We are anticipating a fast pace of change from an energy perspective post-election with the Biden/Harris administration having pledged to re-join the Paris climate agreement and calling for net zero by 2050.
Renewable energy was a pillar of the election campaign, not only from an environmental stance, but also as a job creation vehicle. It’s expected this will encourage project approvals, job creation and training support and new funds to help with infrastructure needs. All eyes will now be on the global wind original equipment manufacturers (OEMs) such as MHI Vestas, Bladt and Siemens Gamesa to follow through with investments in new locations and manufacturing operations.
There are many companies in the US, particularly in the northeast, that are ready to support the offshore wind industry, but they need projects to fully develop. As project lead times will be more clearly defined, these companies will partner with international suppliers to build the support the industry requires. More clearly defined time frames will also allow for both regional and state training programs to be developed so workers are available when needed and suppliers can scale as the industry grows.
The renewable industry has huge potential for the US and the power purchase agreements (PPAs) in place are a leading indicator of this potential. Previous consent delays gave the OEMs pause as they desperately want to see steel in the water. We now expect to see more rapid project approvals which will lead to construction to enable those large-scale projects and a more predictable pipeline of developments.
Confidence that there will be a robust offshore wind industry and that projects will be approved will drive local supply chains and stimulate greater investment. It will encourage industry clusters to form around projects and existing assets. Importantly, it will give the global offshore wind tier one suppliers the confidence that establishing US operations makes long term economic sense.
A renewable energy strategy driven by the White House will unlock significant investment in the mid-Atlantic region and you only have to look at the New Jersey Windport development as an example of the ambitious state-led impetus for renewable energy. The state is looking at various funding options for a proposed $300 million to $500 million port infrastructure development. Increased support from the White House would be likely to move discussions with OEMs forward from concept to reality.
And it won’t only be larger states that benefit. All major undeveloped (or underdeveloped) locations should see serious discussions regarding investments. The current plan calls for more than 30GW by 2035 and when looking at how current planned and expected power purchase agreements will roll out, in 2025 and beyond there will be over 300 turbines per year installed which will require multiple locations along the entire Atlantic coast.
Whilst the new administration will cause some decision-making headaches for traditional hydrocarbon players, as an industry we also must look to the opportunity. Both oil and gas majors and the supply chain have recently been altering their business narratives. The Biden-Harris administration is likely to bring an acceleration of already-commenced activities to reduce or offset emissions. Of course, some of the global majors are already investing in offshore wind and the supply chain is rising to the challenges of the energy transition, so we are poised for the growth in opportunities within the US.
COP26 in Glasgow, Scotland, next November would provide the perfect opportunity for the new administration to actively demonstrate its climate commitments on the world stage and we can expect renewed confidence in co-operation with other global leaders on climate policies.
About the Author
Jeff Tingley is a senior consultant at Xodus and an experienced Rhode Island business specialist. Xodus has operations in Houston and launched in Boston earlier this year to bring its extensive offshore wind expertise to the USA.