By - Jim Vess

Investments in U.S. offshore wind could outstrip offshore oil by mid-2020s, Rystad says

Energize Weekly, January 29, 2020

Annual investment in U.S. offshore wind – based on projects in the pipeline – could reach $15 billion by the mid-2020s, surpassing offshore oil and gas capital expenditures, according to Rystad Energy.

Rystad Energy, an Oslo-based energy consultant, called the trend “a truly remarkable development.”

There are 6.4 gigawatts (GW) of offshore wind projects that have begun to receive permit approvals for development with a price tag of $20 billion over the next five years.

“Assuming continued support from the regulators, many more projects will be sanctioned in the coming years and we expect to see yearly investments in the sector exceed $15 billion by the middle of the decade,” Tim Bjerkelund, head of consulting in New York for Rystad Energy, said. “That would certainly signal an energy revolution and offshore suppliers should take note.”

U.S. oil and gas offshore investments are projected by Rystad Energy to average $14.8 billion a year between 2020 and 2025.

The biggest areas for U.S. offshore development are the coasts of the Northeast and mid-Atlantic states, a region of the country that has limited natural energy resources and has been dependent upon importing energy from other states and other countries.

Land-based wind and large-scale solar projects, which are land intensive, also present challenges for the densely populated areas of the Northeast.

“This is reminiscent of problems faced by European countries, and the states in the Northeast have wisely picked up the same playbook,” Bjerkelund said. “Benefiting from the technological developments and cost efficiencies introduced in the North Sea, these states are adopting the lessons learned and are rapidly rolling out targets for a much higher share of renewables in their power mix.”

The projects in the five-year pipeline include:

  • The 800-megawatt (MW) South Fork project between Block Island, R.I., and Montauk Point, N.Y.
  • The 12 MW Virginia Coastal Offshore Wind
  • The 812 MW Empire Wind project off Long Island, N.Y.
  • The 804-MW Park City wind project off the Connecticut coast
  • The 804-MW Mayflower Wind project off the coast of Massachusetts

To be sure, the prospects for some of the projects remain uncertain. For example, federal regulators have extended the environmental review for the 800-MW Vineyard Wind project, after protests by fisherman and environmentalists, and the South Fork project has engendered opposition from Long Island coastal communities.

Still, the U.S. Energy Information Administration calculates there is a potential for offshore wind to generate 7,200 terawatt-hours of electricity a year.

“The energy transition is taking place now – not through small test projects, but through utility-scale projects that each require billions of dollars in investment. U.S. suppliers should take note – this new industry could outgrow offshore oil and gas in only a few years’ time, providing lots of new opportunities,” Bjerkelund said.

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