Longer development timelines are shielding the nascent US offshore wind sector from the supply chain issues sparked by the Covid-19 pandemic that helped slow work on onshore renewable energy projects.
As a consequence, the opening wave of US offshore wind farms appear to be moving along on schedule — at least for now — even as supply chain disruptions and higher prices for resources needed by wind and solar farms complicate development timelines inland.
"Offshore wind, by its nature, the way the project development timeline goes, is a longer-term horizon," Business Network for Offshore Wind vice president for supply chain development Ross Gould said. "Developers already factor short-term fluctuations in their risk profile and in their calculations."
That longer timeline is exemplified by utility Dominion Energy's 2,600MW Coastal Virginia Offshore Wind system, at present the largest project planned for US waters, which the company proposed in 2019. Construction on the wind farm is scheduled to begin in 2024 and conclude in 2026. While the company has already placed orders with steel mills and equipment manufacturers to reserve the raw materials necessary for the project, production for them will not even begin until 2023, Dominion said.
And once the time comes, dedicated heavy equipment vessels will both manufacture and transport them. Dominion's supplier has already allocated ships for delivery based on the utility's construction schedule.
Similarly, Vineyard Wind last month began work on its 800MW Vineyard Wind I project, the first utility-scale system in US waters, but will not begin delivering electricity into Massachusetts until 2023 at the earliest. In contrast, most onshore wind and solar farms can be built in under a year. And while onshore projects must deal with their own oftentimes drawn-out regulatory process, developers have generally avoided the federal reviews that have caused multiple delays in offshore wind farm timelines.
Vineyard Wind, a joint venture between utility Avangrid and Danish investment firm Copenhagen Infrastructure Partners, declined to comment.
Many onshore projects are pushing back construction schedules in response to higher commodity prices. Steel prices have more than tripled over the past calendar year, while aluminum has risen 67pc and copper is up 43pc, according to consultancy Edison Energy, which expects only 12 utility-scale US onshore wind and solar projects on line in 2022. Edison in its recent third quarter update said 80 projects are targeting operations in 2023, a 25pc drop from the previous quarter.
A number of east coast states are still moving ahead with their offshore wind plans, with Massachusetts and Maryland each selecting another round of projects on 17 December. Other projects will likely follow in 2022, with the 132MW South Fork Wind and possibly Danish developer Orsted's Ocean Wind and Revolution Wind as well, Gould said.
All of which is good news for states depending on renewable energy certificates (RECs) from offshore wind for their escalating compliance needs. PJM states from New Jersey to Virginia are banking on the ocean-based wind farms to meet a growing portion of load with renewables, as are states in the ISO-New England footprint, where the land available to build new onshore turbines is extremely limited. New York needs the projects to funnel carbon-free power to population-heavy areas downstate, like New York City, as the state's transmission limitations currently undercut its ability to deliver electricity from its upstate renewables fleet.
Longer-term disruptions could change the story, with Gould noting that a couple more years could result in "a different conversation."
"What would alarm me would be announcements of project delays," Gould said. "And not just one, but if you are, all of a sudden, seeing a pattern of project delays as a product of supply chain issues."
But a strong global appetite for building out the industry is otherwise poised to provide a tailwind for the sector.
