By Richard Streeter, Partner & Joshua Belcher, Counsel
Although coastal states and the federal government have been working to streamline the process for obtaining wind leases and permitting the necessary facilities, offshore wind development in the U.S. remains a highly complex and politically charged endeavor.
Collaboration with experienced European offshore wind players is ideal, at least in the short term, before the U.S. can truly go it alone.
Here are five tips for successful offshore wind development in America.
1. Build a buddy system
U.S. offshore wind developers are wise to “buddy-up” with European players in ownership of the next wave of offshore wind projects. In fact, new entrants have already used this approach in the European sector, so it is nothing new (for example, ScottishPower Renewables developing the West of Duddon Sands Wind Farm with Ørsted).
Partnering up is ideal for two reasons: to obtain lessons learned from an experienced counterpart — and particularly given the unique state and federal requirements applicable to coastal and offshore development, and current political climate in the U.S. Secondly, there’s a risk that European developers will simply go it alone in the U.S.
To stay relevant in their local market, U.S. developers must get involved in the process of developing and constructing offshore sites with the support of European experience, so projects get built without delays.
2. Create regional hubs for offshore wind
Ports along the Eastern seaboard are already revitalizing infrastructure and development offshore wind hubs. For example, the Brayton Point Power Station — a former Massachusetts coal plant — will serve as a logistics port, manufacturing hub, and support center for the offshore wind sector.
Grouping suppliers and developers at a single location or using shared facilities encourages scale of growth, shared wisdom, and economies of scale. After years of projects built independently, the European industry is moving toward shared construction facilities and centralized storage facilities, vessel fleets, and operations and maintenance bases
3. Sub-contract to local businesses
To ensure projects get built in a timely and efficient manner, reliance on an experienced first-tier supply chain makes sense. However, it is important to encourage local subcontracting with the future in mind. Although unrealistic for a native offshore wind manufacturing sector to develop overnight, it is never too soon to start building a reliable offshore workforce and full-service supply chain in America.
This will provide long-term economic benefits for the states in which the projects are built and the projects. Critically, it will also support the local workforce and their elected officials, securing allies and important stakeholders for future projects.
4. Use existing technology
Though innovation has driven cost reductions in Europe, there have also been some harsh lessons learned along the way (grouted connections, cable failures, etc.). While the temptation is to push boundaries in the U.S. with newer and bigger turbines, a cautious approach is advisable for the first projects. This approach will have a greater chance of success and will give greater comfort to investors and shareholders who may feel the projects already have enough risks in other areas.
5. Seek professional advisors
The second wave of U.S. offshore wind projects will be built by an experienced supply chain. However, an understanding of market opportunities and contractual obligations are crucial in getting the best allocation of risk for a project. So, it’s important to seek out that knowledge as the U.S. market develops to gain a competitive edge and ensure successful project ROIs.
Experienced lenders and investors will be familiar with how projects are structured and contracts negotiated, so it’s worth seeking reliable expertise to mitigate risks and maximize opportunities.