All in for Wind: Localizing the Offshore Wind Supply Chain

Columbia Climate & Society:

Fanny Everard: StoryMaps Lead

Daisuke Kato: Research & Writing

Annika Larson: Research, Writing, & Editing

Kiki Pichini: Project Lead & Writing

Mathilde Robinet: Research & Mapping

Erik Valentine: Design Lead & Mapping

Catherine Vaughan, PhD: Columbia Climate School Capstone Project Supervisor

Cornell University ILR:

Avalon Hoek Spaans, M.A.: Research Advisor & Project Manager

Scott Siegel: Research Assistant

The Biden-Harris Administration has been a champion of offshore wind energy. Upon taking office, one of President Biden’s first acts was signing an Executive Order in support of developing offshore wind (OSW). In March of 2021, the Administration announced a goal of 30 GW of offshore wind by 2030, thereby increasing the U.S.’ energy independence and security ( The White House, 2021 ). Meeting the 30 GW goal is expected to generate over 44,000 jobs in offshore wind by 2030 with 33,000 additional indirect and induced jobs in communities that offshore wind activity supports ( The White House, 2021 ).

While the U.S. is poised to make progress in developing offshore wind, challenges threaten to hinder this growth. Issues in global supply chains are slowing down development and leading to delays in manufacturing and installation timelines. Consequently, investors and developers have grown weary of prolonged timelines, threatening essential funds for these projects. Offshore wind farms depend on critical infrastructure, such as ports and vessels, that require updates or production to be capable of supporting offshore wind activities (Kohley, 2022). Yet, across the U.S., infrastructure is chronically underfunded and in poor condition. Ports alone are reported to lack $12 billion for essential infrastructure upgrades over the next ten years and all three elements of the existing U.S. energy system – generation, transmission, and distribution– are chronically underfunded ( American Society of Civil Engineers, 2021 ).

Offshore wind is critical to drastically lower emissions across all sectors, and to rapidly scale up its growth U.S. policymakers must support domestic supply chain development. Strengthening and accelerating a domestic supply chain will require significant investments in ports, vessels, and training/apprenticeship programs (Shields et al., 2022). Increasing investments into local supply chain development will allow the U.S. to be well positioned in achieving cost-effective and sustainable growth well past the 2030 goal of 30 GW (Kohley, 2022). Fortunately, the U.S. can turn to the UK, a leading player in the offshore wind industry for over two decades, for fundamental lessons. Through an assessment of existing U.S. offshore wind capacity, infrastructure, and workforce development, and understanding the historic context of offshore wind development in the UK, the following recommendations have been developed and are aimed to rapidly accelerate offshore wind deployment– meeting the 30 GW goal and beyond– while ensuring high-quality domestic jobs for frontline communities:

The U.S. boasts a total of 5,259 GW of offshore wind technical potential, broken down into 2,472 GW of fixed-turbine generation potential and 2,787 GW of floating turbine generation potential (Energy Sector Management Assistance Program [ESMAP], 2022). These figures are an estimate of the maximum possible offshore wind generation capacity within a given sea area, based on factors including wind speed and topographical data. For reference, the total existing electricity generation capacity of the U.S. (across all sources) in 2021 was 1,143 GW (Energy Information Administration [EIA] , 2022 ).

The nationwide technical potential of 5,259 GW for the U.S. strongly surpasses the technical potential of the current global leaders in their existing installation capacity, including the UK (1,800 GW), China (2,982 GW), and Germany (203 GW). Despite this, an undeveloped supply chain has restricted significant offshore wind project development in the U.S. to a fraction of what has already been achieved in other nations. In particular, domestic manufacturing, port capacity, electric grid capacity, and lack of policy function to encourage development in these areas (in the form of federal investment and local procurement mandates, among others) are some of the primary factors that have contributed to holding back the large-scale development of offshore wind throughout the U.S.

The map below demonstrates the offshore wind technical potential by state, to show which areas currently demonstrate the highest potential.

As shown in the map, the regions of highest offshore wind potential lie on the West coast, particularly concentrated in California and Oregon, the southern area of Texas and Louisiana bordering the Gulf of Mexico, and the East coast stretching from Georgia to Maine. To consider the possible impact of this technical potential on greenhouse gas-fueled energy production, the map also shows the top US States in terms of percentage of energy produced from fossil fuels.

GULF COAST

There is already a transition occurring on the Texas Gulf Coast: A region known as a powerhouse for oil and gas extraction. The Biden administration is currently reviewing 30 million acres of possible sites for offshore wind projects in the Gulf Coast Area off Texas and Louisiana, some of which could be up for sale through auctions scheduled up to 2025 ( Tamborrino, 2022 ). In Texas, two Wind Energy Areas have been identified for offshore wind development in Galveston and Port Arthur; both of these are expected to be put forward in a proposed sale notice following a comment period regarding the Bureau of Ocean Energy Management (BOEM)’s draft environmental assessment of offshore wind leasing impacts in the Gulf Coast area ( Bachtel et al, 2022 ).  Recent developments have shown potential for supply firms in oil and gas industries to transition their workers and manufacturing processes into components needed for offshore wind development, particularly given their high existing capacity for such work and increasing in-state options for certification and training in renewable energy and wind energy technology. While Louisiana does not yet share the depth of opportunities for education and workforce training as neighboring Texas ( DOE, 2022 ), six former oil/gas companies within the state seized the opportunity to gain involvement in the first established offshore projects in the country— sending their designers, ship operators, welders, and other specialists to assist in major aspects of project planning and execution ( Baurick, 2021 ). As oil and gas corporations continue to abandon wells across the Gulf Coast, it is vital that there is a transition for these workers to have access to training and direct job placement within the renewable energy industry especially as there are transferable skills within these industries.

Existing Labor Concerns Within the OSW Industry

Examples of labor concerns in the existing offshore wind industry have further highlighted the need for just labor initiatives, particularly when facilitating the transition of workers in other industries to offshore wind. In Texas, the global marine and offshore company Keppel AmFELS has been working towards constructing a domestic wind turbine installation vessel (WTIV), a crucial component that would reduce historical inefficiencies in domestic offshore wind development. Successful construction of this vessel would be a step forward in reducing the need for difficult logistical shipments of turbines and other components directly from the EU, instead allowing for development and movement between U.S. ports. 

In 2019, the Keppel AmFELS manufacturing facility in Brownsville, TX employed nearly 800 workers but was not unionized following a 594-196 vote not to do so amongst the employees. The Southwest Pipe Trades Association (SWPTA), affiliated with the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the U.S. and Canada (UA), had begun organizing pro-union demonstration efforts, with 247 of 793 workers expressing interest in unionization prior to the vote. SWPTA organizers later alleged that Keppel AmFELS had employed intimidation tactics to (1) force all employees to vote and (2) encourage a vote of “no” from employees neutral to unionization. Prior to the vote, an employee who met with SWPTA organizers reported being afraid to be seen with pro-union organizers and expressed the labor force’s concerns of immediately being fired upon submitting a vote of “yes” to establish a union ( Port Isabel Press, 2021 ). While SWPTA had asserted that a complaint concerning the vote would be filed to the National Labor Relations Board (NLRB), no further cases concerning Keppel AmFELS have been reported so far on the NLRB website (National Labor Relations Board [ NLRB], 2022 ). Given the prevalence of similar cases, it is key for local, state, and federal governments as well as organizations to remain proactive to ensure high quality union job creation within the offshore wind industry as it rapidly develops past its infancy.

LOCAL INITIATIVES AND PROJECTS

In the current landscape, local and state-level policy have been some of the main drivers of offshore wind development. A federal goal was set in 2020 to deploy 30 GW of offshore wind capacity by 2030, less than 1% of total nationwide technical potential and less than 3% of the current total US generating capacity. For the longer term, the Department of Energy has been investigating a framework for capacity expansion to 300 GW by 2050, just under 6% of total technical potential. Individual coastal state requirements for project procurement have also begun to drive domestic manufacturing, such as Local Content Requirements. Local Content Requirements (LCRs), are mandates for a given percentage of project content to be sourced from the state or territory under which the proposed project falls. Numerous labor unions across high-potential states have been advocating for the implementation of LCRs, citing the benefits of local job creation for strengthening regional supply chains and contributing directly to regional economic growth ( Skinner et al, 2022 ). To make this component of the just transition a plausible reality, workforce training programs in offshore wind have increased significantly in prevalence, with over 40 dedicated industry training programs across the country (outside of project developer initiatives to fund internal workforce development). Some recent developmental highlights in education include:

• A $20 million budget allocated by the state of New York for the establishment of an Offshore Wind Training institute, which will be facilitated by Farmingdale State College and SUNY Stony Brook. Upon completion, the center looks to train at least 2,500 New Yorkers per year. 
• The state of Massachusetts has allocated a total of over $2 million across 15 grants to institutions, unions, and businesses to develop educational programs that support the state’s objectives in offshore wind development. 
• The state of New Jersey has provided $4.5 million to support a proposed Wind Innovation and New Development Institute, which aims to become a hub for offshore wind workforce development and innovative research. ( NJ Wind Council, 2020 )

To develop some further context on the current projects in the US and their constraints, the map below shows a selection of specifics for all currently proposed and completed offshore wind projects, including their total or proposed cost, workforce if found, and GW installed. Many of these projects are concentrated on the East Coast, particularly in the area from Virginia to Massachusetts.

RHODE ISLAND

The first commercial scale non-pilot offshore wind farm to be commissioned in the US was the Block Island Wind farm located in Rhode Island, a high-potential state given its small coastal area. Block Island Wind began the planning and permitting process in 2011, preliminary construction in 2015, and operation in December 2016.  It consists of five 6 MW turbines for a total operating capacity of 30 MW.  Deepwater Wind, an American offshore wind development group that was later acquired by Danish offshore wind company Ørsted in 2019, was designated by the state government of Rhode Island to develop the pilot projects associated with a larger project plan spanning across the states of Rhode Island and Massachusetts, the remainder of which remains in the planning/development stage ( Orsted, 2022 ). While the turbines of Block Island wind were sourced by French company Alstom Wind (now GE Wind), the foundations, engineering, and assembly were performed by the following domestic companies: Gulf Island Fabrication and Keystone Engineering completed steel work and other construction projects in Louisiana, which were transported to the project site via marine transport. Four Rhode Island ports were used to complete the construction and staging processes: Galilee, Block Island, Quonset Point, and ProvPort. The completion of the Block Island project set the groundwork for the 2016 expansion of ProvPort supported by $20 million from the State of Rhode Island ( GoLocalProv, 2016 ). Later agreements for ProvPort included plans of housing a new regional offshore wind construction hub that will construct foundation components for projects managed by Ørsted and Eversource Energy within Rhode Island, Connecticut, and New York ( Eversource Energy, 2021 ). This expansion was approved in 2021 and under an agreement between the energy companies and the Rhode Island Building and Construction Trades Council ensures that 100% of the port expansion project’s work will be completed by 40 union workers ( Revolution Wind, 2021 ). This project has further established Rhode Island and its workforce as national leaders in offshore wind development, and has opened up opportunities for increasingly efficient regional expansion.

The most significant roadblocks during the construction process of Block Island were due to restrictions on the transport of required turbine equipment from domestic ports thanks in part to the Jones Act, discussed later in this chapter. To meet these requirements, Deepwater Wind shipped the necessary components from France via a specialized installation vessel designed by Norwegian firm GustoMSC ( 4cOffshore, 2022 ), and ensured that the vessel never docked during the construction period. US-flagged lift boats then shuttled necessary components from local ports to the foreign installation vessel which was prohibited from completing these transfers ( Grabow, 2021 ) . This “logistical gymnastics” was referenced as a practice that had barely succeeded for the Block Island Project, and would likely require even further planning to succeed for a larger project under the same regulatory landscape ( Merchant, 2017 ). 

The Block Island project led to many domestic partners manufacturing offshore wind components for the first time leading the project cost per megawatt to be higher than comparable starting projects, with a final cost of $9.6 million per MW (compared to $1.6 million per MW for the North Hoyle farm in the UK, for example, which was of similar size and commissioned over a decade prior ( Coflein, 2010 ). As such, the contract for selling the farm’s generated power to the National Grid presented a starting rate of 24.4 cents per kilowatt-hour (with an annual 3.5% increase). Given the state’s average electric retail price of 12.7 cents per kilowatt-hour at the time of contract negotiation ( EIA, 2012 ), this contract rate presented a roadblock in the project approval process, which was only able to move forward following adjustments of the definition of “commercial reasonability” for electric purchase rates within the RI state electricity law. Even following the legal adjustments and mediation with the Rhode Island Public Utilities Commission, local residents filed reports to the Federal Energy Regulatory Commission (FERC) citing concerns for the contracted electricity rate’s potential economic burden. The need for new, reliable clean generation infrastructure in the state was clear, however: Rhode Island’s utility-scale power industry comprised 98.5% Natural Gas generation at the time of the project’s proposal, yet their gas pipeline network was one of the 5 oldest in the nation ( ASCE, 2017 ). Further, Block Island did not have electrical connection to the primary Rhode Island state grid, which forced residents to obtain power from even more costly, unreliable diesel generators ( Brink & Dalton, 2018 ). The Block Island project involved connecting the island to the main grid  through submarine cables, which allowed residents to obtain cleaner power at more typical in-state rates ( Froese, 2017 ). RI resident reports were ultimately not honored by FERC, and the project began construction in 2015 following 4 years of permitting and contract negotiation.

The usage of multiple ports throughout the construction process created local union employment in the marine and metalworking industries, which led to the development of a more positive public attitude towards the generation facility’s construction. In total, the Block Island project helped to create over 300 community-based jobs for workers in manufacturing and construction across 30 unionized contractors and sub-contractors ( Hewett, 2017 ). The experience in offshore wind development that these domestic companies gained through the Block Island project has also been cited as a strong point of potential for future capacity growth in the high-potential Gulf Coast area, as Rhode Island leads the way on high quality job creation through the scale up of the Offshore Wind Industry.

OSW SUPPLY CHAIN

In 2020, total developed offshore wind capacity in the U.S. surpassed 35 Megawatts (MW), with an additional 15 pipeline projects reaching the permitting phase of development ( Musial et al., 2021 ).  

Despite this progress, the U.S. OSW supply chain is highly dependent on foreign supply chains. The domestic supply chain remains in its “infancy” and most components need to be imported from European and Asian suppliers. For example, fixed-bottom foundations for OSW are based on the historical European market and U.S. needs to rely largely on European manufacturers ( National Renewable Energy Laboratory, 2022 ). 

At the same time, wind turbine manufacturing is dominated by a few top manufacturers: Siemens-Gamesa (Germany-Spain), Vestas (Denmark), GE Renewables (US), Senvion (Germany), and Goldwind (China). The top five OSW markets in the world are the UK, Germany, China, Denmark, and Belgium (Kohley, 2022).

In 2020, wind energy supported 1.25 million jobs worldwide. However, the opportunity is concentrated in Asia (54%), Europe (27%), and America (17%). 1 million people were employed in 10 countries: five European, three North American, and two Asian ( International Renewable Energy Association [IRENA] & International Labour Organization [ILO], 2021 ).

The COVID-19 pandemic has shown the substantial risks and volatility of US supply chains. At the same time, political unrest and the Russian invasion of Ukraine has also led to instability in the global food and energy market ( Wilson, 2022 ), a supply chain that is concentrated in geopolitically volatile regions making U.S. citizens vulnerable ( Center for American Progress, 2021 ). To strengthen and sustain the U.S. energy supply offshore wind and other renewable supply chains must be rapidly developed.

High quality union jobs must be prioritized in the build out of this renewable energy supply chain. Through labor and industry collaboration, a just transition can be achieved ( Memija, 2022 ). Notably, the North America’s Building Trades Unions (NABTU) and Ørsted, offshore wind developer and operator company, have signed a Project Labor Agreement (PLA) to build out the company’s offshore wind farms in the U.S. with a unionized workforce ( Memija, 2022 ). This PLA is known as the National Offshore Wind Agreement (NOWA) and represents three million individuals in the Building Trades. This agreement is unprecedented in the U.S., covering all of Ørsted’s offshore wind contractors and subcontractors from Maine to Florida ( McDermott, 2022 ). NOWA intends to strengthen diversity, equity, and inclusivity in the workforce while providing opportunities in this sector to frontline communities ( Ørsted, 2022 ). 

High quality union jobs must be prioritized in the build out of this renewable energy supply chain. Through labor and industry collaboration, a just transition can be achieved ( Memija, 2022 ). Notably, the North America’s Building Trades Unions (NABTU) and Ørsted, offshore wind developer and operator company, have signed a Project Labor Agreement (PLA) to build out the company’s offshore wind farms in the U.S. with a unionized workforce ( Memija, 202 2). This PLA is known as the National Offshore Wind Agreement (NOWA) representing three million individuals in the Building Trades. This agreement is unprecedented in the US, covering all of Ørsted’s offshore wind contractors and subcontractors from Maine to Florida ( McDermott, 2022 ). NOWA intends to strengthen diversity, equity, and inclusivity in the workforce while providing opportunities in this sector to frontline communities ( Ørsted, 2022 ). 

SCALING UP OSW SUPPORT VESSELS

The Merchant Marine Act of 1920, known as the Jones Act, is a federal statute establishing support for the development of a merchant marine in order to support commercial activity and serve as a naval auxiliary in times of national emergency. Originally, this law was implemented to ensure a vibrant U.S. maritime industry and for national defense. Section 27 of this statute requires shipping between U.S. ports to be conducted by U.S.-flagged ships ( Legal Information Institute, 2022 ). This has become an obstacle for American OSW projects, as only five vessels outside of China can install the next-generation turbines planned for the coming U.S. projects (Knobloch , 2022 ). The U.S. has just one vessel that fulfills the requirement of the Jones Act ( Schuler, 2022 )

An amendment attached to the  National Defense Authorization Act  for Fiscal Year 2021 extended enforcement of the Jones Act for all offshore renewable energy production vessels (William M. (Mac) Thornberry National Defense Authorization Act, 2021). In its  first ruling  since that amendment was finalized, U.S. Customs and Border Protection (CBP) found that the Jones Act applies to the transportation of merchandise from a U.S. port and other coastwise points to wind turbine generator foundations located on the Outer Continental Shelf (U.S. Customs and Border Protection, 2021; Akin  Gump, 2021 ).

The Jones Act broadly applies to OSW projects, but according to the ruling of April 2022, the CBP determined the Act does not apply to some special cases, which permits those activities to be performed by foreign vessels as follows. 1) The CBP confirmed that a foreign WTIV can move crew members and materials to the work site. 2) A foreign WTIV may arrive in U.S. waters and install foundations and other project components it has transported from a foreign port. 3) The Jones Act does not apply to vessels laying electrical cables in U.S. waters between two U.S. points, or to vessels loading that cable at a U.S. port. 4) The use of foreign cable lay vessels is permitted. 5) Foreign vessels are permitted to pick up rocks in a U.S. port, transport them offshore, and place them at a work site (Knight & Casey , 2022 ). This determination allows WTIVs to park offshore and process shipments from Jones-compliant tugs and barges, which might add complexity and danger to the process of OSW projects (Wilcon  & Valenstein, 2021 ). At the same time, it is pointed out that the definition of “Vessel Equipment” is not clear and stakeholders of OSW projects should get case by case judgment about the scope of the Jones Act from CBP ( Akin Gump, 2021 ).

Considering the Jones Act helps maintain 650,000 American jobs in every state and territory, contributing billions of dollars each year to the nation’s economy, it can be said that the scope of the Jones Act influences the cost and job creation of OSW projects ( West Coast Sailors, 2022 ). At the same time, limited supply of OSW support vessels creates a bottleneck in the OSW supply chain. Therefore, policy measures to boost domestic vessel manufacturing are imperative.