(Kevin P. Coughlin/Office of Governor Andrew M. Cuomo)
A new wind blows steadily along the U.S. East Coast, launching a whole new industry with New York City at the center of it all. Until three years ago, all wind energy in the U.S. came from land-based turbines. Today, the East Coast looks to a pipeline of offshore wind (OSW) energy projects, or ocean-based wind farms, that could generate more than 20 gigawatts (or 20,000 megawatts) of power within 10 years. Compare that with Europe, the leader in offshore wind energy, where it took 30 years to install 18.5GW of capacity.
To put those numbers in perspective, consider how offshore wind energy would change the game in the most load-strained parts of New York State. According to the plan, offshore wind energy could power up to one million homes in New York City and Long Island within five years. That energy would be generated by two projects: Sunrise Wind, a joint venture between the Danish energy company Ørsted and New England’s Eversource; and Empire Wind, a project of the Norwegian company Equinor (previously known as Statoil).
The two projects are expected to be operational by late 2024 and will generate 1700 megawatts of electricity. That same year New York City buildings — responsible for nearly 70 percent of the city’s carbon emissions — will start being held accountable for their pollution under the city’s Climate Mobilization Act. The legislation requires that the city’s buildings, over 25,000 square feet, cut carbon emissions by 40 percent by 2030 and 80 percent by 2050. In light of these benchmarks, New York’s aging buildings will not only have to become energy-efficient but connect to a renewables-based electric grid as well.
That’s where offshore wind energy comes in. To be sure, the biggest push is coming from Albany, but the main beneficiary will be New York City. New York State’s climate bill, the Climate Leadership and Community Protection Act (CCPA) requires that 70 percent of the state’s energy come from renewables by 2030 and 100 percent by 2040. New York City consumes nearly 60 percent of the state’s energy, the bulk of which currently comes from natural gas and nuclear power.
A map showing the Empire Wind and Sunrise Wind turbine locations, as well as the ports that would play a role in assembling and supplying equipment to the wind farms. (Credit: New York State Energy Research and Development Authority)
Announcing the Empire and Sunrise Wind projects in July, New York governor Andrew Cuomo, with Vice President Al Gore beside him, sent a powerful signal: offshore wind power in the U.S. will set sail from New York Harbor. New York City sits at the middle of a coastal corridor that stretches from Maine to North Carolina, where shallow waters make it easy to install turbines and the strong, consistent winds lead some to speculate that the East Coast could generate enough clean energy to power up the entire United States. Fortuitously, the timing of peak offshore winds corresponds with daily peak electricity demand in coastal cities.
But offshore wind is more than an energy project — it’s an infrastructure project. To make OSW a reality, New York City needs ports that are physically capable of supporting the manufacturing, assembly and staging of large wind turbines — some of which are tall enough to rival the Chrysler Building. Is New York City ready for these massive projects that could put more than 150 wind turbines into the ocean? And what kinds of jobs will offshore wind energy investments create when the industry is still largely dependent on European technology?
OSW has finally come to the US because market forces now buttress the East Coast’s natural advantages. Factors such as European governments’ support of renewable energy and big business’ bet on offshore wind have combined to make OSW cost-competitive worldwide. The global benchmark price of OSW was $78/MWh in the second half of 2019, 30 percent lower than during the same period last year. That’s still higher than the global benchmark prices of solar and onshore wind energy. But as deployment increases, the price of renewables tends to fall. OSW costs are expected to keep falling as more — and bigger — projects come to fruition. For example, GE is developing a 12 megawatt offshore wind turbine, significantly larger than the current 8-megawatt turbines, with blades longer than a football field to generate power efficiently, even in low wind conditions.
“The cost has plummeted in Europe most notably in the last five years, not just because of the scaling of technology, but because of the scaling of the pipeline of projects that allows for the financing of vessels and financing of factories in proximity to the projects. Offshore wind energy is not just the cost of turbines but everything that goes along with it,” pointed out Boone Davis, president and CEO of Atlantic Offshore Terminals (AOT). Davis spoke at a conference on offshore wind energy in New York City on November 7, co-hosted by the Waterfront Alliance and The General Contractors Association of NY. AOT acquired Staten Island’s Arthur Kill Terminal on earlier this year. Arthur Kill Terminal and the South Brooklyn Marine Terminal (SBMT) are teed up to be key New York City ports in a U.S. regional offshore power supply chain.
Sure enough, the vast pipeline of projects in the U.S. has also started to push costs downward. But inadequate port infrastructure is a big obstacle for these wind farms faced with aggressive timelines. The U.S. has only one dedicated port built specifically for offshore wind: the Port of New Bedford, in Massachusetts. “The [New York City] ports currently don’t have the load-bearing capacity for large wind turbines being developed by the likes of GE and Siemens,” said Michael Stamatis, president and CEO of Red Hook Terminals, at the November 7 conference.
Michael Stamatis, president and CEO of Red Hook Terminals, speaks at offshore wind energy conference in New York City. (Photo by Karen Imas)
Red Hook Terminals is one of the operators of the 65-acre South Brooklyn Marine Terminal. As Stamatis noted: “Twenty years ago in Europe, offshore wind started creating opportunities for port terminals that were no longer active. Some of them have been revitalized by the offshore wind industry. That’s what we are hoping to see happen here in Sunset Park, Brooklyn and at the South Brooklyn Marine Terminal. We are talking to the developers and manufacturers about all the jobs and activities that are going to be created.”
Mindful of the opportunity, New York City is eager to quickly upgrade its ports; just last month it issued an RFQ for public-private investments in port infrastructure, toward which the state plans to contribute up to $200 million. “We are hoping to build the largest offshore wind port facility in the New York Harbor,” said Stamatis.
That will be quite a transformation for SBMT. Built in the 1960s, the facility was once an active container terminal in Sunset Park, Brooklyn. But it had been closed for more than 25 years when the New York City Economic Development Corporation (NYCEDC) decided to reactivate it, handing over its lease and operation to the Red Hook Terminals and Industry City last year. SBMT is looking at Equinor as a prospective tenant given that Empire Wind, to be installed roughly 20 miles south of Long Island in the shallow waters between Jones Beach and the Rockaways, will use South Brooklyn as its operations and maintenance base.
Meanwhile, Atlantic Offshore Terminals has its sights on the larger mid-Atlantic market. That’s because Staten Island’s Arthur Kill boasts a key feature missing from most U.S. ports — unrestricted access from the port to the ocean for moving the turbines, meaning no bridge or other height restrictions on the way out to sea. “Modular assembly onshore is more cost-effective than manufacturing at sea. Having this port in Staten Island will be critical to performing cost-effective turbine assembly for the 12.5 gigawatts of projects in the mid-Atlantic. That’s a thousand wind turbines coming through New York Harbor, being put together and taken out to sea,” Boone said. According to him, no other port between Connecticut and Virginia is unobstructed by bridges, making Arthur Kill the obvious centerpiece of a regional supply chain.
But federal regulation may complicate the ramp-up. The Merchant Marine Act of 1920, commonly known as the Jones Act, forbids foreign vessels from transporting merchandise within the U.S. That means foreign vessels are not allowed to load turbine components at a port in the U.S. and then taken them out into the water to install them. That’s a problem because the U.S. doesn’t have its own installation jack up vessels.
The first offshore wind energy farm in the U.S., the Block Island Wind Farm (BIWF), got around the Jones Act by using U.S. barges that fed wind turbine towers and blades to the offshore site. From there, a foreign-flagged installation vessel took over and assembled the various components. That said, BIWF is a 30-megawatt demonstration-size project. It’s not yet clear if this strategy — of U.S. feeder vessels working in coordination with foreign vessels — is a scalable solution for the large market taking shape in the U.S. Will the U.S. amend the Jones Act, repurpose or even build its own vessels? Those are all open questions.
But one thing is clear. High-quality port infrastructure suitable for supporting the offshore wind industry encompasses many features: unobstructed pathways in and out of the harbor; the capacity to lift, handle and store large components; the proximity to project sites; and skilled workforces, among others. Small U.S. ports scattered along the East Coast, often located on the other side of bridges, were not designed for the heavy lifting and installation that’s required for offshore wind farm construction. The ports’ limitations may just push their owners and operators toward a more cooperative approach with one another and with project developers. Within New York, it’s likely that Capital Region ports — the Port of Albany-Rensselaer and the Port of Coeymans — will support the fabrication and assembly of OSW components.
It’s no surprise that offshore wind energy has become intertwined with New York’s vision of a Green New Deal. Sunrise Wind and Empire Wind are expected to cost around $3 to $4 billion each, while potentially creating thousands of jobs, including many high-skilled positions near where the projects are installed. Just how critical OSW is to decarbonizing New York’s energy sector, while boosting the economy, comes through clearly in the exhaustive Offshore Wind Master Plan released in January 2018, a detailed 60-page report summarizing findings from 20 studies addressing a number of issues, from port infrastructure and transmission structures to job creation and environmental impact.
A big push for regionalizing the supply chain, however, will come from developers such as Ørsted that have won multiple projects in the U.S.. “To keep the costs low they are going to bundle projects together and award large contracts in multiple states to one supplier. The developers will have to have a strong logistics program and that’s going to spread the activities along the East Coast,” believes Liz Burdock, CEO and President of Business Network for Offshore Wind, a nonprofit focused on the development of a U.S.-based OSW supply chain.
That’s already happening. Ørsted has signed an MoU with a German manufacturer of steel foundations, EEW, to help open its first manufacturing plant in Paulsboro, New Jersey, with the expectation that it could become a key supplier for the U.S. OSW market. ABB, a major player in power transmission infrastructure with its sights on the U.S. offshore wind market, has announced a new high-voltage cable factory located in the “energy hub” of Charlotte.
No such big announcements in New York — yet. But Burdock says New York City’s workforce has a lot going for it. “You’ve got the finance and insurance sectors in New York that will drive a lot of these projects. And building trades are well suited to support offshore wind. There’s a lot of scaffolding that’s going to be needed and tones of cranes and crane operators and high voltage electricians. The general contractors in New York are world class, and they will be able to participate in this industry.”
Northeast states themselves see an enlightened self-interest in collaboration. In 2015, Massachusetts, New York and Rhode Island came together to identify opportunities for cooperation in OSW, to share best practices and explore the potential for developing a regional supply chain. At the same time, these states are also in a race to bring the many new OSW jobs to their own shores. Roland Lewis, President and CEO of the Waterfront Alliance in New York, captured the prevailing mood when he said: “We are all climbing a big learning curve and we should do it fast. I’ve got news for you, New Yorkers. There are other states along the eastern seaboard and they might become the wind capital of the world.”
The prospect of new jobs is both promising and intimidating for New York’s workforce. “We have only a handful of members who can build stuff 20 miles into the sea. Our members are more competent to do work on the shore. So we want to learn more about the kind of work that local contractors will be involved in,” said Robert Wessels, Acting Executive Director, The General Contractors Association of New York, which represents the civil construction industry. Wessels moderated the November 7 discussion.
The learning curve is steep for all involved. It’s too soon to say how these projects will evolve, but the Block Island Wind Farm offers some clues. Even on that smaller scale, the project shows that OSW jobs can span many different occupations, — 74 by one estimate – including electricians, welders, ironworkers, engineers, policy experts, scientists, environmentalists, lawyers and sales representatives, among others.
The New York State Energy Research and Development Authority (NYSERDA) projects more than 10,000 OSW jobs by 2035 at various stages of the projects, from planning to manufacturing, assembly, installation, operations and maintenance. It estimates the average salary of these jobs to be around $100,000.
“The green economy is focused on communities and the transition must be just. We are in these communities and we expect the same from our developers. The commitments cannot just be press release statements.”
Photo by Beyond My Ken/CC BY-SA 2.5
A more concrete measure of job prospects is the way in which state governments are pushing European developers in the American offshore wind market to integrate with the local economy. In its solicitation for wind farms in New York, NYSERDA included labor and wage requirements and organized meetings to connect developers with potential New York-based suppliers. At a panel discussion on OSW during the Climate Week in New York, Doreen Harris, NYSERDA’s vice president for large-scale renewables, said, “The green economy is focused on communities and the transition must be just. We are in these communities and we expect the same from our developers. The commitments cannot just be press release statements.”
Ørsted and Equinor have already committed millions to develop New York’s workforce. Along with its partner Eversource, Ørsted is spending $10 million on funding a National Workforce Training Center at Long Island’s Suffolk County Community College. Equinor, which will spend at least $60 million to upgrade New York ports, has set aside at least $4.5 million for community benefits and workforce development. As a large offshore operator, it also expects to transfer skills from offshore oil and gas to offshore wind. For its part, New York is investing $20 million in offshore wind training programs within the State University of New York (SUNY) system, including at SUNY Maritime College in the Bronx.
Today practically every coastal state wants to be a leader in offshore wind, and that includes California on the opposite coast. In pursuit of its 2045 goal of carbon-free electricity, California is planning offshore wind farms that float, because the Pacific Ocean floor is too deep to safely anchor wind turbines. Equinor, which has pioneered a floating wind farm in Scotland, is a likely bidder for California’s projects.
In light of the enthusiasm on both coasts, it may be hard to believe that in the early 2000s, the late liberal Massachusetts Senator Edward M. Kennedy had joined forces with conservative billionaire William Koch to block an offshore wind farm from coming into Cape Cod. The unlikely allies had presented numerous environmental and economic arguments against OSW, even as rumor mills speculated that the wealthy neighbors simply were trying to keep their ocean views unobstructed.
Such concerns appear to have receded. Perhaps because today’s undersea transmission capability allows gigantic turbines to be situated farther away from beachfront homes. Or simply because clean energy has become non-negotiable in more liberal communities.
So where does the conservative Trump administration stand, given its strikingly different vision of offshore oil drilling on the Atlantic and Pacific coasts? After all, states have to lease federal waters to build these windfarms. The good news is that the Bureau of Ocean Energy Management (BOEM) has 15 active wind leases for offshore wind development now. But the industry is concerned because BOEM has extended its environmental review of the 800 megawatt Vineyard Wind in Massachusetts, delaying the project that is tipped to be the first large-scale offshore wind farm in the U.S.
Insiders say BOEM and National Marine Fisheries Service (NOAA fisheries) disagreed over Vineyard Wind’s impact on marine ecology, and that allowed commercial fisheries to slow the project. Whether this is a hiccup or a more long-term obstacle is hard to say at this stage. “What if such disagreements get bumped up to political levels? I am concerned that these projects may take longer than anticipated,” says one source.
Perhaps, but developers such as Ørsted and Equinor are in it for the long haul. The developers know they need to comply with environmental impact statements and lengthy permitting processes at federal, state and local levels in the U.S. And after early disappointments in the U.S. market, Ørsted acquired the Rhode Island company Deepwater (which built BIWF) last year for $510 million, possibly to better navigate the U.S. regulatory environment.
The U.S. will invent its own systems and practices to benefit from offshore wind energy technology that has developed very quickly (and mostly only in Europe). And there lies New York City’s and New York State’s greatest opportunity to lead. To bring offshore wind energy onto a massive power grid creates huge infrastructural challenges. But starting from scratch is also an opportunity to get things right.
Deepali Srivastava is a writer and editor whose articles on socio-economic and environmental issues have appeared in Forbes Asia, MSNBC.com, strategy-business.com, and Warscapes.com. She is Senior Director of Content Strategy at Global Gateway Advisors.