Spanish utility group Iberdrola wants to be the biggest player in the U.S. offshore wind market, but it will need to go through early market front-runner Ørsted to get there.

Iberdrola, among the world's largest wind power generators, plans to steamroll its way through the coronavirus crisis, with CEO Ignacio Galán announcing plans this month to increase investment in renewables projects and continue adding jobs as soon as the public health crisis is over. Up to a quarter of the €10 billion ($11 billion) the company plans to invest this year will go toward offshore wind.

Iberdrola has long been a major player in U.S. renewables and remains one of the country's largest owners of onshore wind farms through its controlling stake in Avangrid, a utility and renewables developer. The U.S. — and Avangrid — is now a central plank of Iberdrola's global offshore wind push, accounting for more than 60 percent of its 12-gigawatt global offshore pipeline.

Avangrid is joint owner of Vineyard Wind, whose 800-megawatt project for Massachusetts is likely to become one of the first major U.S. offshore wind farms despite its ongoing permitting delay saga. Vineyard is now expected to be finished in 2023; Iberdrola confirms there has been no change in the project timeline despite the coronavirus shutdown.   

“We're in a very good position to be the leading player [in the U.S.]," Jonathan Cole, managing director of Iberdrola’s offshore wind business, told GTM. "We're going to be the first to build a large-scale offshore wind project in Vineyard I. That puts us in a strong position and allows us to just keep growing and growing beyond that.” 

Denmark's Ørsted, which is the world's leading offshore wind developer, holds a formidable position in the U.S., with interests in projects across five states totaling more than 8 gigawatts. By the middle of this decade, Ørsted could own more than 3 gigawatts of U.S. offshore wind, compared to 800 megawatts for Iberdrola if Vineyard successfully builds its first two projects in New England.

But Cole said Iberdrola's market position is unique, given its ownership of a U.S. utility and its vast experience building onshore projects. Avangrid has more than 3 million utility customers in New York and New England. As the decade progresses, Avangrid will look to bring as much as 2.5 gigawatts of capacity online in its Kitty Hawk lease area off North Carolina, while opening up Vineyard Wind's second large zone in southern New England for construction.

The company is hiring dozens of new U.S. offshore wind employees as it scales up. “Initially we've taken some very talented people from the onshore renewables business to help well as assigning some very experienced offshore wind people from Europe,” said Cole.

“From that critical mass, our plan is to grow a substantial organization that has the capability to do the full lifecycle of an offshore wind project, from initial site finding through development, engineering, procurement, construction, and eventually operations and maintenance."

Can floating wind shift the balance?

By the late 2020s, another differentiator may come into play: Iberdrola's concerted push into floating offshore wind.

Ørsted has said little publicly about floating wind; the technology, which is still in its early stages of commercial development, barely features on Ørsted's website or in its annual reports. In an earnings call last August, CEO Henrik Poulsen said Ørsted was monitoring the market so that "if there is an opportunity where we should act, we would be ready to do so. But for the time being, we are not actively pursuing any floating projects."

Iberdrola, on the other hand, recently revealed details of two demonstration projects in Norway and Spain, and the company looks set to move swiftly once its pilots have run their course. Creating an offshore wind market in its native Spain, where floating turbines will be necessary, gives Iberdrola a strong motivation to pursue the technology. A growing number of other major European energy companies are actively pursuing floating wind, including EDPR, Shell, Total, Engie and Equinor.

“In the context of a net-zero world where we are trying to totally decarbonize the power sector, you need as many of these massive-scale, low-carbon generating facilities as possible — and that means that probably you need to look further offshore and into deeper water,” said Cole.

In the U.S., there is scope for floating wind off both coasts.

“What you're looking for is an area where you've got deep water, good wind resources and high demand, which can drive up a lot of volumes and economies of scale," Cole said. "That's how floating [wind] is going get the costs down and [become] cost-competitive with fixed [foundations] by the end of this decade. If you apply that concept to the market, you can see that there are near-term opportunities on the West Coast of the United States and in Asia.”

Maine Governor Janet Mills has breathed new life into the 12-megawatt Aqua Ventus floating project off the state's coast, after years of delays and uncertainty. Despite Avangrid's presence in the Northeast, Iberdrola told GTM it would not be investing in Aqua Ventus at this stage, focusing instead on its two floating demos in Europe.

Meanwhile, a study last year by Energy + Environmental Economics (E3) found a case for 7 to 9 gigawatts of floating wind in California by 2040, potentially saving ratepayers $2 billion in the process.