Offshore Coming On-Grid

As we’ve reported before,^[1] much of the growth in the U.S. wind energy sector is coming from land-based wind energy. Wind is providing significant capacity in middle-of-the-country states like Iowa, Kansas, Oklahoma, and Texas. Offshore wind has lagged behind, with the Department of Energy identifying high cost of energy, technical challenges of installation, and grid connection as significant barriers to adoption.^[2] And studies on potential environmental impacts are in their early phases. (Though, despite claims by politicians, there is no evidence to suggest that offshore wind farms are behind the recent spate of stranded whales along the East Coast.^[3]) There have even been a handful of project cancellations over the last year.^[4]

Nevertheless, offshore wind continues to hold great promise for an increasingly de-carbonized energy economy. The National Renewable Energy Laboratory estimates that if all of the technical resource potential of offshore wind were developed it would amount to three times the country’s annual electricity consumption.^[5] That being the case, it’s not surprising that offshore projects are on the rise. Dominion Energy recently received federal approval for the nation’s largest planned offshore windfarm, comprising 176 turbines that are expected to produce 2.6 GW of electricity, which it expects to be online in 2026.^[6] And Northeast Ocean Data lists 30 projects underway all along the East Coast, from Maine to South Carolina, with two already in operation and six having completed environmental review and permitting.^[7]

As might be expected, New England is a particular hub of offshore activity. Here are a few highlights from the area.

• Massachusetts started construction on Vineyard Wind in 2022, touted as, “Nation’s first commercial-scale offshore wind project”.^[8] January saw delivery of energy to the grid for the first time.^[9] Five turbines are expected to be running at full capacity in early 2024, and when all of the planned 62 are operating, the project is expected to provide energy for over 400,00 MA homes and businesses. Further projects are set to follow, and in November the Massachusetts Clean Energy Center issued an RFP for the sixth round of its Offshore Wind Works initiative, with up to $8 million available for projects related to workforce development, infrastructure, and training.
• Rhode Island has also seen a recent offshore wind RFP, with Rhode Island Energy (RIE) soliciting bids for long-term power purchase agreements and renewable energy credits from newly developed offshore wind energy.^[10]This isn’t Rhode Island’s first foray into offshore wind. In 2016, the Block Island Wind Farm became the nation’s first commercial wind farm.^[11] Its five offshore turbines produce 10 times the energy needed to replace the island’s five diesel generators. The excess is sent to the mainland, and, overall, the RI Coastal Management Council estimates the wind farm results in a 40% reduction in electricity rates.^[12]
• Maine: While Maine has been slower to develop wind energy than some of its New England neighbors, it is particularly well situated to take advantage of the emerging industry given its ability to leverage extensive established maritime-based industries and its access to the Gulf of Maine, with deep waters that make it ideal for floating offshore wind. Indeed, the Bureau of Ocean Energy Management released a Gulf of Maine draft wind energy area for public comment in October.^[13] Moreover, wind energy will be necessary to meet the state’s ambitious clean energy goals (80% renewable energy by 2030 and 100% by 2040). To that end, in February 2023, the Governor’s Energy Office released the Maine Offshore Wind Roadmap, proposing milestones that include having construction of the first floating offshore wind port on the East Coast underway at least by 2030.^[14]

Looking Ahead

An honest look at offshore wind has to acknowledge that it is not yet a major player in the energy market and has faced some recent setbacks in its attempt to become so. However, it should also recognize that, given the incredible potential and large number of commitments in place, including significant projects already coming online, these setbacks are almost assuredly temporary. Suppliers, then, would do well to keep an eye out for opportunities to get in on the (ahem) ground floor, diversifying the green offerings that continue to be a major source of competitive advantage.

^[1] “2023 Wind Industry Outlook” (Illuminations, September 7, 2023).

^[2] Department of Energy: Offshore Wind Research and Development.

^[3] Frequent Questions—Offshore Wind and Whales (NOAA Fisheries, August 17, 2023).

^[4] “Offshore wind projects face economic storm. Cancellations jeopardize Biden clean energy goals” (Associated Press, November 4, 2023).

^[5] Offshore Wind Resource Assessment (NREL, 2022).

^[6] “Massive windfarm project to be built off Virginia coast gains key federal approval” (Associated Press, October 31, 2023).

^[7] Offshore Wind Projects (Northeast Ocean Data, February 12, 2024).

^[8] Vineyard Wind.

^[9] “Avangrid, CIP Announce First Power from Nation-Leading Vineyard Wind 1 Project” (Vineyard Wind, January 3, 2024).

^[10] Rhode Island Energy’s Long-Term Clean Energy Procurement: Offshore Wind RFP (October 13, 2023).

^[11] Block Island Wind Farm (Orsted).

^[12] Block Island Wind Farm (RI Coastal Management Council, 2016).

^[13] “BOEM Releases Draft Wind Energy Area in the Gulf of Maine for Public Review and Comment” (Bureau of Ocean Energy Management, October 19, 2023).

^[14] Maine Offshore Wind Roadmap: Executive Summary (February, 2023).