Despite financial gyrations in the U.S. offshore wind energy market that have caused project delays and cancellations over the past two years, America now has joined other world nations in having energy generated for the first time from a utility-scale facility.

That U.S. clean energy milestone was reached with the early December announcement that the 132-MW South Fork project off New York successfully sent power to the state grid, through its onshore connection point in East Hampton, Long Island. The estimated $2-billion project is located 35 miles east of Montauk.

Power generation “represents years of hard work, vision and courage to lead in our energy transition,” said Doreen Harris, New York State Energy Research and Development Authority (NYSERDA) president and CEO. The project will “demonstrate to all that offshore wind is a viable resource New York can harness for generations,” Gov. Kathy Hochul (D) said, adding it will cut up to 6 million tons of carbon emissions each year.

Two of 12 Siemens Gamesa-made turbines that will power the project being built by a joint venture of developer Orsted and Connecticut utility Eversource, were installed —with the remaining 11-MW structures to follow through early 2024, the team estimates.

Kiewit-made offshore substation for South Fork project off Long Island, N.Y. was installed earlier this year.
Photo: Courtesy of Orsted

The project would be the first completed in New York, which has set an aggressive goal of 9 GW of offshore wind capacity by 2035. Project work, based at the port of New London, Conn., also includes installation of the project's 1,500-ton offshore substation fabricated by Kiewit in its Texas yard—the first to be made in the U.S. Orsted Americas CEO David Hardy said East Hampton now is “the first community in New York to receive clean energy from an offshore wind farm,” despite local opposition to its cable routing plan.

The project's 68-mile high-voltage, alternating current export cable was also the first to be domestically produced, manufactured by France-based Nexans at its expanded Charleston, S.C., plant.

Nexans also said in November it has a “framework agreement” with Orsted and Eversource to manufacture cable for its just approved 704-MW Revolution Wind project that will supply power to Rhode Island and Connecticut. "The completion of the work at South Fork Wind Farm is a monumental step in the U.S. energy transition,” said Pascal Radue, executive vice president of Nexans' generation and transmission business group. “We are looking forward to continuing work in the state and in the broader region."

Energy Transition Lead

In Massachusetts, the 800-MW Vineyard Wind project—which was first in the U.S. to be permitted and start construction—said five of 62 planned 13-MW GE-manufactured turbines that are more than 850 ft high with 107-ft-long blades, have been installed. These are being tested, along with other key infrastructure, and could deliver power by year end to the New England electric grid, said an Avangrid spokesman. The estimated $3-billion project is set to fully operate next year. 

"This will forever change how we think about power production in the U.S., unlocking a major source of electricity in the Northeast that can be copied by other coastal regions," said Joe Curtatone, president of the Northeast Clean Energy Council, In a statement. In the project's second report to the state on Dec. 15, it said it has created 937 union jobs through two years of construction, double its original commitment in its Project Labor Agreement. 

Avangrid CEO Pedro Azagra said the estimated $3-billion project "is working through the final technical requirements" to start the power flow. 

Despite approval process roadblocks during the Trump Administration for South Fork and Vineyard Wind, their earlier starts enabled them to lock in financing and supply chain costs before more recent inflation-generated increases that have caused cancellations of project power agreements in Massachusetts and Connecticut—and of two entire projects in New Jersey that were set to deliver 2.2 GW. The latter state's remaining 1.5-GW Atlantic Shores project still awaits its federal construction permit.

Coping with Constraints

One key roadblock now unfolding is delay and cost hikes related to construction of Charybdis—the first U.S.-built turbine installation vessel able to carry large project components from U.S. ports to offshore sites in compliance with the federal Jones Act. 

Commissioned by Dominion Energy in 2020 for use in August 2025 for its 2.6-GW offshore wind project off the Virginia coast, the 472-ft vessel was supposed to enter service this year but now will be completed in late 2024 or early 2025, the firm said in its latest quarter financial report in November. 

That will meet Dominion’s offshore project time frame but it had been contracted to other projects on earlier schedules, forcing them to secure costlier alternatives that have weighed on project economics. This was a key factor in Orsted’s cancellations in New Jersey—where a spokesman said the delay would have upended project schedules and added major costs, said the Wall Street Journal earlier this month. 

The company said its Revolution Wind and Sunrise Wind projects face the same problem, but it committed to complete the former, with higher tax credits available. The latter's fate is still not clear.  Vessel construction is about 70% completed, but its cost has risen from about $500 million to $625 million, including financing—double what a similar ship might cost abroad, analysts told the publication.

With New York still facing a Sunrise cancellation and that of one awarded to Equinor-BP, totaling 4 GW—after state regulators would not allow power price adjustments—to insure capacity, state energy officials recently ramped up project awards and launched a new procurement round. New York will accept bids through Jan. 24, and make contract awards in February.  Earlier approved projects would be allowed to be rebid projects with price adjustments, according to NYSERDA. New Jersey Gov. Phil Murphy (D) also has directed the state Board of Public Utilities to speed up its upcoming bidding process. In total, at least ten East Coast projects have tried to renegotiate power offtake prices, said Reuters. 

Massachusetts recently formed a pact with Rhode Island and Connecticut to better coordinate developer proposal selection and enable potential cross-border sharing of port, manufacturing and other supply chain investments. But according to reports, Massachusetts bidders also will have to disclose details of past defaults, which could be weighed in bid-scoring, and may be asked to provide significantly higher security deposits if they had cancelled a state contract. 

Also, U.S. Treasury Dept. rules proposed last month clarified that federal investment tax credits would be extended to subsea cables and onshore power treatment facilities under the Inflation Reduction Act. But the incentives do not apply to third-party-owned offshore transmission assets, such as planned mesh systems that sector proponents say offer cost savings in linking multiple projects, according to industry publication Recharge.

Moving Forward

The U.S. Interior Dept. still is approving new projects to move forward, as well as new development areas. It released several months ago a new 278,000-acre mid-Atlantic lease area set for auction next year but this month reduced it due to U.S. military concerns that development would interfere with its operations. Jamie DeMarco, Maryland director of the Chesapeake Climate Action Network, termed the cutback “disappointing.” To help the state meet its new goal of 8.5 GW of offshore wind by 2031, officials will evaluate other areas for a new lease sale “as early as 2025,” Interior said.

States are also stepping up. In a first key move by Delaware into the offshore wind sector—despite no deployment goal yet set—Gov. John Carney (D) announced on Dec. 19 negotiations with a Maryland offshore wind developer to provide its two projects transmission cable connection space at a state park and at a now closed coal-fired power plant.

Louisiana also became the first state to launch commercial offshore wind development in near-shore state waters, when Gov. John Bel Edwards (D) announced award of project sites last week to a unit of turbine maker Vestas and one owned by Mitsubishi. The state has set a goal to install 5 GW of offshore wind by 2035. The two companies and state officials did not disclose specifics about proposed projects, but renewable energy advocacy group American Clean Power said lower transmission costs closer to shore would boost technology testing. The state has previously noted interest in using Gulf offshore wind energy to produce cleaner burning green hydrogen through electrolysis.

"For generations, Louisiana has been a leader in energy production, and offshore wind energy is the next chapter in that ... as we expand our options for clean energy production and open new avenues for the development of our state economy,” Edwards said.