Good Weather Ahead: America's Offshore Wind Revolution

Key Milestones

The Biden administration’s goal to increase domestic offshore wind capacity to 30 gigawatts by 2030 is a strong signal for the technology’s importance to the clean energy transition and meeting climate goals. Industry “firsts” for U.S. offshore wind in the past 12 months have included:

• Breaking ground on the country’s first and second utility-scale projects—Vineyard Wind and South Fork Wind—located off the New England coast near Rhode Island, Massachusetts, and New York.
• Holding a record-breaking offshore wind lease auction off the New York coast. The New York Bight sale brought in nearly $4.4 billion and represents the nation’s highest-grossing competitive offshore energy lease sale in history, including oil and gas lease sales.
• Bringing new wind energy areas to the coasts of the Central Atlantic (North Carolina to Delaware), Pacific (northern California and Oregon), and Gulf of Mexico regions.

Recent Federal Policy Developments

Major new laws in the past two years provide much-needed certainty for the growing industry. The Infrastructure Investment and Jobs Act of 2021 provided foundational funding for U.S. offshore wind, including: $27 billion for improvements to the U.S. power grid’s resiliency and reliability, $2.25 billion for the Department of Transportation Port Infrastructure Development Program, $25 million for the DOT Marine Highways Program, and authorization for energy storage on the outer continental shelf. These programs are designed to ease the construction and integration process for offshore wind developments. The law also appropriates $100 million for wind energy research authorized in the Energy Act of 2020. The Inflation Reduction Act of 2022 included several offshore wind provisions, including financing provisions that BPC identified as an overarching policy need in our Offshore Wind Issue Brief. These include $100 million for activities related to development of transmission for offshore wind energy, updates to existing renewable energy investment and production tax credits, and a new tax credit for the domestic production of wind components and equipment like specialized offshore wind installation vessels.

State Leadership

States are critical in establishing the policy environment necessary to grow the offshore wind industry. The East Coast states of Rhode Island, Connecticut, Massachusetts, New York, New Jersey, Maryland, and Virginia have collectively committed to procuring 32 GW of offshore wind capacity by 2030. In June 2021, a bipartisan group of nine East Coast governors wrote to the Biden administration outlining their priorities for offshore wind expansion. Then in June 2022, the administration announced the Federal-State Offshore Wind Implementation Partnership, formalizing workstreams between 11 states (the original nine plus North Carolina and Pennsylvania) and the federal government (Departments of the Interior, Energy, and Transportation, and the National Oceanic and Atmospheric Administration). This partnership is in line with BPC’s recommendation for enhanced federal, state, and interregional coordination, and seeks to strengthen the U.S. offshore wind supply chain through coordination with existing efforts in domestic manufacturing capacity, logistics networks, ocean co-use, transmission and interconnectedness, and workforce development.

Figure: Expected Offshore Wind Installation 2022-2029 (MW)

Source: Global Offshore Wind Report 2022, Global Wind Energy Council

West Coast states are also getting into the act. California recently set targets of 2-5 GW of offshore wind by 2030 and 25 GW by 2045, and Oregon is planning for up to 3 GW of floating offshore wind projects by 2030. In addition to federal and state policy support, the U.S. offshore wind industry will need to engage local communities to guarantee success. As more projects get added to the pipeline, a regional approach to community engagement may streamline and enhance individual outreach conducted by each project developer.

Fast Facts

To provide context for these historic federal and state announcements, here are four quick facts on offshore wind.

1) In the next two decades, offshore wind is on track to grow to a $1 trillion global business.

The International Energy Agency found that in the next two decades offshore wind could become a $1 trillion global business. Currently, Europe, particularly northern Europe, is the global offshore wind industry leader, but other regions are quickly ramping up their aims to incorporate offshore wind in their energy mixes, particularly China and other nations in Asia. In 2021, 80% of the 21.1 GW of new offshore wind capacity added globally was in China. The United States is laying the foundation for its own offshore wind industry, supply chain, and workforce, but what happens over the next few years will be critical to ensure that the United States can be a competitive and key participant in the growing global industry.

Figure: Offshore Installations, Global (MW)

Source: Global Offshore Wind Report 2022, Global Wind Energy Council

2) U.S. offshore wind installed capacity is projected to increase by orders of magnitude by 2050, even if no new supportive polices are enacted.

BPC, Third Way, and Clean Air Task Force came together under the Decarb America Research Initiative to analyze pathways to net-zero carbon emissions by 2050. We found a range of growth scenarios for U.S. offshore wind capacity and domestic energy production. Under a business-as-usual scenario, offshore wind capacity is projected to grow from today’s 42 megawatts to reach 18 GW by 2030 and 65 GW by 2050. DOE’s findings in the 2022 Offshore Wind Market Report show similar growth—U.S. offshore wind project development and operational pipeline grew to a potential generating capacity of 40 GW by mid-2022. However, if policy support for offshore wind is strengthened in combination with the implementation of other sector-specific climate policies, hundreds of gigawatts of offshore wind capacity could be deployed by mid-century. For more information, visit the Decarb America website and explore the interactive offshore wind maps.

3) Actively pursuing and building out a robust U.S. offshore industry could generate billions of dollars and create tens of thousands of jobs.

There is growing bipartisan political support for offshore wind in the United States, especially since stakeholders are bullish on the economic and jobs impacts the industry could have. The Vineyard Wind project alone is expected to create 3,600 jobs and generate power for 400,000 homes and businesses.

A Wood Mackenzie study finds that total investment in the U.S. offshore wind industry will be $17 billion by 2025, $108 billion by 2030, and $166 billion by 2035. The economic benefits of offshore wind would not be isolated to the coasts—many states, particularly those with manufacturing hubs and marine services industries, are well-placed to engage with the offshore wind supply chain.

4) Unlocking these benefits will require a policy and business environment that efficiently and effectively enables such development.

The amount of U.S. offshore wind energy generating capacity that comes online will depend on multiple factors, such as the extent and nature of federal support, the robustness of state policies and related regional coordination, and the confidence of project developers. The National Renewable Energy Laboratory estimates that the technical resource potential for U.S. offshore wind exceeds 2,000 GW of capacity. However, the technical potential for offshore wind in the United States is constrained by supply chains, the diversity of technology needed based on geography (i.e., floating vs. fixed bottom platforms), port infrastructure, transmission infrastructure, and the need for balance among marine use activities, like fisheries, among other things.

Conclusion

Overall, aggressive federal, state, and local support for the U.S. offshore wind industry will pay dividends in terms of domestic energy diversification, jobs and economic growth, and meeting climate goals. The United States possesses all the key elements necessary for a strong, internationally competitive offshore wind industry, and with forward-thinking national and subnational legislation and planning, is poised to realize the many benefits of this unique industry.