The US offshore wind (OSW) industry achieved significant milestones during the past year. The country’s first commercial-scale OSW project – the 132 MW South Fork Wind Farm off Rhode Island, began delivering power to New York in November 2023 and was fully commissioned in March 2024. The second commercial-scale project, the 806 MW Vineyard Wind 1, also delivered its first power in January 2024. By the end of May 2024, the total OSW installed capacity increased to close to 200 MW with an additional 4,097 MW under construction.
The National Renewable Energy Laboratory’s (NREL) recently released ‘Offshore Wind Market Report: 2024 Edition’, outlines these significant milestones achieved over the past year in addition to highlighting the increased state and federal support, growing investment in vital infrastructure as well as a robust future pipeline of OSW projects.
Despite rising costs due to inflation, interest rates, and supply chain issues, the sector is buoyed by new offtake agreements and supportive federal and state policies. The US government’s extension of long-term tax credits is a key factor, offering additional incentives for projects using domestically produced materials and benefiting historically impacted communities. The Inflation Reduction Act (IRA) further supports this with a manufacturing tax credit to boost US production of wind turbine components and related infrastructure. Federal funds have also been allocated to enhance transmission planning, focusing on OSW projects to ensure reliable grid integration. The Bureau of Ocean Energy Management (BOEM) and National Oceanic and Atmospheric Administration (NOAA) have received additional federal support to increase their staff dedicated to permitting procedures, which will help them review and process projects more efficiently and on time.
During 2023, the OSW pipeline grew in 2023 by 53 per cent to a potential generating capacity of 80.5 GW. New lease areas were proposed in the Gulf of Maine, along Oregon’s coast, and in the Gulf of Mexico, expanding the total capacity and the industry beyond the Atlantic Ocean to include floating OSW development, which has 25 GW in the pipeline. At the state level, a dozen states have set planning targets or procurement mandates. The planning targets 115,130 MW of OSW capacity by 2050. The mandated procurement equals 45,730 MW by 2040. As of May 31, 2024, 15 offtake agreements have been signed, which is linked to 12,378 MW of contracted capacity. Around USD10 billion has been announced or invested in the US OSW supply chain, including support for ports, vessels, and workforce.
While macroeconomic headwinds and market volatility present hurdles, the industry remains poised for long-term growth. New federal laws, including the extension of tax credits, are designed to mitigate market risks and encourage investments in infrastructure. These policies support the development of floating OSW technologies and improve cost certainty for project financing. Despite near-term decreases in OSW energy deployment, forecasts indicate robust global market growth, with the US expected to contribute approximately 9 per cent of the global OSW capacity by 2035.
The full report can be accessed here.
