VIRGINIA BEACH, Va. — The sudden halt of the offshore wind sector has left states holding high-investment wind ports that won’t be needed for a while, raising questions about how states can use the pricey assets without hampering future OSW needs.
New Jersey, which spent about $550 million on its wind port, and New York, which is completing a $350 million wind port in Albany, are looking for alternatives that can put the ports to work. (See NJ $1 Billion OSW Port and Marshaling Hub 60% Finished.)
That approach, while understandable to try to recoup on the investment, could leave OSW developers high and dry if the industry rebounds, said speakers at the International Partnering Forum (IPF), which ran from April 28 to May 1.
“It scares us,” Brendan Crowe, port procurement manager for developer Invenergy, said in a panel called “Preserving Offshore Wind Port Development Momentum Amid Market Uncertainty.”
“We completely understand that that port is sitting fallow right now,” said Crowe, whose employer is developing OSW projects in New Jersey, New York and California. “We do understand that it needs to be a revenue-generating asset, and the state needs to start paying back the taxpayers for their investments.”
But, at the same time, “We don’t want that port to go to another alternative and we are not … able to claw back that use for our projects. Hopefully those alternative uses are short term prior to our project construction periods.”
Crowe urged states to stay the course.
“If the states are serious about their offshore wind goals, to put it frankly, they’ve got to put their money where their mouth is,” he said. “These port facilities are the industry enablers, and we’re not going to be able to construct anything without these ports. I always say ports are one of the first dominoes that needs to fall.”
Thinking Long Term
The panel was part of an ongoing discussion at the conference about the uncertain future. The sector requires massive investments and a complex, interlocking system of permitting, financing, supply chain and assembly elements. Planning is tough when the future is unclear.
Even before President Trump’s decisions to temporarily freeze all OSW projects in the permitting process, and to halt New York’s Empire Wind project mid-construction, the sector suffered a series of abandoned projects due to supply chain and financing problems, and rising costs.
That raised questions about the level of risk taken to support logistics and supply chain projects, and what’s the price — and reason — for taking it on.
Bon-Kyu Koo, CEO of cable manufacturer LS Cable & System, gave a decisively positive answer to a question by moderator Liz Burdock, CEO of Oceantic Network, the conference organizer, as to how he weighed the risks against the market opportunities in the United States.
The previous day, the manufacturer broke ground on a $700 million, 750,000-square-foot subsea cable factory in Chesapeake, Va., in a ceremony attended by Gov. Glenn Youngkin (R). The plans include a vertical vulcanization tower and a dedicated pier.
“The most important thing for all of us here in the offshore wind industry is if you look at this as a timeline of only one, two, three, four, five years, it’s difficult to make a decision,” Bon-Kyu Koo told Burdock. “But what we did is, we’re looking at this as an industry that will last over 20, to 30, to 40 years.
“Of course we’re going to have our ups and downs. But if you look at the long-term curve, this will be a curve that will be now going up.”
Port Capacity Shortfall
For stakeholders involved in building or using a port, the question is how to weather the near-term turbulence, said Jonathan Kennedy, chief development officer for port developer Clean Energy Terminals, who moderated the panel and was heavily involved in developing New Jersey’s port.
The OSW sector has achieved much in the past five years, developing the N.Y. and N.J. ports, as well as building ports in New Bedford, Mass., Tisbury, Mass., Providence, R.I., and New London, Conn., he said. The challenge stems from the large scale of the projects and the need to build them well in advance of when they’re needed to handle turbine materials and preparation, he said.
“We all know the U.S. lacks the port capacity it needs to achieve long term offshore wind targets,” he said. “Given the current market uncertainty, how do we preserve that momentum so that we can be port-ready when that offshore wind pendulum swings back — and it will swing back.”
John Schneidawin, director of strategic initiatives for the Port of Albany, said the agency recently put out a request for “expressions of interest” for alternative uses of the port, given the dramatic slowdown in offshore wind business. (See Fate of Wind Tower Manufacturing Site in Albany Uncertain.)
The port, located 126 miles from New York up the Hudson River, has 85 acres and will be shovel ready in two years, he said. The initial goal was to use it for a Tier 1 tower manufacturing site, taking advantage of the cheaper costs of doing business in Upstate New York while moving materials, equipment and finished towers down the Hudson River to the South Brooklyn Marine Terminal, he said.
“We’re trying to identify, do we subdivide those 85 acres,” said Schneidawin, who attended the ports panel but was not a panelist. “Do we maybe leave half of it kind of dedicated toward the needs of the industry now in offshore wind, whether that’s just storage and assembly and marshaling? Or maybe go with a different use for the other set of the acres.”
Future Income Uncertain
Suzanne Plezia, senior director/chief harbor engineer for the Port of Long Beach, said the port is confident the project on 400 acres to assemble floating wind turbines will not go to waste, based on the experience of the main port. The Port of Long Beach, which handles imports and exports in shipping containers, is the busiest in the U.S.
“From a near term, (for) all of our infrastructure, we have to think 20, 30 years down the road. So we do cargo forecasts. That’s how we look at, ‘Do we need to expand our infrastructure?’” she said. “It’s a similar approach here with pure wind. We believe in the long-term horizon and the need for offshore wind. And you know, whatever happens in the next four years will sort of be a blip on that horizon.”
The port also is protected by the heavy demand for land in the port area for non-wind uses, she said.
“From a risk profile, we know that should offshore wind not move forward, there will absolutely be a demand for that land,” she said. Still, she added, the nature of offshore wind makes it tough to get private investors interested in the wind port compared to backing cargo ports, for which the future cargo flow and income is more predictable.
“When it comes to pure wind, we need that same environment where there’s predictability on that source of revenue,” she said, and cited the typical “offtake” or contract for output delivered in the future. “The offshore wind model in particular is very challenging in that regard because offshore wind offtake happens in the future in increments over time. And that is really a core foundation for investors: Is that revenue secure?”
“So you have to think about, ‘How do we move forward during this period of time so that when (the developer) is ready my infrastructure is ready?’” she said. “And that risk is really high right now.”
Maturation Period
Crowe, of Invenergy, said the industry needs to draw on its OSW solicitation experience to create “offtake mechanisms,” that “share and mitigate that risk between developers and the ratepayers.”
“We are still in the early stages of this industry,” he said. “We have to allow the industry to mature before we start tacking on these kind of supply chain development targets on these early projects, and allow the industry to mature and bring those manufacturing (elements) domestic over time.”
Crowe agreed with the suggestion from audience member Molly Croll, director of Pacific Coast Offshore wind for the American Clean Power Association, that the current enforced pause may help the OSW sector by giving more time to develop the supply chain and decide which equipment is needed so ports can design around that plan.
Invenergy, which expects to use the Port of Long Beach to develop its floating foundation types, is “continuing to select what that component of foundation is going to look like, and that is really going to help (the port) build a more efficient, effective port for our use,” Crowe said.
“The challenge,” he said, “is I’m not the only customer,” and other developers will be placing their own demands too.
