At some point, the discussion about the construction of a dedicated vessel for building offshore wind farms in the US will have to move from aspiration to actuality. Currently, no specialized vessels for offshore wind construction exist in the US, but final investment decisions will eventually be made for large US wind plants. However, a buildout of multiple large US wind plants cannot be done in a cost-effective way by using European vessels, which is the only current solution.
That point of actuality is drawing near with a company well-positioned to deliver on the aspiration. Dominion Energy confirmed in a May 5 conference call that it was part of a consortium formed to build a US-flagged offshore wind construction vessel. This vessel will work on Dominion’s 2.6 GW offshore wind farm off the Virginia coast and on other large projects in the near-term pipeline.
Dominion plans to build its 2.6 GW project in three 880 MW phases, completing one phase each year from 2024 to 2026. The wind farm will connect into PJM’s wholesale power market, and its cost will be borne by Dominion’s ratepayers. Dominion is showing signs that it is on track with small vessels currently conducting geophysical, biological, and oceanographic surveys. Dominion also signed a preferred supplier agreement in January 2020 with Siemens Gamesa for the wind turbines. Dominion recently confirmed that the project will use the company’s latest 14 MW turbine (announced on May 19).
Consortium Provides Solution for the US Offshore Wind Market
The construction and commissioning of a US-flagged vessel has been critical to the offshore wind market. But this process has been mired in a dilemma. Offshore wind developers face higher costs if they have to contract work from a European vessel, but investors interested in building a US vessel are not going to build without being certain the vessel is used at full capacity for the years needed to recoup the investment. A vessel will likely need 500 MW to 800 MW of annual capacity installation for at least 5 years.
The obvious answer is that the two efforts must proceed concurrently with solid contractual obligations to protect all investors and stakeholders involved. That is what Dominion and this consortium are attempting. The other stakeholders have not yet been identified, but they include offshore wind developers active in the US market. These other developers should contract their development and construction activities with this consortium-built vessel so they can avoid the higher cost and complexity of using European vessels.
The Jones Act Complicates Offshore Projects
A further challenge is a maritime law from the 1930s called the Jones Act. The law makes it illegal for vessels that are not built in the US to deliver goods and conduct work from port to port. One US offshore project commissioned in 2016, Deepwater Wind’s 30 MW Block Island wind farm off the Rhode Island coast, illustrates this challenge. The developers had to contract a jack-up vessel from Europe due to the lack of US vessels, but the vessel could not touch US shores where it would normally pick up the wind turbines, towers, and blades. Instead, Deepwater had to use smaller US-flagged barges that towed wind turbine equipment out to the site, where it was transferred to the European jack-up vessel, increasing the cost and complexity of the project. A dedicated US-flagged vessel will be more efficient and cost-effective by loading all components at a US port on one vessel. Eventually, more dedicated vessels will be essential for the future success of the US offshore wind market.
Source: Guidehouse Insights