State demand for offshore wind nearly doubled in 2022: report

Source: BY SHARON UDASIN, The Hill • Posted: Tuesday, February 21, 2023

FILE - Offshore wind turbines stand near Block Island, R.I. on Aug. 15, 2016.
(AP Photo/Michael Dwyer, File) FILE – Offshore wind turbines stand near Block Island, R.I. on Aug. 15, 2016.

Demand for U.S. offshore wind nearly doubled last year while investments in the sector tripled, a new report has found.

These achievements marked not only a “transformative year” for the industry, but also “an inflection point” that enabled its transition to commercial-scale operations, according to the 2023 U.S. Offshore Wind Market Report.

The annual survey, produced by the nonprofit Business Network for Offshore Wind, analyzed both industry growth in 2022 and the challenges ahead in the coming year.

“From surging investments to cutting-edge floating turbine technology on the West Coast, passage of the landmark Inflation Reduction Act, and federal regulatory efforts that bring more certainty to permitting, 2022 kicked the American offshore wind industry into full throttle,” Liz Burdock, president and CEO of Business Network for Offshore Wind, said in a statement.

Offshore wind-related contracts in 2022 surged by 36 percent — with a majority of those bids awarded to U.S. companies, according to the report.

Long-term offshore wind targets set by states rose 79 percent in 2022, particularly after California called for 25 gigawatts of offshore wind generation and Louisiana, New Jersey and Rhode Island announced new goals, the survey found.

Just two months ago, the first auction for wind development off the country’s Pacific coast raked in a total of $757.1 million after two days of bidding.

That auction, which was the third major offshore lease sale in 2022, will allow five companies to develop about 4.6 gigawatts of offshore wind — or enough to power more than 1.5 million homes.

Throughout 2022, the U.S. offshore wind market saw $9.8 billion in new investments — more than three times those of the previous year, according to the Business Network market survey.

While this growth was fueled primarily by lease auction fees, more than $4.4 billion went to port infrastructure, supply chain development and transmission, the report found.

Since 2014, total new investments driven by offshore wind activity have reached $17 billion, the Business Network stated.

The group noted that membership in its own supply chain database, which allows companies to engage with each other, jumped 27 percent from the previous year.

The report found the Biden administration is on track to meet its goal of having seven new leasing areas and 16 completed project environmental reviews by 2025.

Nonetheless, the Business Network warned that the offshore wind industry will likely fall short of installing 30 gigawatts of offshore wind by 2030 — a long-term goal set by the administration.

A rapid scale-up of leasing off the coast of New York could help close this gap, the report found.

The survey forecasted that over the course of 2023, the U.S. offshore wind industry will move from demonstration to commercialization phase, as the first two commercial-scale projects — in Massachusetts and Rhode Island — will begin producing power.

These two states, as well as New Jersey and New York, will also likely finalize new rounds of offshore wind procurement this year, according to the report.

Funds from the Inflation Reduction Act passed by congressional Democrats will also help harness the power of offshore wind output for uses beyond state electricity demands, the survey found.

Some such applications include green hydrogen production, green ammonia production and carbon sequestration initiatives, according to the report. The first such pairing between green hydrogen and offshore wind occurred last year in Louisiana.

“As the industry makes the transition from demonstration to commercialization amid global economic uncertainty, we must double down on a national industrial strategy,” Burdock said.

Such a strategy must focus on bolstering the growing “offshore wind supply chain and manufacturing base in the United States,” she added.