The global offshore wind industry has been hit with what some are calling a “perfect storm” of economic challenges. It’s a vulnerable moment as the U.S. continues to build out the offshore wind energy we need — enough to provide clean, domestic power to millions of homes and good jobs to hundreds of thousands of workers. Given what we stand to gain, I am confident that America’s leaders will not shy away from the heavy lifting it takes to scale a new industry that can deliver so much for our communities.
Consider how these economic challenges came to be. U.S. offshore wind began to take hold in the years leading up to and during the COVID-19 pandemic. After bidding and contracting for long-term prices based on a pre-COVID financial outlook, the ground shifted substantially underneath the global economy and the offshore wind industry. Economic challenges common to the cyclical nature of the energy industry were combined with pandemic-driven inflation, high interest rates and strains on the global offshore wind supply chain. Projects are now moving forward amid these economic headwinds — and some are currently unable to overcome them.
It’s clear that we need to build a stronger foundation for American offshore wind power, one that establishes a sustainable, cost-competitive industry. Central to that foundation is seeing U.S. projects built — not canceled or delayed. Offshore wind projects are what bring the supply chain and infrastructure investments that drive prices down. They are what deliver offshore wind’s transformative benefits to our communities, and how we actually build our clean energy future.
Even in the midst of today’s financial challenges, the fact remains: The U.S. has a world-class offshore wind resource which is essential to meeting our nation’s clean energy goals. Many states’ goals are also dependent on offshore wind — that’s why we’re seeing state leaders reaffirm their commitment to this critical clean energy resource.
In October, New York selected projects that will supply more than four gigawatts of offshore wind electricity, and New Jersey will soon announce their third set of project awards. Meanwhile, Massachusetts, Rhode Island, and Connecticut announced a first-ever multi-state procurement plan to lower costs, and California enacted legislation for a central procurement mechanism to help meet its ambitious floating offshore wind goals. And for the earliest projects caught up in the “perfect storm” of pre-COVID contract prices, New York, Massachusetts, and Connecticut are offering a range of rebidding opportunities. Rebidding projects swiftly, efficiently, and in consideration of ongoing permitting and contracting processes is critical to offshore wind’s build out. These are the kinds of critical and creative solutions needed to ensure more resilient projects in the future.
The federal government also has tools, and a key part to play, to ensure the U.S. offshore wind project pipeline and related infrastructure and supply chain investments continue to move forward. The Biden administration’s landmark clean energy policy — the Inflation Reduction Act — has already delivered over $310 billion in clean energy investments, created more than 211,000 jobs, and has helped revitalize communities across the country. Broad access to IRA tax credits for U.S. offshore wind development will help address the impacts of inflation facing the industry, further revitalize manufacturing and port communities, and unleash even more transformational benefits for workers, communities, and the environment. Continuing to provide guidance, like November’s Section 48 clarification, for the robust offshore wind investments eligible for the IRA’s benefits can help fully launch this critically-needed clean energy industry so it will thrive — and communities will benefit — for decades to come.
With continued, timely action from our state and federal leaders, America can emerge from this moment with an offshore wind industry strong enough to meet our ambitious and achievable economic, environmental, and energy security goals, and in a way that maximizes benefits for communities who need them most.
There are many reasons to be optimistic about American offshore wind, even in these tumultuous times. Projects currently under construction will soon deliver the first gigawatt of U.S. offshore wind power, the largest project to date was just approved off the coast of Virginia — with prices lower than originally announced — and the industry is already creating thousands of good-paying jobs. These benefits will spread even further as projects continue to develop on all coasts. By using all the policy levers at hand to withstand today’s economic challenges, we’ll keep the U.S. on course to build out offshore wind at the scale we need, unlocking transformative benefits for generations.
Stephanie McClellan is executive director of Turn Forward, a non-profit that seeks to advance American offshore wind power.