HATING GREENS DOESN’T STOP THE WIND AND THE SUN:
Offshore wind is at a crossroads. Here’s what you need to know. (Heather Richards, 11/13/2023, E&E News)
[B]oth analysts and developers remain confident that this period of instability could also reset the offshore wind sector and refocus policy priorities on building an industry and supply chain that’s sustainable.
“We need to slow down a little bit in our growth,” Jan Matthiesen, director of offshore wind for the research and consultancy group Carbon Trust, said at the Turn Forward press briefing. “Give the supply chain some room to actually breathe and catch up.”
With U.S. offshore wind at a crossroads, here’s four questions answered.
Why are only some projects in trouble?
While it’s clear the entire offshore wind industry is facing significant headwinds, the impacts haven’t been equally felt.A slew of projects have broadcast their vulnerability. In addition to the now-canceled Ocean Wind project, New York’s Beacon Wind, Empire Wind 1 and 2, and Sunrise Wind are on the ropes. Two Massachusetts projects, SouthCoast Wind and Commonwealth Wind, are paying million-dollar penalties to break contracts with utilities with plans to rebid in future state solicitations.
“It’s largely an issue of timing,” explained Tim Fox, a research analyst with ClearView Energy Partners. “Projects that bid into solicitations before macroeconomic factors arrived, but then had to secure contracts amid high interest rates and inflation, face serious headwinds.”
Some projects are barreling forward — like Vineyard Wind, a joint project of Avangrid and Copenhagen Infrastructure Partners off the coast of Massachusetts. The first large project permitted in the U.S., Vineyard is under construction with full operations beginning by next year. South Fork Wind, an Ørsted project off the coast of Rhode Island that will power New York, may go live even sooner.
A similar spirit of confidence is occurring in Virginia, where the utility Dominion Energy said last week that its 176-turbine Coastal Virginia Offshore Wind project is on schedule. Monopile foundations have already been delivered.
The troubles thrashing some offshore wind projects highlight some of the benefits that Virginia’s project uniquely enjoys.
It is the only project being developed in the U.S. solely by a regulated utility. Richmond-based Dominion is a monopoly in Virginia, though it also has customers across 14 other states.
That means its investments are paid for by electric consumers, with utility regulators approving a return on the investment as profit. Dominion has already fought, and won, for its right to proceed with a project that is costing roughly $2 billion more than it had planned.
“Dominion’s smart strategy has helped it avoid the same issues faced by its competitors. They are the off taker — they are able to pass on cost increases to consumers,” said Atin Jain, wind analyst at BloombergNEF.
He noted that Dominion secured supply deals with turbine manufacturers in 2021, before inflation drove up costs. The Coastal Virginia project will also be “huge,” with a capacity of 2.6 GW, enabling the company to benefit from economies of scale.
The project, which got final approval from the Interior Department last month, is also building its own ship, the Charybdis, to install its turbines.
Expected to be complete by early 2025, the $650 million vessel means the utility won’t have to fight with other developers over a limited number of installation vessels, said Søren Lassen, head of offshore wind research at Wood Mackenzie. Plus, Dominion will be able to pay off some of its investment in the ship by leasing the vessel out to other U.S. projects, he said.