Panticon Wind Expert Offers US Offshore Wind Outlook [Part I]

As we prepare for the Offshore Wind Project in the U.S. webinar, part of Breakbulk Americas: The Digital Special, we turn to our expert in Denmark, Thomas Poulsen, managing partner at Panticon, who recently published a white paper on Breakbulk looking at the global wind market, along with a deep dive into Europe’s projects.

European companies such as Ørsted Energy (appearing on the upcoming webinar) are active in the still new US offshore wind sector, bringing their expertise to projects up and down the U.S. East Coast. Here, Thomas provides insight into the potential for offshore wind in the U.S. and reveals the waters that will be targeted for development following the Atlantic projects. In part II of this story, he identifies the opportunities for logistics and transport companies to help build this promising supply chain.

Leslie: Since the pandemic hit, wind projects seem to be one of the few types of projects where cargoes continue to move. Why?

Thomas: Wind is an energy form that is not necessarily fully regulated by supply and demand. It is an energy form that in some countries requires a bit of government tax breaks subsidies. It is not really a market driven energy form because this desire to create a cleaner world is something that governments are driving now inside the wind market.

When we deal with governments, we often have very strict deadlines and milestones within projects. We often see a planning span that is much longer than just one, two or three years with other projects. Wind projects are increasing in velocity over the coming years, and it's not stopping because now governments are saying, “What should we do to get businesses moving again?

This week we Boris Johnson in the UK say that they need to move to larger targets for wind energy in the UK than what has been planned so far. They very much see renewables as a way to kind of get out of the doom and gloom that Corona leaves behind.

Leslie: How about the cost of wind energy compared with other energy sources?

Thomas: There are different ways that you can compare energy forms when it comes to cost. One way is to say, do we need tax subsidies or not? The first offshore windfarms that will be constructed globally without tax subsidies will come online to the grid in 2022 and 2023 in Holland and Germany.

There are no subsidies in the offshore wind industry in India, Taiwan, China, or in the U.S. and Brazil for that matter. Just because you can see that it's being done in Holland or in Germany, it takes some years to build the supply chain and subsidies may be needed in countries without it.

Another way of looking at it is to look at what's called levelized cost of energy. That's really a sort of complex math formula that says over the lifespan of an energy plant it will generate so much energy that can be sold against the cost to construct the plant, run it and break the plant back down. Think of the Hoover Dam: we put in all that concrete, we run the damn for so many years, and if I were you, I wouldn't walk under it. I think it needs to be demolished pretty soon.

It's become cheaper to produce the turbines and to run and maintain the turbines. A number of countries are actually seeing that it is cheaper from a levelized cost of energy perspective to run wind energy than several of the more traditional forms such as oil, gas and nuclear.

Leslie: What is the potential for offshore wind in the Americas?

Thomas: The U.S. has talked about offshore wind for a long time. In 2018 we saw the first five test turbines go up, and we've just seen two more go up this year. So now, in a country with 330 million people, we now have seven turbines.

It's very much a “hurry up and wait” situation where you've got many governors from many states involved along with the federal government. Offshore wind sites are controlled by a federal body and the federal system in the U.S. does not have an offshore wind target or an offshore wind ambition.

The current administration can certainly see that it's great to auction off potential water areas and make a lot of money. After you've done the auction then you make a bid and you say, “OK, now all of you who won the auctions can now bid for a small part of it.” So, after you've auctioned it and gotten a lot of cash, then you put a bid out and only some of the folks who won the auction can then actually get to produce something. And that's only if you can get the federal permits. We’ve got this quite kind of wait and see game at the moment where we move one step ahead and we take three steps backwards.

Once private companies make financial investment decisions and decide to move projects forward, they have to hope the government at that time will honor the previous commitments. You need to have ice in your stomach at the moment.

When we look at the West Coast, we have a different situation. Analysis is being carried out because the U.S. West Coast and Hawaii really are more suitable for floating turbines, a fairly new development compared to the East Coast where turbines are connected to the seabed, a method that’s been in use for around 30 years. The floating offshore wind business is still very embryonic. It's at its infancy stage and not expected to reach a cost level that's remotely competitive until 2025 to 2030.

At the time when the plans for the Gulf were the most advanced, you also had to consider things like hurricanes and the wind technology was not yet at a stage where it was safe enough to put up turbines in the water. Since then states like Texas have pulled back on their offshore wind plans, but it would have been maybe the best place to actually do something bigger in size because you do have the port infrastructure that receives a lot of turbine parts already.

With lots of heavy-lift capacity in place, we wouldn't have to create new ports and create new infrastructure and move all these cranes and heavy lift vessels around to the East Coast or the West Coast. We kind of have it all there. But it looks like we'll start in the northeast and then move down.

I do think we’ll see some demo sites for floating turbines off the West Coast just like we see right now in other demonstration areas like Japan, France, Scotland and Norway. The US will join the leading edge of floating.

Read Part II: “How to Enter the US Offshore Wind Supply Chain”

Photo credit: Ørsted Energy  

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