Three Takeaways from Vineyard Wind's Supplier Announcement

On December 2, Vineyard Wind announced that it was replacing its previous preferred supplier of wind turbines for its Vineyard Wind project with General Electric (GE). As a result of this change, Vineyard Wind decided to temporarily withdraw its Construction and Operations Plan (COP) from further review by the Bureau of Ocean Energy Management (BOEM) to allow the project team to conduct a final technical review that includes GE’s ~13 MW Haliade-X turbines into the final project design.

We think this decision could serve three purposes. First, higher capacity per turbine reduces the project’s footprint and could show responsiveness to concerns from the commercial fishing industry. We have considered commercial fishermen’s opposition to be among the biggest threats to the project. Second, notwithstanding Vineyard Wind CEO Lars Pedersen’s statement that the election was not a factor, we think delaying a BOEM decision until President-elect Joe Biden takes office may diminish what the broader industry may view as incremental risk from the outgoing Trump Administration. President-elect Biden, in contrast, supports renewable power deployment, and identified addressing climate change as one of the four top-level priorities on his BuildBackBetter.gov transition agenda. Third, purchasing GE-developed turbines could align with the Biden Administration’s support for domestic trade unions. Although GE Renewable Energy is based in Europe, Vineyard Wind’s supplier commitment could prove to be a critical first step in onshoring domestic wind industry capability. Indeed, CEO Lars Pedersen also reportedly said that its choice of GE meant that “a historic American company will play a vital role in the development of the first commercial-scale offshore wind power in the U.S.”

Vineyard Wind argues that the change in supplier will not delay its expectation to reach financial close in 2H2021 and put the project in service in CY 2023. However, we think project sponsors may be understating the extent to which the regulatory process may need to accommodate the change in turbines. For example, taller wind towers and longer blades could raise questions regarding previous conclusions concerning bird, bat and aviation impacts. At minimum, we think the change could require an incremental notice-and-comment phase.

Timothy Fox is a Vice President at ClearView Energy Partners, LLC, a D.C.-based research firm that serves institutional financial investors and corporate strategic planners by providing forward-looking assessments of economic and political catalysts that could impact energy supply, demand or price.