The offshore wind sector is expected to grow quickly over the next decade, boosted by a predicted $300 billion investment that will add an approximate 10GW to the nation’s current wind energy capacity.
Why is wind power such a big opportunity?
A modern offshore wind energy turbine at an appropriate site will generate 20 million units of electricity each year, enough to meet the annual needs of over 11,000 households each year. The mid-Atlantic coast offers strong wind resources that are close to approximately 45% of the nation’s population and associated energy needs.
What are the key market opportunities?
Offshore wind farms. The US has an excellent resource of offshore wind, particularly along the eastern seaboard, which has good strong wind speeds in relatively shallow water and close to major consumers of electricity. Today the US is positioning itself to rapidly become a significant world producer of electricity from offshore wind. The US will start its entry into this growing market sector with the technological advantage of the offshore turbines with designs up to 10MW being developed, considerably larger than onshore wind turbines. New technology is being introduced to reduce size/weight while increasing capacity. Direct drive turbines where the rotor blades fit directly onto the generator and eliminate the gearbox are increasingly being considered for offshore applications. Several of the major OEMs have a presence in the US and are waiting for state and federal commitments for the development of a market before announcing plans to build wind turbine factories on the east. Maryland’s lead in deploying offshore wind off its coast line could significantly help these developments, making offshore wind market opportunities more attractive to wind energy developers.
What are the economic development opportunities?
Many different economic development opportunities will arise in all five stages in the deployment of Maryland’s offshore wind farm. Wind energy projects typically require hundreds of different products and components as well as a diverse range of specialist support services used at the different staged of deployment. Businesses that engage in the early formation of the US supply chain with the first wind farms will be in a strong position to provide the services to other states along the east Atlantic coast. Further, there may be additional export opportunities as other nations around the world seek to diversify their energy base and include offshore wind energy. For example, Europe has the goal of 100GW of offshore wind to be deployed by 2020. This provides a huge export market market for Maryland businesses engaged in this new market sector.
The chart below summarizes some of the services and manufacturing opportunities for each of the five chronological stages of an offshore wind energy farm.
|Design||Turbine Manufacture||Non-Turbine Offshore Wind Farm Facilities||Construction||Operation & Maintenance|
|Feasibility Studies||Castings||Towers||Heavy Lifting||Inspection|
|Site Assessments||Gear Box||Cable||Vessels||Remote Monitoring|
|Testing||Hydraulics||Foundations||Divers||Repair & Maintenance|
|Environmental Assessment||Electrical||Access Platforms||Logistics||Safety|
|Design Studies||Rotor Components||Lighting||Painting / Coating|
What are the typical Product/Service requirements for offshore wind farms?
Maryland has significant capabilities within its existing business community including the headquarters of several major Tier 1, 2 & 3 suppliers, covering a diverse range of products and services. With its strong manufacturing, marine, and advanced technical as well as engineering heritage, Maryland is ideally positioned for its existing businesses to become the nation’s lead suppliers to the offshore wind industry. Maryland’s pioneering leadership to develop the nation’s offshore wind farm will attract new entrants to support the commercial development of offshore wind energy industries, not only to support the mid-Atlantic region but to contribute to the nation’s initial goal of 10GW by 2020 and 54GW by 2030. Initializing this first step is important to building a strong sub-sector of Maryland’s economy that will last over the next 20 years and beyond.
The deployment of wind energy is expected to accelerate over the next decade from the present $100+ million in investments to over $300 billion in 2020. A total potential capacity of over 54GW of wind energy generation is currently being planned in the US, with a total capital investment of over $1.5 trillion by 2030. This will create major opportunities for Maryland companies supplying equipment and services across the supply chain.
What are the costs of offshore wind?
Offshore wind developments have much greater initial costs than onshore. However, as the offshore wind farms get larger and the supply industry moves to becoming based in the US, the costs will go down. The need for more components will increase as more offshore wind farms and start to supply the high load demand along the Atlantic east coast states. The figure below provides a typical breakdown of costs for an offshore wind project.
Typical cost breakdown of each sector of offshore wind.
What are the industry’s barriers and challenges?
The size of the wind farms and the number of turbines needed can have an impact on the cost of the wind farm and the unit cost of power. Most of the plant equipment for offshore wind turbines will have to be imported from Germany and Denmark, the leaders in offshore wind supply chain. The UK currently has the most offshore wind energy deployed. This has resulted in some UK companies to supply the offshore wind sector with slip rings, power converters, electrical laminations, castings and fasteners, but the majority of the large value supply chain products and services remain outside the UK. Historically, the UK addressed the supply chain and economic development opportunities separately from the need to produce clean energy. Now the country is working to ‘catch up’ but finds itself limited to compete on only O&M work and in repair and refurbishment. Maryland needs to develop a strategy that results in a position of economic development advantage and not to mirror the mistakes of the UK where policy makers are stuggling to find ways to develop a new offshore wind energy supply chain within the UK.
Maryland businesses should look to work with state policy makers to ensure that when the wind farm is developed off Maryland’s coast line, it not only helps the state to meet its renewable portfolio standard (20% by 2022) but that it is developed strategically, in a manner that maximizes the economic development opportunities for the state. There are many lessons to be learned from the UK which today, remains the nation with the most capacity of offshore wind deployed, but looks to Germany and Denmark for its primary supply chain components.