The United States has trailed significantly behind its European and Asian counterparts when it comes to offshore wind energy. The top three players in the world are currently the United Kingdom, China, and Germany, who have installed 10.5 gigawatts (GW), 10 GW, and 7.6 GW of capacity respectively. These figures are colossal compared to the United States’ meager 42 megawatts (MW) of offshore wind capacity as of 2020. That’s just 0.042 GW compared to the UK’s 10.5 GW.
The table below highlights this difference between the top countries and the United States. China’s offshore wind industry is growing quickly and may soon outpace the United Kingdom as the world’s leader.
Despite the low capacity figure, developers have tried to jump start offshore wind in the U.S. for over a decade. The Cape Wind project off the coast of Massachusetts is especially notable for its failed attempt at becoming one of the largest sources of offshore energy. The project experienced legislative setbacks and financing issues, which led to its ultimate termination in 2017.
In March, the White House announced a goal of deploying 30 GW of offshore wind by 2030.
The Cape Wind project is just one example of the roadblocks that are faced by the offshore wind industry. Over the past five years, more than 28 GW of offshore wind goals across multiple east coast states have been in limbo due to a mixture of bureaucratic requirements, uncertainty around financing, and opposition by anti-offshore wind lobby groups.
The table below highlights a number of offshore wind energy projects that are still waiting for regulatory approvals from numerous federal government agencies.
Table 1: Sample Offshore Wind Projects in Development
The Biden administration hopes to change this status quo while boosting American jobs and strengthening the domestic supply chain. In his first week in office, President Biden issued an Executive Order that called to build new American infrastructure centered around clean energy. In particular, the administration announced a renewed commitment to the offshore wind industry.
Further, in March of this year, the White House released a detailed statement announcing that Departments of Interior (DOI), Energy (DOE), and Commerce (DOC) declared a shared goal of deploying 30 GW of offshore wind capacity in the U.S. by 2030. This would be no small order as it would reflect enough energy to power 10 million American homes and prevent more than 78 million metric tons of CO2 emissions from going into the atmosphere.
But how will the U.S. actually get there? Let’s take a quick look at the latest government plans to catalyze the offshore wind market in the U.S.
Increased funding opportunities
The Biden administration estimates that approximately $12 billion in capital investment should be spent on offshore wind projects per year in order to meet the 2030 goal. This would include a mix of private and public funding opportunities.
The administration is currently highlighting two public options:
- The Department of Transportation’s (DOT) Maritime Administration has a $230 million grant through its Port Infrastructure Development Program. The grant will be applied towards shore-side projects, such as storing turbines, laydown areas, and the docking of wind energy vessels to be transported to offshore wind farms. The applicants will be selected on their ability to strengthen port infrastructure, increase efficiency for the construction of offshore wind, and incorporate environmental justice initiatives.
- Wind developers will also have access to $3 billion in debt capital through the DOE’s Loan Programs Office (LPO). The LPO’s Title XVII Innovative Energy Loan Guarantee Program would offer debt capital to developers at competitive rates.
It is also worth noting that the LPO has already funded approximately 1,000 MW of onshore wind, totaling $1.6 billion in support. As the below table shows, existing offshore wind funding has thus far paled in comparison.
Table 2: Earmarked DOE Funding for Offshore Wind Development, Including Demonstration Projects
Sources: Dominion Energy, University of Maine, NS Energy, and Energy Central
Strengthening research and development initiatives
Another key focus of the administration is to increase research and development (R&D) investment for the offshore wind industry. According to the U.S. Energy Information Administration (EIA), offshore wind is considerably more expensive when compared to other renewable and non-renewable energy sources (Figure 2). This reinforces the idea that there needs to be increased investment towards innovation in the sector in order to make it more competitive and increase the feasibility of large-scale projects.
The DOE’s National Offshore Wind Research and Development Consortium (NOWRDC) and the New York State Energy Research and Development Authority (NYSERDA) announced an award of $8 to 15 million for offshore wind R&D projects. The projects were selected based on their focus on offshore support structure innovation, electrical systems innovation, and solutions for impacts on nearby wildlife.
According to the EIA, offshore wind is considerably more expensive when compared to other renewable and non-renewable energy sources.
Furthermore, the government is partnering with stakeholders in the private sector to improve data-sharing. The DOC’s National Oceanic and Atmospheric Administration (NOAA) signed an agreement in March with the multinational Danish power company, Ørsted, where the company has agreed to share physical and biological data with the government from its projects across the United States. The NOAA has also released a request for proposal to support research into understanding offshore renewable energy and its impact on coastal communities.
Boosting well-paid, union jobs
A robust labor market is integral to achieving the 30 GW goal. It is estimated that Biden’s plan will directly lead to 44,000 jobs in the offshore wind industry and an additional 33,000 jobs to support the sector.
The federal government has already spurred this plan into action by announcing a new priority Wind Energy Area in the New York Bright area, which includes the shallow waters between the New Jersey and Long Island coasts. The designated area has the potential to generate over 7 GW of offshore wind energy by 2030, which could power over 2.6 million households.
It is also predicted that offshore wind project development in the area would spur up to 25,000 construction and 4,000 operations and maintenance roles. In addition, it would create 9,000 jobs for people in adjacent industries in the community.
Future of offshore wind still uncertain
While the Biden administration’s plan is bold, the offshore wind industry still faces many challenges. High levelized cost of energy (LCOE), regulatory roadblocks, and mixed public opinion could hinder President Biden’s 30 GW by 2030 goal.
However, if the federal government manages to streamline the approval process, invest in R&D, and increase low-cost financing, the U.S. would be well positioned to develop the same capacity of offshore wind over the next nine years that it took Europe more than two decades to build.