Deepwater Shows Up US Offshore Gap

When Deepwater Wind started construction on the first offshore wind farm in US waters in April, it was always bound to lead to a series of other firsts.

Last month, we had the announcement that LM Wind Power is set to supply the 15 blades for the five Alstom Haliade 150-6MW turbines used on the 30MW project; and also the announcement that high-speed catamaran ferry company Rhode Island Fast Ferry has won the 20-year crew transfer contract to support construction and maintenance. In other words, the first US offshore blades deal; and the first US offshore wind crew transfer deal.

These two deals are significant because they show that the idea of building wind farms in US waters is becoming reality. This is particularly needed for the sector that experienced a huge blow at the start of the year as utilities National Grid and NStar announced they were planning to agreed power purchase deals at the 468MW Cape Wind. The two withdrawals have sent the project into a downward spiral that it is now battling to escape.

Meanwhile, the latter deal has enabled Rhode Island to launch a commercial wind support services division, Atlantic Wind Transfers; and to commission Blount Boats to build the first US-built crew transfer vessel. These are significant steps because the US needs a supply chain if it is to support the development of new offshore wind farms in US waters.

However, this supply chain will only be able to grow further if there are more US offshore wind farms to supply to, and there is nothing obvious. Cape Wind is in trouble; Dominion Virginia Power pushed back a 12MW pilot scheme last month because of anticipated high building costs; and there is nothing else that is obviously going to follow Block Island. We keep looking to see if there is anything we have missed but, frankly, there is not.

These deals highlight two gaps for US offshore: in new projects; and the supply chain.

The new projects need to come first. If US offshore wind is to take off then it needs people, like Deepwater, that are pushing ahead with viable projects. Developers will find it tough to come up with viable projects until they have access to sub-contractors that can appraise offshore risks realistically and charge realistic prices. But most sub-contractors are unlikely to offer such certainty until they have experience working on some projects.

This can be solved with the input of sub-contractors from Europe —indeed, the blade firm LM supplying to Block Island is headquartered in Denmark —but they too will be reticent about opening in the US if there is no clear project pipeline. This will take years to emerge.

It is a catch-22 situation for US offshore that, thus far, only Deepwater has negotiated. But there is a good chance that Block Island will still look very lonely in years to come.