Equilibrium & Sustainability

US offshore wind sees strong 2022, but challenges lie ahead: market survey

AP Photo/David Goldman, File
FILE – The five turbines of America’s first offshore wind farm, owned by the Danish company, Orsted, stand off the coast of Block Island, R.I., in this, Oct. 17, 2022. The wind farm allowed residents of small Block Island to shut off five diesel generators. Tuesday, Dec. 6, marks the first-ever U.S. auction for leases to develop commercial-scale floating wind farms in the deep waters off the West Coast.

The U.S. offshore wind sector had a strong end to 2022 but is bracing for multiple economic challenges ahead, according to a new market survey.

The least three months of the year were particularly successful for the industry due to key port investments and the first-ever federal offshore wind auction on the West Coast, the Business Network for Offshore Wind found in its 2022 fourth quarter report.

Nonetheless, a combination of supply chain bottlenecks and surging commodity prices could impede further progress this year, the nonprofit warned.

“The U.S. offshore wind industry remains on solid footing, even with the speed bumps and setbacks we saw emerging at the end of 2022,” Liz Burdock, president and CEO of the Business Network for Offshore Wind, said in a statement.

“We cannot rest on the long-term promise of this industry, however, and we must work to overcome our known challenges,” Burdock added.

Among the biggest 2022 achievements identified by the group was California’s wind auction, in which the federal government leased a total of 4.6 gigawatts for $757.1 million after two days of fierce bidding. 

This future offshore wind capacity will be enough to power more than 1.5 million homes, according to the Department of the Interior.

The five developers that won bids all have projects under development on the East Coast, the nonprofit group noted in the quarterly survey. 

Other 2022 offshore wind auctions netted $4.37 billion off the coasts of New York and New Jersey, and $315 million in Carolina Long Bay, the survey stated.

The California winners will be paying prices comparable to those in the Carolina auction, despite the fact that the deeper Pacific waters necessitate “cutting-edge floating wind turbine technology,” according to the report.

Another accomplishment cited by the report authors was a domestic supply chain “buttressed by key growth” in the steel sector and in major port investments in California, Connecticut, Massachusetts and New York.

Nonetheless, the report also cautioned that inflationary conditions disrupting European offshore wind have “finally reached U.S. shores, resulting in project delays.” The first such delays hit the Massachusetts shoreline in October, it said.

“Inflation, high interest rates, rising commodity prices and supply chain shortages have created havoc on the global economy and impacted renewable energy development,” the report stated.

At the same time, however, the authors also pinpointed the Gulf of Mexico as a region with immense offshore wind potential.

The area could generate nearly 9 gigawatts of offshore wind — or enough to power nearly 3 million homes, the report stressed.

The federal government has officially designated two wind energy zones off the coasts of Texas and Louisiana — the final step before officially auctioning lease areas in mid-2023, according to the report.

“This new year is a critical moment to double down on coordinated action,” Burdock said.

Such action must focus “on building a strong domestic supply chain that will continue moving the industry forward,” she added.


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