UK’s world-leading offshore wind industry sheds light on America’s opportunity
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- Nov 17, 2020 10:42 pm GMTNov 17, 2020 8:28 pm GMT
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This is the first article of a three-part series covering America’s offshore wind opportunity
The United Kingdom’s (UK) successful and world-leading offshore wind industry provides the perfect template for how the United States (US) offshore industry could proceed, representing a mammoth investment and job creation opportunity. Unlike the UK and most of Europe’s offshore industries, the United States hasn’t started the big buildout yet, which means the development projects that secure financing and get the regulatory green light will be able to implement state-of-the-art new grid and turbine technologies that will result in higher levels of efficiency and reliability as projects enter service.
Building complex offshore wind projects takes superb engineering and a massive supply chain including large, specialized ships, the largest turbines ever created, expanded ports, and a plethora of modern grid infrastructure technologies like state-of-art high-voltage grid systems, including the newest undersea and underground cable, converter stations, modern substations, and everything digital.
The ability to plan, finance, and construct complex projects are proven in the UK and across other parts of Europe and Asia. For the nascent United States (US) offshore wind industry to become the next big growth region, the same level of supply chain support, currently ongoing in the UK and other parts of the globe, will need to develop in the US.
If all goes according to plan, by 2030, both the UK and the US will be home to two of the largest portfolios of offshore wind capacity in the world, and it only gets bigger as the global power industry continues its path to zero-carbon emissions by mid-century.
The UK – the world leader in offshore wind
The UK offshore industry has not looked back since the first operating offshore project, North Hoyle (60 MW), off the coast of Wales, started generating in December 2003. Today, the UK is home to 8 of the top 10 largest wind farms in the world including the 1,218-megawatt (MW) reigning champion of large operating offshore installations, Hornsea 1. The first of four phases, the wind farm is owned by Denmark’s Ørsted and Global Infrastructure Partners. Hornsea 1 (2020) is the largest, followed by East Anglia 1 (714 MW/2020), Walney Extension (659 MW/2018), London Array (630 MW/2013), and Beatrice (588 MW/2019). In all, the UK has more than 32 operating offshore wind farms (10.4 GW), 3 in construction (2.4), 3 in pre-construction (0.5), and 12 projects well along in development (>14 GW). Overall, the UK is home to about one-third of worldwide operating offshore wind generating capacity.
Today there is about 24 GW of operating wind farms in the UK – 10.4 GW of offshore and 13.6 GW of onshore capacity. The UK meets about 20% of the country’s power demand from wind today, and with the planned additions expected by 2030, that figure will be much higher.
UK and US offshore markets set to grow
Driven by continued government and public support, the UK offshore wind industry is expected to grow at 14.5% CAGR (compound annual growth rate) through the decade – topping 40 GW by 2030. Led by the UK, the burgeoning global offshore wind industry has grown at a 24% annual rate since 2013. In contrast, today, the United States (US) has only two small operating projects, the 30 MW Block Island Wind Farm, off the coast of Rhode Island, operated by Denmark’s Orsted, and the 12 MW Coastal Virginia Offshore test wind farm, owned and operated by Dominion Energy. That is about to change. State governments and electricity customers along the northeastern and central Atlantic coast heavily support offshore wind and think that implementing the technology is the fastest avenue to a zero-carbon power future.
American nascent offshore industry about to pop
According to project data compiled by Hitachi ABB Power Grids’ Velocity Suite research team, seven states along the Atlantic coast have procurement commitments at roughly 29 GW, with New York’s plan to build out around 9 GW as the highest. There is around 9 GW of advanced development projects, with about 6.3 GW in six states having already issued competitive solicitations. The U.S. market could have large-scale offshore projects operating by as early as 2024, and by 2030 is expected to have roughly 24 GW in operation. The Massachusetts 800 MW Vineyard Wind could be the first project to be built with the Bureau of Ocean Energy Management (BOEM), deciding on the final Environmental Impact Statement (EIS) in December of this year. The project, located about 15 miles off the coast of Martha’s Vineyard, is a joint project of Iberdrola Group’s Avangrid Renewables and Copenhagen Infrastructure Partners (CIP), LLC. All required permits to start construction are expected to be secured by the spring of 2021, with an operational date in 2023.
Offshore wind industry comparing United Kingdom with United States east coast, GW
Source: Hitachi ABB Power Grids' Velocity Suite and Wikipedia project coverage of the UK offshore wind industry
To realize this unprecedented opportunity, government officials, developers, and power companies will need to line up significant financing to upgrade and build ports and new supply chain infrastructure. The United Kingdom has already made a tremendous investment and has numerous projects moving along nicely.
For the US market, there are plenty of significant challenges ahead, including securing financing, lining up power off-takers, getting federal and state permits, and convincing a supply chain that is currently mature, and building in other parts of the world, to come to America. Some of the largest infrastructure companies in the world are lining up to take on the buildout, which could last for decades.
UK government support is high
In early October, UK Prime Minister Boris Johnson, speaking at the Conservative Party annual virtual conference, said, “In the future, offshore wind will power every home in the country.” He went on to proclaim, “The current goal for 30 GW by 2030, will now be 40 GW, with 1 GW of floating offshore wind capacity as part of the plan.” That is a tremendous amount of offshore planning and construction. During the presentation, Johnson also conveyed that the country would invest £160 million ($207 million) in ports and factories to manufacture the components needed to drive the offshore growth. The Prime Minister suggested, “the building effort could generate upwards of 60,000 jobs. He went on to comment, “What Saudi Arabia is to oil, the UK is to wind – a place of almost limitless resources.” The plan is to have 60% of the components and construction to originate in the country. Current estimates peg the overall UK pipeline at 50 GW, so there are plenty of projects to pick from to build out an additional 30 GW, which, when complete, could supply more than one-third of all power demand in the UK by 2030. The ultimate UK goal is to reach net zero-carbon by 2050.
Wind power in the UK is a large and growing resource
The growing combination of operating offshore and onshore wind farms has significantly impacted the power supply for the UK. On February 8, 2019, at 2:00 AM BST, more than 56.05% of all the power used across the UK was generated by wind turbines. And then, on December 8, 2019, during storm Atiyah, wind power reached an all-time peak of 16 GW. Records were again made this past August. During the early morning hours of August 26, 2020, during storm Francis, 59.9% (14.2 GW) of Britain’s electricity was produced by wind, and on August 31, 2020, wind provided a record 60%.
US market ripe to take off
According to research by the American Wind Energy Association (AWEA), as of September 2020, offshore wind project developers expect 14 projects totaling 9.1 GW will be operational by the end of 2026. The AWEA projects up to 29.1 GW of offshore wind by 2035. Today, six states had selected 6.3 GW in offshore wind state-issued solicitations, with more coming in the future. The U.S. Department of Energy determined that the U.S. could build up to 86 GW of offshore wind projects by 2050. Remarkably, the research by AWEA determined that the development of 30 GW of offshore capacity could support up to 83,000 jobs and deliver upwards of $25 billion in economic output by as soon as 2030.
Net capacity factor (%) and technical potential of offshore wind by region, GW
Source: U.S. Department of Energy and U.S. Department of the Interior
Development of the US offshore industry will benefit immensely from the lessons learned in the UK, Europe, and other parts of the world where offshore projects have been built and are now generating power – the knowledge is getting better. The new technology available today, including the massive, upwards of 14 MW single turbines, and more durable and long-lasting infrastructure like undersea cable and sophisticated digitally run converter technology and interconnection equipment, make the future bright for offshore projects. Having access to the ‘best of the best’ technology makes the soon to be burgeoning American offshore wind industry a surefire success story that will result in great jobs and plenty of investment opportunity.