New York offshore wind projects face global tussle for turbines

Looming auctions in New York and New Jersey could put three derailed offshore wind projects back on track but developers must tap into an overstrained supply chain.

In April, New York State Energy Research and Development Authority (NYSERDA) decided not to sign offtake agreements with three planned offshore wind projects after U.S. supplier GE Vernova backtracked on plans to provide developers with 18 MW turbines, its largest ever.

The 1.4 GW Attentive Energy One (TotalEnergies and Corio Generation), 1.3 GW Community Offshore Wind (RWE and National Grid) and 1.3 GW Excelsior Wind (Vineyard Offshore) projects were all awarded provisional contracts in a competitive auction in October 2023.

GE's climbdown from supplying a 18 MW turbine comes as western suppliers focus on existing models to improve supply chain efficiency and reduce delivery risks associated with new larger models.

New York's decision follows the cancellation of several U.S. East Coast offshore wind projects last year due to rising costs and supply chain challenges since the pandemic. Developers including Orsted, Avangrid, and Equinor are struggling to secure installation vessels and face strong competition for turbines from European countries seeking to boost offshore wind generation.

           Installed offshore wind capacity by country

                                    (Click image to enlarge)

 

Source: U.S. Department of Energy's Offshore Wind Market Report, 2023 Edition (August 2023)

New York required the three projects awarded in October to install GE Vernova turbines and earmarked a $300 million grant for the company and its subsidiary LM Wind Power to build nacelle and blade manufacturing facilities in New York state.

New York's attempt to combine support for supply chain buildout with offshore wind power contracts increased supply risks for developers, industry sources told Reuters Events.

Dependence on one turbine manufacturer resulted in high supply risks, Community Offshore Wind president and project director Doug Perkins told Reuters Events.

Tony Appleton, Offshore Wind Director at Burns & McDonnell, applauded New York’s efforts but said  "aiming for an 18 MW turbine that had not yet been developed was an ambitious endeavor."

New York is looking to lure back developers with another auction in the summer and one in 2025. New York plans to reallocate the $300 million supply chain grant and is considering changing cost indexes to reduce risks, but a solution will be required that encourages regional supply chain investments without restricting competition.

Perkins urged policymakers to separate offshore wind procurement from manufacturing procurement in future solicitations.

The upcoming auction will be successful if NYSERDA gives developers flexibility to choose the “best available” turbines from any supplier, he said.

Switching states

The developers of Attentive Energy One, Community Offshore Wind and Excelsior Wind are keen to continue with their projects but could instead seek to sell power to neighboring New Jersey.

Last month, New Jersey launched its fourth offshore wind auction to secure between 1.2 GW and 4 GW of clean power. Developers must submit their offers by July 10 and awards are scheduled for December.

In January, TotalEnergies and Corio Generation signed an offtake agreement with New Jersey for Attentive Energy Two, a project adjacent to Attentive Energy One.

According to Aegir Insights, as many as 10 offshore wind projects could take part in the New Jersey auction, including the three projects denied contracts in New York.

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The three projects would only need a “limited number of modifications” to bid in the upcoming solicitations, Appleton told Reuters Events.

The cost of installing a higher number of smaller turbines could be offset by benefits including faster delivery times and higher capacity factors.

“Fundamentally, the projects will be the same. All you’re changing is the number of turbines, and potentially their locations, and array cables,” he added.

Turbine squeeze

Most U.S. East Coast projects are set to install turbines in the range of 11 GW to 15 GW and as the industry consolidates around this level, the three projects impacted in New York will face intense global competition for turbines.

The current global supply chain "is just not big enough” to meet ambitious offshore wind targets in U.S., Europe and other key markets, Appleton said.

    Global offshore wind turbine market share for operating projects (end of 2022)

                                                                 (Click image to enlarge)

Note: SGRE = Siemens Gamesa.

Source: U.S. Department of Energy's Offshore Wind Market Report, 2023 Edition (August 2023)

Danish turbine supplier Vestas saw its back order for offshore wind turbines nearly double in 2023 to 4.3 GW, the company said in its annual report. This was largely due to demand for its new 15 MW turbine, which the Danish company will start delivering in 2025, it said. Germany's Siemens Gamesa is the largest global supplier of offshore wind turbines to date and the company is seeking to ramp up manufacturing capacity at three sites in Europe in a bid to meet increasing demand, it said earlier this month.

“This is not happening only in New York, this is a global issue. Developers are engaged in a constant battle with suppliers because no matter what states or what countries, they all have ambitious offshore wind targets and they are all pushing for the same deadlines,” Appleton said.

Reporting by Eduardo Garcia

Editing by Robin Sayles