Dong Injects Commercial Nous Into US Offshore

There is no shortage of hyperbole in the US offshore wind market. It seems like every development, however minor, is hailed as a huge leap forward.

Indeed, anyone entering the wind energy market afresh would be forgiven for thinking that US offshore wind is already a fully-fledged market. It isn’t.

In fact, back in October, after attending a somewhat lacklustre AWEA Offshore 2014 conference, we argued that the development of demonstrator projects, while hugely important, did not necessarily mark the start of major market movements –and that despite best intentions, the future was far from certain.

And so it was. Over the last six months there have been some seismic shifts.

Cape Wind –the US offshore industry’s flagship project for the past 14 years –is now dead in the water. But Deepwater Wind, which started at the same time, has secured funding of $290m for its 30MW Block Island project.

But the really big news is that a new developer has entered the race for US offshore wind: Dong Energy. The Danish utility, which has arguably more experience than any other developer in the offshore wind market, has taken over the development rights of a large area offshore from RES Americas.

And by large, we really do mean large: 187,523 acres to be precise.

Indeed, best estimates suggest that there is the potential to build over 1GW of capacity in the area, which is around 55 miles south of Martha’s Vineyard.

For an industry that’s already gearing up to service the initial 30MW Block Island project, that is good news and helps create a compelling commercial case for the accompanying construction and operations and maintenance supply chain, too.

Knowing Dong Energy as we do, we have no doubt that a major market move like this will have been carefully executed and planned, with senior industry executives having been in private discussion about development opportunities for well over 12 months already.

For US offshore wind, injecting that level of long-term thinking can only ever be a good thing. For too long this area of the offshore market has been filled with clichés and plenty of talk, but little action. Dong could change that.

The utility’s relatively quiet entry into North American fits neatly with its global expansion strategy but most important of all, should inject a healthy dose of commercial realism into US offshore development.