The U.S. offshore market is finally beginning to materialize, according to MAKE Consulting’s latest Global Offshore Wind Power Market report.
MAKE analysts forecast a compound annual growth rate of more than 50 percent for the market to 2026, mainly by state-level procurement in the absence of major federal policy incentives. Massachusetts, New York and Maryland are already showing promising initiatives that will kick-start the market.
In line with expectations, New York Governor Andrew Cuomo revealed plans to solicit 800 megawatts of offshore wind over the next two years in his 2018 State of the State address. The Master Plan, announced yesterday, will guide the development of 2.4 gigawatts of offshore wind by 2030.
Note: We'll be livestreaming Clean Energy Connections' panel on the offshore wind market in New York with MAKE Consulting on Wednesday, January 31 at 7:15 p.m. EST. Click here to jump to the live broadcast!
Offshore Wind Market Outlook for the U.S. by State, 2017 to 2026E
Source: MAKE Consulting
To date, the only offshore wind power installation in the region is the 30-megawatt demonstration-scale Block Island project south of mainland Rhode Island. However, more than 2.3 gigawatts are expected by 2026 in the U.S. market, led mainly by states in the Northeast, according to MAKE’s forecast.
Compared to the expected 3.9+ gigawatts of installed offshore wind power capacity globally for 2018 alone, the U.S. growth trajectory might appear to be lagging. However, there are clear upsides to arriving a little late to the party: namely, the emerging U.S. offshore wind market has the luxury of learning important lessons and best practices from other markets.
Bureau of Ocean Energy Management Lease Zones by Leaseholder
Source: MAKE Consulting
Offshore auction systems have become mainstream in Europe over the past three years, and have produced impressive results.
“Following the Danish model, Germany, the Netherlands and the U.K. are definitely showing the world how competitive offshore wind can be, and MAKE expects multiple subsidy-free projects to be awarded in 2018,” said Søren Lassen, offshore wind analyst at MAKE.
And it is not only lessons from northern Europe that will positively affect the U.S. offshore wind market. European developers are also actively entering the U.S. market.
“With the intense competition in their home market, European developers are now branching out to establish development pipelines globally. The U.S. has been a particularly attractive destination, and these players have established an almost 12-gigawatt development pipeline there,” said Anthony Logan, market analyst at MAKE.
The technological developments in the U.S. market are largely drawn from the European market, and the majority of components used in the Block Island Project were European supplied. While technological developments are likely to follow the European market, MAKE expects a larger share of the supply chain to be established in the U.S. as the market matures at the beginning of the next decade.
The market’s growth is not without several challenges, including compliance with the Jones Act. Those issues will need to be resolved before large-scale installations can commence.
Learn more about MAKE's offshore market research and download a free copy of the Global Offshore Wind Power Market report here.