December 28, 2022 — Offshore wind advanced at a dizzying pace in 2022, from billion-dollar bids in New York to turbine installation vessels arriving in New England waters.
The landmark year buoyed confidence in investment in the U.S. market and saw the expansion of federal tax benefits — along with an increased government workforce — to support wind growth. Insiders continued to express confidence in the industry despite looming economic headwinds that threaten to slow the pace of President Joe Biden’s wind boom in the years ahead.
The White House’s commitment to raising turbines in the ocean, to reach a 30-gigawatt target by 2030, enough to power 10 million homes, fueled much of the growth seen over the last 12 months.
In February, energy companies pledged $4.4 billion for wind leases off the coasts of New York and New Jersey, the largest offshore energy sale in U.S. history.
The Biden administration would go on to hold its first auction in the Pacific Ocean and commit to raising 15 GW of floating offshore wind, a developing technology that’s needed to build wind farms in deep water.
“The momentum continues for the offshore wind sector,” said Erik Milito, president of the National Ocean Industries Association. “The government has done a good job of keeping things moving at a reasonable pace.”
New financial certainty also came from Congress, which expanded incentives to underwrite offshore wind investments and provided benefits for manufacturers of components like turbines and blades, and turbine installation vessels. As the year neared its close, turbine installation vessels arrived in northern waters to begin construction on the first large-scale projects in the country off the coast of Rhode Island and Massachusetts.
It’s a growth story only dampened by the specter of inflationary costs from the Covid-19 pandemic and the Russian war against Ukraine that have begun to bleed into development forecasts. The high price of steel and supply chain problems could pose threats as companies scramble to quickly launch projects.
Inflationary costs are not a unique problem for offshore wind. They are mirrored across the energy industries, noted Michelle Solomon, who tracks electricity trends for Energy Innovation Policy & Technology LLC, a nonpartisan think tank that supports the energy transition.
But there is a “concerning” possibility that inflation and supply chain issues can slow down the offshore wind build-out in the United States at a time when climate targets demand an even faster pace of renewable deployment, she said.
This month an offshore wind developer asked Massachusetts if it could bow out of contracts with utilities, citing higher costs that have put the project underwater without a different deal, while other large developers like Ørsted A/S and the Public Service Enterprise Group Inc. have been frank about their concerns about prices undermining project timelines (Energywire, Nov. 15).
The pressure is also at an all-time high for the Biden administration’s offshore wind bureau, the Bureau of Ocean Energy Management, to meet lofty clean energy targets. Despite a breakneck speed, the bureau needs to approve more than a dozen offshore wind arrays in under two years (Energywire, Dec. 1).
Still, these pressing challenges follow a pivotal year in offshore wind that’s increased confidence that the industry has cemented its position in the U.S. Here are four takeaways of how the sector shifted in 2022 that shed light on where it’s going.