The east coast of the United States is on the verge of a 19.3-gigawatt boom in new offshore wind capacity by 2035 that would dwarf the 30 MW currently operating offshore across the country, according to analysis released last week by S&P Global Market Intelligence and S&P Global Platts.
“Legislation, regulation and, now, approved power purchase agreements are encouraging the development of the new capacity,” reports the Institute for Energy Economics and Financial Analysis (IEEFA), with the result that “grid operators may have to modify their procedures to accommodate the additional resources.” The article summarizes commitments for 9,000 megawatts in New York State, 3,500 MW in New Jersey, 2,000 MW in Connecticut, 1,600 MW in Massachusetts, and 1,000 in Rhode Island.
The Associated Press says the Connecticut program will seek to deliver 30% of the state’s electricity from offshore resources, while positioning the jurisdiction as “a central hub for the offshore wind industry in New England”.
With much of the U.S. wind industry scrambling to complete projects before the current federal Production Tax Credit (PTC) phases out in 2024, Greentech Media is looking ahead to an intense but brief flurry of new development. “Wood Mackenzie expects more than 30 gigawatts of new U.S. wind capacity to reach completion in the 2019-2021 period, a concentrated burst of wind farm construction never before seen outside China,” the U.S.-based industry newsletter states. “However, WoodMac sees the U.S. wind market cooling off considerably after that, dipping into the four- to five-gigawatt-per-year range from 2022 and onward, despite an anticipated lift from the incipient offshore sector.”
But Greentech also cites at least one company showing interest in longer-term, subsidy-free projects.
“We see a little bit of a countercyclical opportunity because a lot of the large strategic investors—not all of them, but some—are really focused on the phaseout,” rather than investing in new projects, said Michael Rucker, CEO of Colorado-based Scout Clean Energy.
“We are actively originating greenfield projects with a time horizon of three to five years,” he added. “We’re looking to have a sustainable pipeline of wind projects that goes beyond the PTC phaseout period.” Rucker cited emerging opportunities in new turbine technology, with major manufacturers GE, Siemens Gamesa, and Vestas all unveiling new designs for onshore wind machines above five megawatts’ capacity. He said he also expects longer-term efficiencies once the federal tax credit disappears.
“I shouldn’t be critical of the PTC because I’ve taken advantage of it in every project I’ve ever been involved with. But in a way, it’s a very inefficient way to structure a market,” he told Greentech. “The stop-start nature of the PTC historically is not efficient for anybody—not for developers, not for manufacturers, and not for the commodity markets where we draw the components we need for turbines.”
Add the legal and financial complexities of PTC projects, and “it crowds out a lot of smaller investors that I think would like to participate in projects,” Rucker said. “Would I turn down an extension of the PTC? Probably not. But I’m not lobbying for one.”