Enel has put a 205MW project on hold in Colombia after long-running protests, and it is not the only company facing such unrest. We look at whether the government can improve consultation before it's too late.
A market is only as strong as its weakest link
By Dr. Carolyn Heeps, Head of Renewables, North America, Lloyd’s Register
Over the past few years, momentum has been gathering for offshore wind in the USA.
Despite some well-publicised political ambivalence several years ago, the sector is now seeing rapid advances and government support; the east coast now has a project pipeline of over 8GW, with the earliest projects likely to be operational by the early 2020s, whilst in the west – and with a longer-term view – there is increasing interest in utility scale floating offshore wind technology.
However, the outlook for the sector can only be as strong as the skills and supply chain that are available and, currently, the lack of a US domestic supply chain is very much a challenge, and a tremendous opportunity.
Often, the common assumption within a nascent industry is that experienced professionals and technicians from mature markets (e.g., in Europe) will support the evolving US market – and indeed, that will go a long way towards transplanting the skills and expertise that are needed. Furthermore, there is great potential for technology and skills to cross over from well-established domestic industries, such as oil and gas – where asset management and performance optimisation, monitoring and subsea inspection disciplines address many shared challenges and solutions.
But imported knowledge from more mature markets will only go so far. Different business cultures and the different layers of legislation, administration and permitting at federal, state and local level are unfamiliar territory to most professionals who have cut their teeth in Europe, where systems may be no less complex, but are set within different legislative and regulatory regimes.
For example, in European markets there is no equivalent to the Jones Act, which requires any vessel transporting cargo between US ports to be carried on US-built and flagged vessels, and therefore limited precedent for the logistical and supply chain issues it precipitates. In the absence of a Jones Act installation vessel in the US, early projects will currently have to rely on foreign flagged vessels combined with Jones Act compliant feeder barges to transport components to the construction site offshore.
In Europe significant cost reductions have been achieved through more efficient installation methods. Consequently, the US market needs a pipeline of large scale projects to give confidence for the investment required to build Jones Act installation vessels to achieve similar cost efficiencies.
Just as site availability and political appetite are vital to developers and investors, greater visibility of a pipeline of industrial scale projects is critical for potential supply chain partners to invest in the necessary manufacturing sites, processes and workforce training - and that relates to all tiers of the supply chain, from the OEMs to the smallest suppliers at a more local level.
Investment in engineering, science, and research will accelerate innovation and expand the pool of local talent whilst stimulating economies, particularly in those coastal communities that are, or will become, the hubs of manufacturing, construction, transportation and operation that will drive the industry towards maturity.
Investment in infrastructure is equally vital, such as port development and upgrades that will be needed to support the construction and installation, and then the long-term operation and maintenance of very large projects. The USA has decades of experience supporting the oil and gas industries and there are significant and exciting opportunities to transfer learning from this energy sector into offshore wind. The offshore wind industry is already reaching out to the oil and gas industry to explore these synergies.
Whilst the under-developed domestic supply chain is an issue right now, some of the building blocks are starting to move into place. But there is no room for complacency, and timing of investment is critical. The market must remember that if you build it, they will come – but only when there is evidence of long-term viability.
The USA needs to tackle the challenges and opportunities of developing a robust and sustainable supply chain head-on, as the rewards will be significant: cost reductions through domestic manufacturing and technological innovation, an experienced and diverse workforce and vibrant coastal communities.
For more insights from Carolyn Heeps (including a series of short videos) visit lr.org/offshorewind.