Navigant Research Blog

First Dedicated Vessel for the US Offshore Wind Industry

Jesse Broehl — August 1, 2017

The US offshore wind market has been caught in the classic “the chicken or the egg” conundrum for years. The lack of purpose-built offshore wind installation jack-up vessels in the United States—necessary for the deployment of wind turbines in marine environments—has added uncertainty, complexity, and financial risk to the nascent offshore wind market in the country. It is also a key factor contributing to the slower-than-expected growth of offshore wind in the United States.

Multiple Issues

I wouldn’t attribute all the blame for the United States lagging behind Europe with offshore wind to this issue. European countries and China have been willing to provide generous regulatory and financial support for offshore wind, along with policies that are set up with a long-term framework. By contrast, the US market’s primary incentive mechanisms, the Production Tax Credit and Investment Tax Credit (PTC/ITC), have been enacted in short-term on and sometimes off again schedules for more than a decade.

Onshore wind developers with projects in advanced development can go from a turbine order to commissioned project in less than 8 months. The offshore wind industry, however, takes substantially longer for project development, turbine procurement, and project construction. Large wind projects in Europe typically require 2 years for construction. Prior to construction, the development and investment phases usually take at least 3-5 years.

That reality is the main reason offshore wind has been slower to take off than expected, but following at a close second is the lack of US-based jack-up vessels. These vessels have not been built in the United States because the offshore wind market demand has not been there to justify their pricey construction. Then why not simply bring a vessel or two from Europe?

The Jones Act

An antiquated maritime law from the 1930s called the Jones Act plays a major role in this issue. The law makes it illegal for vessels that are not built in the United States and crewed by American staff (a US flagged vessel) to deliver goods and conduct work from port to port. It is largely considered a protectionist measure to protect the US shipbuilding industry. One offshore project was commissioned last year, Deepwater Wind’s 30 MW Block Island wind farm off the Rhode Island coast. The Jones Act forced additional cost and complexity because the developers had to contract a jack-up vessel from Europe due to the lack of US vessels. Yet, the vessel could not touch US shores, where normally it would pick up the wind turbines, towers, and blades. Instead, Deepwater had to use smaller US flagged barges that towed wind turbine equipment out to the site, where it was transferred to the European jack-up vessel, thus increasing the cost, complexity, and risks of the project.

A Step Forward

One small but important step has arrived to mitigate the Jones Act problem. Two Texas-based companies active in the oil & gas industry, Zentech Inc. and Renewables Resources International (RRI), recently announced they would be the first to build an offshore wind construction jack-up vessel. The vessel will be a four-legged, self-propelled dynamically-positioned level 2 (DP2) jack-up vessel based on a US-built barge. Zentech plans to install four truss legs with spud cans, a proven oil & gas design, integrated in a newly built hull. It will be able to install in each port-to-site voyage three 6 MW-9 MW range wind turbines. Commissioning is expected in 4Q 2018.

The US offshore wind industry still faces challenges, but this recent announcement is a positive step toward minimizing the Jones Act as one of the industry’s impediments.

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