Offshore Wind : Prepare for Impact

Offshore Wind : Prepare for Impact

May 3 2022

The US has a goal of 30 gigawatts (GW) of offshore wind by 2030. To put this in context, the state of New York consumes about 33 GW at peak demand. By 2050, it is possible 35% or more of US electricity needs could come from wind power. Since it can be located close to major coastal cities, offshore wind holds great appeal. This promise is driving developments in areas such as floating offshore wind technology as well as infrastructure simplification and operating cost reductions.

Last week, TCC attended the largest offshore wind energy conference in North America, hosted by The Business Network for Offshore Wind. It reminded us of investment conferences focused on the semiconductor industry in the early 1990s when future industry titans like Applied Materials, and ASM Lithography were still unknown to the rank-and-file investor. We came away optimistic about the potential for European companies like Orsted, Equinor, Shell, EDF, Iberdrola / Avangrid, RWE, Dominion, and others to drive the US industry forward. They have a 10-year track record of success in Europe, and the Biden Administration is only too happy to oblige, having announced additional ocean lease areas last week in the Atlantic and Pacific.

In the same way that DARPA (Defense Advanced Research Projects Administration) helped establish the US semiconductor industry, ARPA-E, (The Advanced Research Projects Agency-Energy) is advancing early stage high-potential energy technologies, with interesting projects in offshore wind. ARPA-E is teaming up with institutions like NREL, Sandia National Laboratories, The University of Maine and companies like Principle Power and using control co-design and digital twins to optimize designs. This helps companies understand how changing various design elements impacts system performance in a virtual manner before making costly (and perhaps incorrect) changes in the real world.

To succeed at scale, the US needs to upgrade its port infrastructure, electric grid, and transmission planning process. This is happening, with public and private investments already underway in places like Paulsboro, NJ, Norfolk, VA, Quonset, RI, Brayton’s Point and Salem, MA. These underutilized ports and retired coal plants in optimal locations are being transformed into offshore wind hubs. Because vessels ferrying to and from wind farms have standard route patterns, they may be among the early adopters of marine electric drive technologies.

The ecosystem required to support the OSW “prime contractors” has some interesting companies like PaleoWestand Search, that help identify issues such as archeological or cultural sites that may be disturbed by renewable development. Environmental service firms with relevant expertise, such as Inspire Environmental, also seem well placed to benefit. European firms with wind expertise like DNV, Deme, and Aker, are hoping to expand into US projects, while US firms like Jacobs, WSP, and Burns & McDonnell, are eyeing OSW as a logical area for expansion. This is having a big impact on some smaller cities like Providence, RI where the Providence CIC (Cambridge Innovation Center) now has offices for over 20 offshore wind related companies.

These hubs have the potential to create distributive renewable energy ecosystems in the same way that Silicon Valley and the semiconductor industry shaped the modern world. Let it blow.

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