developers. And I think in that context, setting targets is actually a very useful tool to say, 'Look, this is what we have in terms of an opportunity'," Dan Kyle Spearman, associate director and global lead for floating wind at the Renewables Consulting Group, said.

Participants expressed confidence that floating offshore wind can be competitive with other renewable technologies.

Sebastian Bringsvaerd, head of floating wind for Equinor ASA, which is behind the Boardwalk Offshore Wind and Beacon Offshore Wind Project, said, "What is innovation? Innovation is not a floating wind structure; that has been used in oil and gas for more than 50 years."

"The innovation here is really to get to industrialization and cost reduction fast enough to meet the need in the markets," Bringsvaerd said. "And that's where you need scale."

Ocean grid

The 30-GW goal also requires the U.S. to resolve the thorny issue of building transmission lines in the ocean.

"All of this is going to require significant investment in infrastructure and particularly with interconnection; offshore projects are currently subject to rules that were designed for the interconnection of onshore projects and so as a result, developers are going to spend millions in radial connection facilities to deliver power from miles offshore to mainland substations," Cory Lankford, a partner at Orrick, said at the ACORE conference.

Lankford pointed to the Federal Energy Regulatory Commission's denial of Anbaric Development Partners LLC's complaint that the PJM Interconnection failed to offer meaningful interconnection services to build an open-access ocean grid. But, he noted, FERC opened a technical conference on the issue, and comments are open.

Elisabeth Treseder, New England market lead for Equinor Wind US LLC, said developing an open-access transmission system could be "cumbersome and from our perspective unnecessary and could impede the timely interconnection," of projects.

Eric Wilkinson, energy policy analyst for government affairs at rsted, which owns the nation's first offshore wind farm, the 29.3-MW Block Island Offshore Wind farm, said, "One of our primary concerns is timing; we can't wait for the perfect transmission system to be conceived of, permitted and built."

The Department of Energy is offering up billions in debt funding opportunities for offshore wind infrastructure.

A leadership void remains on the transmission issue as federal agencies, states, grid operators and ocean users debate it, according to Burke, of the Business Network for Offshore Wind.

"You have this kind of Gordian knot of interstate and inter-regional cooperation that has to be untangled, and that is where in many ways you can see federal leadership fitting in," he told the ACORE audience.

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A supportive offshore wind industry sees Biden's 2030 goal as ambitious - S&P Global