BOSTON — Two months after the U.S. government abruptly delayed Vineyard Wind’s 800-megawatt offshore wind project, the industry is still looking for answers.
It’s not exactly clear when Vineyard will get its final go-ahead, let alone what effect the government’s unexpected “cumulative impacts analysis” will have on the pathbreaking $2.8 billion project or the broader American offshore wind market.
If anything, the timeline for a resolution has slipped. The Bureau of Ocean Energy Management initially said it anticipated completing Vineyard’s supplemental environmental impact statement (EIS) in late 2019 or early 2020, delaying the project by about six months. But BOEM Acting Director Walter Cruickshank said this week that the Interior Department agency now expects to have the supplemental draft EIS “out for public comment early next year.”
“It seems the scope of goals for this industry changes from speaker to speaker and conference to conference,” Cruickshank said, speaking at an industry event hosted by the American Wind Energy Association. “This rapid growth makes it all the more important to ensure the first projects are done right.”
The federal government says the large number of big offshore wind farms shaping up along the East Coast justifies its demand for additional studies. Such studies are indeed common in other offshore wind markets, but experts say they are rarely imposed on a project so far along in the development process and in such an unexpected manner.
Two weeks ago at another event hosted by AWEA, Vineyard Wind CFO Álvaro Ortega Sebastián said he could not give a firm timeline for the project, which was set to be the first major offshore wind farm to get built in U.S. waters. “Hopefully next year we’ll get the permit — that’s our expectation right now,” Ortega Sebastián said.
The project’s two 400-megawatt phases were slated to reach completion in 2021-2022 some 14 miles south of Martha’s Vineyard. The delay makes that schedule unlikely. The rapid timeline was designed to capture as much of the fading federal Investment Tax Credit as possible, and in doing so minimize costs for Massachusetts ratepayers.
Vineyard is still analyzing how best to “mitigate” the delay’s impact on its ITC qualification strategy, Ortega Sebastián said. The developer is also “trying to renegotiate the contracts” that were in place, he said, adding that Vineyard’s equipment suppliers have so far been “very supportive.”
Vineyard Wind, a joint venture of U.S. utility group Avangrid and Copenhagen Infrastructure Partners, had nearly all of its major supply contracts in place when the project hit a snag. Those deals include MHI Vestas for turbines, Sif for monopile foundations, and Bladt for the offshore substation.
Knock-on effects
Despite Vineyard’s delay, the offshore wind industry remains enormously optimistic about the U.S. market. East Coast states have stood by or even increased their ambitions for the technology. Last month utility Dominion Energy outlined plans for a 2.6-gigawatt project off Virginia, the largest proposed so far in U.S. waters.
In the coming weeks, both Massachusetts and Connecticut are set to announce winners of major offshore wind procurements, further adding to the pipeline of projects with confirmed offtakers.
“We’re looking at a very, very substantial market moving forward,” said Dan Shreve, head of wind research at Wood Mackenzie.
WoodMac now expects more than 16 gigawatts of offshore wind capacity to be spinning off American coasts by 2028, with potential on the upside. The impact of those gigawatts will be bigger than the number suggests, given the associated investments in ports, harbor infrastructure and factories.
Even at the big-picture level, however, Vineyard’s delay is causing uncertainty and potential logistical challenges. If the project were to push back into later years, that would create a "stacking" effect with other projects in a market already short on viable ports and installation vessels.
And there's always a concern that BOEM's cumulative impact study could "turn something up" that stalls more projects and pushes the market's timeline further out, Shreve noted.
For Vineyard's project and those involved, there’s no question the delay is causing headaches.
“This delay…I took it very personally,” said Jason Folsom, director of U.S. sales at MHI Vestas and a market veteran, speaking at the Boston conference this week.
“Do we like it? No. Does it have an impact financially or otherwise? Yes.”
Sif, the Netherlands-based steel fabricator that won the contract to make the 84 monopile foundations for Vineyard, warned investors in August of a potential financial hit from the project's delay.
Folsom, like many others in the industry, portrayed the delay as a surmountable setback for a young market with big momentum. “At the project level, it’s a real challenge; it has impacts,” he said. “But it’s manageable. These things happen in market development.”
“The almost 25 gigawatts of state commitments to offshore wind — that doesn’t change because of the delay," he added.
"Victim of its own success"
Industry leaders seem to be taking the Trump administration at its word that there were no political motivations behind the supplemental studies. The industry has faced vocal opposition from parts of the commercial fishing industry.
“While it’s not been the most fun summer I’ve ever had, I think we’ve come to accept that this is one of the steps that needs to be taken to move this industry forward,” said Vineyard Wind CEO Lars Thaaning Pedersen, speaking in Boston.
“We’ve kind of been a victim of our own success,” Pedersen said. “The fact is, when Vineyard Wind was awarded the first [power-purchase agreement] in May 2018 — that’s 18 months ago — the market was a couple of gigawatts [in size]. Now we’re talking about [25,000] megawatts.”
BOEM’s Cruickshank echoed that sentiment.
“In our draft EIS, we looked relatively narrowly at existing plots that we had in place and existing PPAs for what was reasonably foreseeable,” Cruickshank said. “Since that draft EIS was published [in late 2018], it seemed almost weekly there were new announcements from states about their new goals and new RFPs.”
The government is committed to "getting this right," Cruickshank said. "We are taking a long-term view on how best to manage offshore wind activities."
If there’s one bright spot from the delay, it’s that offshore wind developers — a fiercely competitive lot — say they are working together more closely to head off potential market snags.
"We have definitely as a group started collaborating more on the issues we can collaborate on, instead of focusing only on competing with each other," Pedersen said.