Avangrid may be one of the biggest developers of onshore renewables in the U.S., with a fleet of more than 50 wind farms, but these days it’s spending much of its time and development dollars on projects out to sea.
Through its Vineyard Wind joint venture, owned alongside Copenhagen Infrastructure Partners, Avangrid made history last year with an 800-megawatt winning project in Massachusetts’ first offshore wind request for proposals (RFP).
That project, more than 25 times larger than the only U.S. offshore wind farm today, will help shape the nascent East Coast offshore wind supply chain, its every success and setback likely to reverberate throughout the market as it aims for completion in 2021.
Vineyard Wind holds the rights to a second development zone in New England, won last year with a record-breaking $135 million bid. That project is awaiting the results of New York’s current offshore wind RFP, where it is competing for an offtake deal.
Avangrid, majority-owned by Spain’s Iberdrola, also controls a large offshore area facing North Carolina, currently the southernmost development zone in U.S. waters. And the company is carefully watching a planned lease auction off California’s coast.
Ahead of an anticipated flurry of announcements in the U.S. offshore wind sector over the next few months, officials from Avangrid, Iberdrola and Vineyard Wind sat down with journalists Tuesday for a wide-ranging discussion on the market.
Among the key takeaways from their views:
- Following the “imminent” decision on New York’s first offshore wind RFP, Vineyard plans to bid into two more RFPs this year, in Massachusetts and Connecticut.
- The federal government’s planned auction of additional development areas off New York, likely to be held in early 2020, could yield zones capable of holding 13 gigawatts of generating capacity — potentially doubling the project pipeline along the East Coast. Vineyard plans to bid.
- The growing recognition of offshore wind’s potential in the Northeast is driving increased renewables portfolio standards in the region. "We think the prices Vineyard Wind managed to produce for the first Massachusetts PPA have encouraged the states to increase their targets."
- Rather than being an impediment to the U.S. market’s development, the Jones Act could in fact spur the creation of new ways of approaching offshore wind logistics that will benefit markets around the world.
- California is a hugely promising market once floating offshore wind technology becomes commercially viable, and may one day rival the East Coast in size.
- For all its tailwinds, the U.S. market is not without its concerns, chief among them the lack of coordination over offshore transmission, the imposition of local-content requirements by states, and the underdevelopment of ports along the East Coast.
The Jones Act: A blessing in disguise?
The Jones Act, which requires that any components moved between American ports be transported using U.S.-flagged vessels, has long been a point of concern for the offshore wind sector.
Alan Hannah, deputy CEO of Vineyard Wind and project director for Iberdrola Offshore, detailed the developer’s plans for mitigating the Jones Act's impact and installing the project’s 84 wind turbines in a country with no tailor-made installation vessels.
The Europe-made foundations and offshore substations will “never go into a U.S. port,” Hannah said. “We’ll transfer them across [the Atlantic] directly to the site, take them from the transportation vessel onto the installation barge, then directly install them.”
Meanwhile, the turbines, towers and nacelles will be delivered to the onshore staging area in New Bedford, Massachusetts for preparation. Two foreign installation vessels will park at the offshore project site, “then we’ll feed them with four jack-up vessels which are U.S.-flagged — Jones Act-compliant vessels.”
MHI Vestas, which won the deal to supply the project with its 9.5-megawatt turbines, is responsible for hiring the U.S.-flagged vessels. “I believe they’ll be coming up from the Gulf,” Hannah said.
Aside from MHI Vestas, the only other contract to have been made public is Prysmian’s €200 million ($225 million) deal to supply offshore cables. But Hannah said Vineyard has finalized about 80 percent of the project’s capex. “We’ve selected almost all the main contracts."
While it may sound like a headache to shuffle between feeder barges and installation vessels, Alejandro de Hoz, head of U.S. offshore wind at Avangrid Renewables, said he believes such a strategy may gain traction in other markets.
“The Jones Act is a topic that comes up very often as a potential drawback for the development of this industry here. Honestly, I don’t think that’s going to be the case,” said de Hoz.
“I think it’s going to be a particularity of the U.S. market that will help the industry develop alternatives to what we do in Europe, which is have a big jack-up that goes to port, picks up components, goes to site and installs them,” he said.
“What we’re going to do here — this concept of feeder barges plus jack-ups — is something I’m almost convinced will develop as a global solution, not only in the U.S. but in other geographies.”
“If the supply chain manages to find a way to construct cheaper feeder barges and keep expensive jack-up vessels on site without having to go back and forth to the ports, this might end up being a very good solution elsewhere,” de Hoz said.
Avangrid was reportedly one of 14 companies to formally express interest this year in developing offshore wind farms off California’s coast.
Laura Beane, CEO of Avangrid Renewables, said the company anticipates bidding for California development zones, likely to be put to auction by the federal government in early 2021.
Because of the water depths off the West Coast, any projects facing California will need to be built on floating foundations. Such foundations are not yet cost-competitive anywhere.
Offshore wind would face stiff competition in California's electricity market from solar, batteries, and even remotely generated onshore wind. But the high capacity factor of turbines spinning far out into the ocean, not to mention California’s ambitions for renewables, have drawn the attention of major international developers to the state’s coast, among them EDF, EDP, E.ON and Equinor.
“We have all seen what California is capable of in terms of aggressive renewable-energy policy,” Beane said. “I have absolutely no doubt that if they want to make this happen, they will enable the first commercial-scale floating [projects] in the world.”
De Hoz suggested that California may one day rival the Northeast as the most important U.S. offshore market.
Pointing to the U.S. Department of Energy’s 86-gigawatt “vision” for offshore wind in 2050, he said the Northeast would remain a key market over that time frame, but perhaps only account for one-third of the installed capacity.
“I think California’s going to have a lot of [market] presence once floating really becomes commercial,” he said. “I wouldn’t be surprised if an important part of those 86 gigawatts are in California.”
In contrast, the Great Lakes will likely represent a more limited opportunity, he said, given the relative lack of development space.