Offshore wind build-out 'quarter lower than expected' as cost squeeze bites - Recharge
Offshore wind build-out 'quarter lower than expected' as cost squeeze bites | Recharge
Offshore wind specialist TGS | 4C Offshore has slashed its four-year forecast for global build-out by 25% after assessing the impact of soaring supply chain and capital costs on projects.
The quarterly global market report, published today (Monday), analysed the negative impact of higher inflation, rising capital costs and supply chain disruptions on the sector and found that out of 113 offshore wind projects studied, 15GW-worth of capacity is facing financial stresses related to the macroeconomic context, with the problem most significant for those securing power offtake contracts between 2019-2022.
Related Knowledge Center: Offshore wind energy
Over the next decade, U.S. offshore wind power is expected to grow from a single 30-megawatt wind farm off Rhode Island to more than 2,000 MW of capacity along the Atlantic Seaboard. There are contracts for wind power off the coasts of Massachusetts, Connecticut, New York, Maryland, New Jersey, Rhode Island, and Virginia.
The National Renewable Energy Laboratory has estimated the United States has over 4,000 gigawatts (GW) of offshore wind potential, enough to power the country four times over.
The growth in part being spurred by state solicitations, including in New York, where then-Gov. Andrew Cuomo (D) set a commitment of 9,000 MW of offshore wind by 2035, and in Connecticut, where in June 2021, Gov. Ned Lamont (D) signed legislation authorizing the construction of 2,000 MW of offshore wind by 2030.
The offshore development is also being driven by an investment tax credit set to end in December 2019 and is equal to 12 percent of expenditures. U.S. Sens. Susan Collins (R-Maine) and Tom Carper (D-Del.) have introduced a bill to extend the tax credit for up to eight years.
The Interior Department has held eight competitive lease sales that resulted in 15 offshore wind leases over 1.7 million acres that has the potential for 21 GW of capacity. In February 2022, the Bureau of Ocean Energy Management completed a bidding process that realized $4.37 billion for 488,000 acres across six lease areas in federal waters off New York and New Jersey.
Projects have also been proposed off the Southeast coast, off California and Hawaii, and for the Great Lakes.