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U.S. Wind – March 2024 Market Report

The first quarter of 2024 saw the solidification of the new paradigm for the U.S. offshore wind segment, after several months of high-profile readjustments, where the strong drivers of federal leasing and permitting, procurement of offshore wind by states and developer aspirations appear once again to have found some sort of balance.

New York has delivered on its plan to manage the fallout of awarded projects not passing developer financial return hurdles by re-awarding 1.7 GW of capacity previously awarded at lower rates to Ørsted’s Sunrise Wind and Equinor’s Empire Wind 1.

In all, close to 7.8 GW of capacity has secured offtake agreements in the last six months, all of which is in New York and New Jersey.

Connecticut, Massachusetts and Rhode Island will also collectively procure around 6.8 GW in the coming months, although like the recent New York Round 4 solicitation, much of the capacity is expected to come from projects that had agreed offtake cancellations in 2023, including Commonwealth, Park City and SouthCoast Wind.

While states and developers are resolving challenges around power offtake agreements, BOEM and other federal agencies are advancing the permitting of projects, approving the construction and operation plans for the 2 GW Empire Wind 1 and 2 developments, and progressing to the final stages of Avangrid’s 2 GW New England Wind, covering Commonwealth and Park City offshore wind farms. BOEM is on track to have approved the construction and operations of a cumulative of close to 13.5 GW of capacity by the end of 2024.

The South Fork project has seen its last turbine installed and commissioning activities have been completed. The 132 MW wind farm is exporting power to New York from all 12 turbines. Vineyard Wind is progressing. By the end of 2024, 6 GW of offshore wind capacity will be either commissioned, nearing commissioning, or starting construction in the Northeast and Mid-Atlantic. Our long-term project pipeline exceeds 93 GW of capacity, and we anticipate that FIDs will be taken on a cumulative 23 GW within the next 36 months.

Despite these positive indicators, there are signs of ongoing supply chain challenges, whether domestic U.S. or overseas supply.

Firstly, close to 15 GW of capacity is expected to be permitted in the period between November 2023 and the end of 2024, resulting in projects potentially competing for the same supply chain resources.

Secondly, several announced offshore wind component factories and construction vessels are behind schedule.

Next, we note from Vineyard and South Fork that foundation and turbine installation vessel productivity is lower than one sees in commercial scale European projects. Our detailed analysis of the progress at Vineyard Wind 1 and the availability of construction vessels indicates that the project still faces some challenges to maintain a 2024 commercial operations date.

And finally, some projects, such as Vineyard Wind, Revolution Wind and CVOW-C are either planning to or having to make contingencies to avoid using the same construction vessels in the same periods. We have identified foundation installation vessel supply as a critical path item for U.S wind projects, especially in the context of the plans of Dominion and Ørsted to commence offshore construction on Coastal Virginia and Revolution Wind in the coming months, where a total of 240 monopiles will require installation. We see this potential challenge becoming greater in 2025 and 2026 as activity is growing in western Europe that will call on similar vessels to that required in the U.S. As the global offshore wind segment enters a period of sustained growth, we anticipate increased stress in the supply chain, possibly impacting U.S. project schedules and financial returns.

On the back of federal aspirations to deploy 15 GW of floating wind by 2035 and state plans to deploy at least 30 GW of floating wind by 2045, we take a deeper diver in the emerging U.S. floating wind segment. We anticipate floating wind projects to be deployed in state and federal waters on both the Atlantic and Pacific coasts over the next decade, with a total capacity of around 11 GW. This activity translates to around 750 floating turbines, over 2,000 mooring lines, and more than 12,000 kilometers of subsea cables. Given the physical size of the floating turbines and the water depths in which they will be deployed, this is a very significant undertaking, and there are currently gaps (and therefore opportunities) throughout the floating wind supply chain. 

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