This is an extract from a recent report “Offshore Wind Market Report: 2024 Edition” by NREL.

Offshore Wind Industry Overview

In 2023, increased costs driven by macroeconomic pressures, market volatility, and shifting market conditions made many projects with existing fixed-price power offtake contracts financially nonviable. In total, eight projects canceled their offtake contracts and are searching for alternative pathways to secure offtake contracts (SouthCoast Wind 1, New England Wind 1 and 2, Empire Wind 2, Beacon Wind 1, Ocean Wind 1 and 2, and Skipjack Wind). As of May 31, 2024, the U.S. wind energy pipeline grew more than 53% (27,836 MW) to a total of 80,523 MW, from the 2023 edition of this report. 

The 27,836 MW of total pipeline growth came from the following developments: 

o 15,702 MW came from the eight proposed lease areas in the Gulf of Maine. 

o 4,499 MW came from the two proposed lease areas in the Central Atlantic. 

o 3,156 MW came from the two proposed lease areas off the coast of Oregon. 

o 6,638 MW came from the four proposed lease areas in the Gulf of Mexico.  

o 144 MW came from one research lease area in the Gulf of Maine. 

Ongoing challenges that began in late 2022 continued to impact developers who had previously signed offtake agreements and were attempting to bring projects online before 2030. Developers reported significant cost increases driven by inflation and rising interest rates that potentially rendered their projects financially nonviable. In April 2024, the New York State Energy Research and Development Authority (NYSERDA) announced that no final awards would be made for the 2022 third Offshore Wind Solicitation. On October 24, 2023, NYSERDA had provisionally awarded three offshore wind projects to Attentive Energy One (1,404 MW), Community Offshore Wind (1,314 MW), and Excelsior Wind (1,314 MW), as well as a New York State grant to GE Vernova and LM Wind Power for nacelle and blade manufacturing in New York’s Capital Region, which were associated with the provisionally awarded projects. Material modifications to the three projects that had bid into New York’s offshore wind solicitation caused complexities between provisional awardees and their partners, resulting in the provisionally awarded parties’ inability to come to terms. Despite near-term financial setbacks, the U.S. offshore wind energy market experienced multiple developments that put it on a trajectory for potential long-term growth.

US Offshore Wind Energy Market Potential and Project Pipeline Assessment

As of May 31, 2024, NREL estimates the U.S. offshore wind energy pipeline to have 80,523 MW of capacity, which is the sum of installed projects, projects under construction, projects approved for construction, projects undergoing various state and federal permitting processes, existing lease areas, and the potential capacity of yet-to-be-leased wind energy areas. Table 2 breaks down the U.S. offshore wind energy pipeline by project status. 

US Offshore Wind Energy Pipeline

In total, there are 65 sites for U.S. offshore wind energy development activity (compared to 59 sites in the Offshore Wind Market Report: 2023 Edition). Included in this activity are three projects in state waters: the operating Block Island Wind Farm in Rhode Island, New England Aqua Ventus I in Maine, and the CADEMO project off Vandenberg Space Force Base in California. 

Federal and State Policy Activities

In April 2024, the U.S. Department of Energy (DOE) released its Pathways to Commercial Liftoff: Offshore Wind report (DOE 2024). The report describes how the U.S. offshore wind sector is adapting to market challenges and is poised for progress in job creation and expanded access to clean energy. The report finds that “liftoff” of the U.S. offshore wind industry is achievable and lays out a pathway to more than 100 gigawatts (GW) of offshore wind capacity by 2050. The report also identifies several key gaps and challenges that must be addressed in the near and long term. Key takeaways include:

Offshore wind offers unique value in its ability to decarbonize coastal population centers and revitalize maritime infrastructure and U.S.-based manufacturing. It complements other clean energy resources to support grid reliability and resource diversification.

  • The 10–15 GW of U.S. offshore wind projects in advanced stages of the pipeline will lay the foundation for long-term deployment, carbon reductions, and economic benefits.
  • Current market structures expose the sector and developers to exogenous risks and require early-mover projects to bear the costs of long-term industry build-out needs.
  • Improved sequencing of offtakes with the permitting process and incorporating risk mitigation strategies can help overcome this challenge.
  • Recent offtake cancellations caused by macroeconomic conditions created funding gaps and timing uncertainty for near-term sector build-out. States are responding with additional competitive procurements for affected projects, and improved risk mitigation is being built into industry planning through state and federal leadership and policy as well as the resources made available through the Bipartisan Infrastructure Law and the IRA.
  • While costs increased due to inflation, rising interest rates, supply chain constraints, and schedule delays, new offtake agreements de-risk the advancement of offshore wind. Governments at the federal and state levels are working together with industry to improve procurement processes, supply chain, and transmission planning to make infrastructure investments.

The Bipartisan Infrastructure Law and IRA support the advancement of offshore wind by providing significant incentives to increase the economic attractiveness of offshore wind energy projects, catalyze domestic manufacturing and supply chain investments, accelerate permitting and project interconnection, and develop a highly skilled and diversified workforce. To overcome market volatility, these new federal laws extended long-term tax credits that increase cost certainty and make project financing more likely. The tax credits provide additional bonuses for developers that use domestically produced iron and steel products and manufactured products and/or ensure the project’s economic benefits accrue to communities who have historically been negatively impacted by energy production or have had a historical reliance on fossil fuel employment. The IRA also creates a manufacturing tax credit to spur equipment manufacturers to make new investments in manufacturing capacity for wind turbine blades, nacelles, towers, floating foundations, fixed-bottom foundations, and related offshore wind vessels.

State Offshore Wind Procurement Policy and Status: The U.S. offshore wind energy market continues to be driven by an increasing amount of state-level offshore wind procurement activities and policies. In this year’s report, the authors differentiate between state planning goals and state procurement mandates. Planning goals are aspirational and do not require agencies to take any direct action. On the other hand, procurement mandates are statutory requirements for the state to achieve a predetermined quantity of offshore wind generation on a scheduled timeline. There are various pathways to securing offshore wind energy generation, including power purchase agreements, ORECs, or direct utility ownership of projects. As of May 31, 2024, 12 states have set planning targets or procurement mandates.

Regulatory Activity: BOEM and the Bureau of Safety and Environmental Enforcement (BSEE) oversee the responsible development of offshore renewable energy resources on the U.S. Outer Continental Shelf (OCS). BOEM transferred the inspection and enforcement functions pertaining to safety, environmental oversight, and compliance to BSEE in January 2023. Since then, BSEE’s involvement in post-COP activities has increased significantly. BSEE now has authority to review and object or not object to facility design reports and fabrication and installation reports along with BOEM. Both reports are submitted following a COP approval. BOEM continues to lead wind energy area identification, leasing, permitting, and project approvals. To accompany the reorganization of BOEM and BSEE roles in offshore wind regulatory authority, the U.S. Department of the Interior proposed the Renewable Energy Modernization Rule in January 2023.

Federal Permitting Status of U.S. Lease Areas: BOEM issues a Record of Decision following the completion of an environmental impact statement analyzing the potential impacts of a proposed offshore wind energy project in accordance with the National Environmental Policy Act. The Record of Decision is the document setting the basis for the agency’s permit approval. Following the issuance of a Record of Decision, BOEM would then issue its approval of a COP, approval with modifications, or disapproval of a COP for developers to build an offshore wind energy project in the United States. Since the start of 2021, the Biden-Harris administration has approved eight commercial scale offshore wind projects totaling more than 10 GW of power capacity.

Lease Activity and New Site Identification: The IRA limits the issuance of future offshore wind energy leases by requiring that BOEM hold an offshore oil and gas lease sale in which at least 60 million acres are offered for development within the year preceding the issuance of offshore wind energy leases. On December 14, 2023, the U.S. Department of the Interior approved the 2024–2029 National OCS Oil and Gas Leasing Program, which includes three potential oil and gas lease sales, fulfilling the IRA requirements and allowing BOEM to issue offshore wind energy leases.

BOEM publishes Calls for Information and Nominations (calls) to initiate the commercial competitive leasing process and assess commercial competitive interest for offshore wind energy development on specific parcels of ocean acreage in federal waters. Since 2021, BOEM has identified new areas, refined existing areas, and/or developed previously identified Call Areas. On April 24, 2024, the U.S. Department of the Interior announced a new 5-year offshore wind leasing schedule that includes up to 11 competitive offshore wind lease sales across the Atlantic, Gulf of Mexico, Pacific, and the U.S. territories. Lease sales are planned for the Central Atlantic, Gulf of Maine, and offshore Oregon in 2024 with a total of 12 proposed lease areas. BOEM anticipates holding a lease auction in October for eight proposed lease areas in the Gulf of Maine, and another auction in October for two proposed lease areas offshore Oregon.

Energy Infrastructure Trends: Progress to build the enabling infrastructure needed for offshore wind energy—including ports, vessels, manufacturing, and the electric grid—continued in the United States. DOE estimates that about $10 billion in investments have been announced in the U.S. offshore wind supply chain since the beginning of 2021, including $2.1 billion just in 2023 for port development, vessel orders, workforce development, research, and other supply chain investments. Despite this momentum, substantially more investment will be required to develop a robust domestic supply chain; for example, NREL reported in 2023 that at least $22 billion in ports, large installation vessels, and manufacturing facilities will be needed to achieve the 30-GW-by2030 target. DOE also reports that more vessels are needed to meet state construction goals, highlighting that many announced supply chain facilities face obstacles because of uncertain demand, especially for projects with planned completion between 2025 and 2030 due to uncertain project timelines.

US Offshore Wind Energy Market Forecasts to 2035 

Although the U.S. pipeline grew to more than 80.5 GW, market forecasts in 2024 show less optimism for near-term development than in past years. The forecasts, developed by 4C Offshore (2024) and BNEF (2023), estimate U.S. offshore wind energy deployment will cumulatively reach 40 GW and 42 GW by the end of 2035, respectively.

Their forecasts show lower levels of deployment relative to those reported in the Offshore Wind Market Report: 2023 Edition. The lower estimates are likely due to project delays resulting from offtake renegotiations/cancellations; project cancellations; and supply chain delays in port, manufacturing, and transmission development. The actual size and speed of U.S. offshore wind build-out will depend on continued regulatory efficiency, the availability of installation vessels and port infrastructure, proactive onshore and offshore grid planning and upgrades, the successful commercialization of 15-MW-class wind turbines and associated infrastructure, and sustained market demand.

These forecasts predict that most near-term (pre-2030) offshore wind energy deployment will occur on the East Coast in states with existing offshore wind energy procurement goals. Both forecasts predict project development in the Gulf of Mexico and floating offshore wind deployment in Maine and California starting around 2030. 

Access the complete report here