New Year, New Energy Excitement for the US

New Year, New Energy Excitement for the US

The offshore wind industry has faced many challenges over recent years; especially in and around 2020. The COVID-19 pandemic shook the global economic state, increased interest rates and drastically heightened inflation. This article will examine the state of the offshore wind market in the US, and compare its state in 2023 with its future in 2024 and beyond.

As many people will be aware, the offshore wind industry witnessed the United States develop far slower post pandemic compared to other European regions and the rest of the world! Perhaps, the US lack of government funding contributed to this fall back by not providing sufficient subsidies for the market, whilst also failing to draw up other rules and regulations at the same time. Additionally, other factors regarding permitting delays, environmental concerns and issues surrounding infrastructure development have slowed down the progress of projects and have temporarily prevented significant growth and advancements for the market.

Macroeconomic pressures have also had a dramatic effect on slowing down market growth in both Europe and the US. Unsurprisingly, increases in interest rates and raw material costs have negatively impacted our offshore projects which has sadly led to the delay or cancellation of many designs.

Investment enthusiasm also dropped in 2023 - proposed by a mix of inflation, soaring raw material costs and vessel shortages. Higher equipment and electricity costs have also left the wind industry, including utility developers and turbine manufacturers, under pressure caused by severe supply-chain disruptions and fixed energy tariffs that are no longer economical for numerous projects in a higher-cost environment. From this, the offshore market is facing more challenges due to its complexity of projects and longer time periods from permitting to commissioning.

The US - 2024

Offshore windfarms continue to be a crucial method of clean, renewable energy for the US in 2024, despite years of uncertainty after the pandemic and a brutal year of financial and environmental challenges in 2023. In fact, despite the turbulence which occurred, the offshore wind sector is predicted to rebound in 2024 alongside interest rates and inflation falling. With the market largely stabilising and returning to growth, the next 12 months certainly have the potential to reboot the US offshore wind industry. As an industry, we must encourage supply chain development, further investment and renewed shipbuilding activity to ensure mass enthusiasm is injected back into the US market!

Exploring the Top Offshore Wind Development Projects of 2024.

• The Us plugs in it’s first large offshore wind farm as developers play catch-up! Vineyard Wind Development - A Significant milestone met in January when the country’s first large scale project supplied first power to the Massachusetts grid. The 5 MW turbine will be joined by 61 additional turbines to provide 806 MW of power to the grid by the end of 2024. This will be enough to power 400,000 homes and businesses in the US. The project will also help deliver a boost to Joe Biden’s ambitions of a proliferation of coastal wind turbines to help combat the climate crisis.
• During 2024, the states could award as much as 1550 of new power offtake, 60% of which will be used to replenish lost contracts! Despite global economic challenges hindering industry progress throughout 2023, we are witnessing the industry press forward with new power contracts being executed in states such as New York, New Jersey and Massachusetts remain dedicated to offshore wind development and investing in a domestic supply chain.
• There are many offshore wind developments either scheduled or anticipated for the rest of 2024. New York is considering offshore wind projects with a minimum of 800 MW and a maximum of 1.4 GW to be awarded with offshore renewable energy credits. Additionally, New Jersey recently announced the results of its third offshore wind solicitation; the fourth solicitation is expected to be revealed within the first half of this year!
• Several offshore wind projects are anticipated to receive approval of their Construction and Operations Plans and are expected to begin construction shortly after. Projects include Sunrise Wind, Southcoast Wind, and Maryland Offshore Wind.

The turnaround for the offshore wind industry in 2024 can definitely be credited and largely driven by a combination of favourable government policies, decreasing interest rates and falling inflation, alongside increasing recognition around the importance of renewable energy sources in combating climate change and ensuring a greener environment. We predict we will see continued development along the East Coast and the West.

In late 2023, BP and Equinor won U.S Government approval for 2.08GW Wind Farm Off Long Island. It will add 2.076GW of wind power capacity to the U.S grid upon its completion by 2028, and is the sixth commercial-scale offshore wind farm project to receive approval from President Biden’s administration. The project includes plans for two offshore wind farms featuring up to 147 wind turbines that could power more than 700,000 American homes each year.

Furthermore, it is expected that the project will support over 830 jobs each year during the construction phase and around 300 within the operations phase.

It is also interesting to dive into the different targets and strategies of achieving net zero emissions between the USA and the UK! It is apparent that there is a rapidly growing concern regarding toxic emissions in all industries globally. Especially for the energy space within the USA, achieving net zero emissions is important for climate change mitigation, economic competitiveness and energy security, which is why it is encouraging to see these targets from the US in comparison to other parts of the world.

• By reaching net zero emissions, the USA will be able to engage in world-wide efforts to capture the rise of global temperatures. This will eventually reduce the likelihood of extreme weather conditions which have an impact on the effectiveness of industry projects.
• Moving towards a low-carbon economy through more eco-friendly infrastructure will also encourage others to participate within the team effort of reaching net zero emissions! Lastly, leading in clean energy technologies will generate more appeal towards the USA industry. Also, the targets made by the USA will better public health through reducing risks of air pollution which we encounter every single day!

So, what can we take from this?

Despite the rocky run ins throughout 2023, the US offshore wind industry is predicted to turn itself around in 2024. As we touched on above, this was due to the state of the global economy, climate change, and a rise in interest rates. However, the exciting new projects confirmed and predicted for 2024 are extremely encouraging in terms of business and industry growth! It is predicted we will continue to see other countries reinforcing their net-zero targets to strive towards a greener, cleaner living space and more efficient method of producing energy over the next 12 months!