States jockey for jobs in nascent U.S. industry

Source: Saqib Rahim, E&E News reporter • Posted: Friday, February 17, 2017

To Paul Rich, it’s obvious where the offshore wind industry should build its factories: Maryland.

That’s where regulators are reviewing two projects, including a 750-megawatt proposal by U.S. Wind Inc. that could go up as soon as 2022. It would be the largest project ever approved in the United States, by far.

Rich, director of project development at U.S. Wind, said that could make Baltimore the de-facto headquarters of offshore wind in the United States.

“If we develop an industrial hub, because of our first-mover advantage in Maryland, perhaps when turbine manufacturers are looking to come to the states, they’d entertain reinforcing a ‘Silicon Valley of offshore wind’ approach and embed it in Baltimore,” Rich said. “Just like all the other great hubs in the world, whether it’s Belgium’s diamond center, Silicon Valley, Britain’s financial center.”

Maryland isn’t alone in its ambition. New York boasts an even bigger wind resource, plus a more aggressive renewable energy policy. Massachusetts, meanwhile, touts a port that it reinforced specifically to handle offshore wind turbines.

All three states intend to build offshore wind farms over the next decade to meet renewable energy goals. They hope utility customers will accept paying more for this pricey power, through power bills or taxes, until its cost comes down (Energywire, Dec. 15, 2016).

A second goal — a quite slippery one in the 21st-century economy — is attracting middle-class jobs that stick. And with Europe firmly in the global lead on offshore wind, it remains to be seen how many of those jobs will arrive on U.S. shores.

The world’s top five manufacturers of offshore turbines are (or were) headquartered in Europe, according to Bloomberg New Energy Finance.

That, after all, is where the market is. Europe has deployed more than 3,500 turbines offshore, according to industry group WindEurope. The United States’ first offshore wind farm, which went live off Rhode Island last year, had five windmills. The manufacturer, General Electric Co., built the most valuable parts in Europe, though the turbine foundations were built in the Gulf of Mexico (Energywire, Sept. 9, 2016).

The European industry supported 75,000 jobs in 2014, according to the Department of Energy. DOE has modeled that a U.S. industry could hit 34,000 jobs by 2020 and multiply by five or six times by 2050.

Going for scale

To encourage the United States to get into the game, the Obama administration auctioned off 1 million acres of federal waters. Massachusetts, Maryland, New York, North Carolina and even California are exploring the resource.

But the offshore wind industry, and the environmentalists and labor unions that support it, has pressed for more. It has urged states to take after Europe: to commit to a large-scale, long-term pipeline of projects.

The “magic number” for that pipeline remains debated. But advocates say it was that scale that helped drive down costs in Europe and birth the industry there.

“Industrial-scale offshore wind manufacturing can create a supply chain, and all the economic benefits that go with it once we have a mature industry here like we do in Europe,” said Lauren Burm, a spokeswoman for Dong Energy Wind Power Inc., the world’s largest developer of offshore wind.

Some states were persuaded. Last year, Republican Massachusetts Gov. Charlie Baker signed a bill requiring utilities to procure 1600 MW of offshore wind by 2027. Last month, New York Gov. Andrew Cuomo (D) said the state will bring 2400 MW of offshore wind online by 2030.

Is 4000 MW enough to flip a factory from Europe to the United States?

“That’s pretty good, and it may be enough to attract some of the earlier movers,” said Bruce Hamilton, a director in the energy practice at Navigant. “Not probably a full-scale turbine manufacturing facility, where you’d do all components. But it may be enough to attract some of the smaller components.”

The question is what’s bankable. A new factory costs hundreds of millions of dollars, so its investors would need a line of sight on how it will make its money.

Hamilton thinks a 500- to 700-MW per year commitment would draw a full turbine facility. Right now, he estimates the demand at about 400 MW per year.

Rich, of U.S. Wind, thinks it would take 3,000 MW of back orders to draw a factory.

If they arrive, factories could bring the kinds of local jobs, and photo ops, that politicians crave. According to the New York State Energy Research and Development Authority, direct jobs from offshore wind can average $140,000 a year in pay and benefits. Supply-chain workers can pull in $70,000 a year. The jobs would range from power engineers to machinists to stevedores.

Long Island wants a piece of the action. Last month, the Long Island Power Authority approved a 15-turbine, 90-MW project off the island’s eastern edge. The developer, Providence-based Deepwater Wind LLC, said it sees 1,000 MW of potential in the area, which sits off Suffolk County’s South Fork.

Roger Clayman, executive director of the Long Island Federation of Labor, hopes they exploit it. He said there’s a defunct nuclear plant on the north side of the island that’s well-suited for a port.

“New York’s got to get in the game,” he said. “If you’re talking about 15 windmills initially and then another 20 windmills after that, or 40 after that, and then you’re talking about three to four other plots around Long Island potentially being developed … then you’re talking about a scale that makes it reasonable, and really price-sensitive, to want to build product here and not ship it across the ocean.”

Deepwater Wind hasn’t yet decided where it will buy the turbines for the 90-MW project. Steve Bellone, a Suffolk County executive, didn’t know how much economic development to expect.

“It’s a little early to tell. The idea of the manufacturing’s not there yet,” he said. “We’re open to anything and optimistic about what this could mean.”

So many moving parts

A typical wind turbine contains some 8,000 parts, according to DOE. They range from the specialized to the standardized

Specialized: the 300-foot blades that must catch the fierce ocean wind without snapping. More standardized: the beefy steel foundations that affix these turbines to the seabed. In between: the 400-foot towers that resemble their onshore cousins but stand taller and stronger.

The parts are made onshore. They’re then taken to a port — one that can carry 300 tons of gear — and assembled into bigger parts. These are motored out to sea, where a specialized ship must provide a steady platform to stick the windmill in the ocean floor.

As with other major projects, the biggest job boost comes during construction, tapering off as the project is completed. Thereafter, a smaller proportion of operations and maintenance jobs remain.

But manufacturing is understood to be a key job engine, not least because it energizes demand in steel and other links in the supply chain.

In a 2014 assessment for DOE, the Global Wind Network (GLWN) said manufacturing accounted for 61 percent of the total value added and jobs growth in the German offshore wind industry.

Manufacturers like to crowd around a port to save on transportation costs, said Hamilton of Navigant.

The United States’ role remains unresolved.

The five turbines off the Rhode Island coast were largely built in GE’s factories in Northern Europe. But their yellow, latticed foundations were made in both Rhode Island and the Gulf of Mexico. Deepwater Wind, which developed the project, said 300 local workers were involved in total.

The United States has more than 500 factories that build parts for wind turbines, according to the American Wind Energy Association. But these factories are geared to onshore wind turbines. None of them can build a blade for an offshore turbine, for example.

In its 2014 report, GLWN found the United States had strong capacities to build towers and generators for offshore wind turbines. But it said that on blades and jacket foundations, the United States would need “major capital investment” to compete. On subsea cables, the United States had no capacity, GLWN said.

Northeast states are trying to figure out who should do what — and trying to avoid costly redundancies.

This year, New York, Massachusetts, Rhode Island and Maine are hoping to release a “road map” that shows how they can jointly maximize the size and value of the industry.

Not every state can be the “hub,” experts admit. But they hope to at least break off some share of the total industry.

Doug Copeland, regional development manager at EDF Renewable Energy, said the industry shouldn’t make excessive promises about manufacturing.

“If one state gets the tower assembly site, or the jacket assembly site, that’s it as far as that aspect … that’s going to be it. There’s not going to be more of those,” he said at an American Wind Energy Association conference last year. “It’s like asking three women to marry you at 10 o’clock on a Saturday. If they all show up, you’re not marrying any of them.”