29 April 2022
The US is about to build lots of offshore wind – what can it learn from Europe?
WindEurope CEO Giles Dickson moderated the US-EU Energy Council High-Level Business Forum on Offshore Wind in New Jersey on 27 April. The Forum was led by US Secretary of Energy, Jennifer Granholm, and EU Commissioner for Energy, Kadri Simson. It was held in conjunction with the International Offshore Wind Partnering Forum (IPF) Other speakers included Ditte Juul Jørgensen, Director-General for a energy in the EU Commission and CEOs from Vestas, Siemens Gamesa, GE, Ørsted Iberdrola, EDF, Fred Olsen and Principle Power.
The Forum facilitates discussion between US and EU private sector and Government leaders about how to speed up the development of an offshore wind industry as part of a global supply chain.
The US currently only has 42 MW of offshore wind capacity installed but it has high ambitions. In 2021 the Biden Administration announced a target of 30 GW by 2030. And there are plans for projects along all the coasts of the US. The most advanced projects are currently all located in the Atlantic. The first large-scale projects are projected to start generating electricity there next year.
There are some important lessons the US can learn from Europe if it wants to effectively expand its offshore wind capacity quickly.
The set-up of auctions will make a big difference – also for seabed leasing. It is important to introduce a price cap for seabed leasing auctions. If there’s no price cap developers can bid at very high prices. Afterwards they simply pass on these costs to consumers. Demanding extra upfront payments therefore only increases the costs of offshore wind. Price ceilings ensure that new offshore wind volumes are delivered at the lowest cost for consumers and taxpayers.
Local content requirements are not the most helpful way forward. They can lead to higher costs and in turn slow down the development of the industry. Some European governments have signed sector deals with the offshore wind industry, but these have not set legal requirements for local content. With the growth of market demand the US will naturally develop a local manufacturing base for offshore wind.
The industry needs to have clear visibility on auction schedules and on volumes. This is key to industrial planning. It allows the wind industry to realise long-term investments in factories, infrastructure, skills development, test facilities, research and innovation.
If it wants a fast expansion of offshore wind Federal, State and local Governments need to have efficient permitting procedures. This includes clear plans for maritime spatial to avoid conflicts at sea. Many projects in Europe have been slowed down because of slow and unclear permitting.
WindEurope CEO Giles Dickson said: “The US is about to see a big take-off in offshore wind. The European wind industry is playing a big part in this, providing equipment and helping to develop projects. And Europe has learnt a lot of lessons, both good and bad, in the development of our first 28 GW of offshore, which we’re delighted to share with our American friends. It’s great that US and EU now have a business/government forum for such exchanges – and to help us work together to meet the common challenges and establish Transatlantic cooperation that can help drive the growth of offshore wind worldwide.”
US Secretary of Energy Jennifer Granholm said: “Achieving our country’s ambitious goal of deploying 30 gigawatts of offshore wind power by 2030 will simultaneously advance our own energy security, help combat the climate crisis, and support an estimated 77,000 jobs in America. By convening a U.S.-EU Energy Council High-Level Business Forum on Offshore Wind Power, we seek to foster transatlantic partnerships that will accelerate investment to build domestic supply chains and deploy offshore wind farms in the United States.”
European Commissioner for Energy Kadri Simson said: “Our day started with the announcement that Gazprom is unilaterally stopping delivery of natural gas to some customers in Europe. This weaponisation of gas shows once again that we need to move away from Russian dependence. This is where renewable energy comes in. The European Union is already a global leader in offshore wind energy. Today, we have 16GW of installed offshore wind capacity. We put in place the most comprehensive regulatory framework with a view to reach 60GW by 2030 and 300GW by 2050. There is a huge transatlantic business opportunity for our energy security and climate neutrality. We are ready to support this opportunity with our U.S. partners.”