Only four or five months ago, the U.S. offshore market seemed poised to embark on a phase of major expansion to become one of the world’s largest markets for offshore wind installations. How things have changed with the swearing in of the new Trump Administration, which clearly promoted and followed through on its anti-offshore wind stance during the election campaign. The table below summarizes the high-level impacts to the U.S wind forecast since January.
Previous Administration “Business as Usual” Case
•Set goals to reach 30 GW of offshore wind by 2030 and 110 GW by 2050.
•Developers proposed a pipeline of over 100 GW of project capacity and ~6,800 turbines to be installed, of which ~58 GW to be commissioned by 2035.
•Behind the targets were commitments to invest in locally built vessels and multiple turbine, monopile and subsea cable factories.
Updated Forecast based on Trump Administration Actions
•The overall pipeline has fallen to ~86 GW and ~5,680 turbines.
•The revised forecast is for ~15 GW of capacity and ~1,100 turbines to be grid connected by 2035, ~43 GW less than the previous forecast.
•As a result of the uncertainty developers have deferred investment plans and several manufacturing facility investments have been cancelled.
The long-term pipeline still amounts to ~85 GW of installed capacity, but much of this is forecast to be commissioned late in the next decade, going into the 2040’s.
The high-level message is that there will be no new permitting, no new project approvals and more legal challenges to existing project approvals, resulting in limited activity and higher developer risk for at least the next four years. Uncertainty has increased and confidence in the segment has been thoroughly shaken.
In our latest U.S. market report, Intelatus Global Partners takes a deep dive into the changes to the offshore wind landscape in the United States and assesses the impact on project activity.
What has Happened?
On the day that he was sworn in to office, President Trump issued a Presidential Memorandum entitled “Temporary withdrawal of all areas of the Outer Continental Shelf for offshore wind leasing and review of the federal government’s leasing and permitting practices for wind projects”.
Under the Presidential Memorandum on offshore wind, there will be no new offshore wind leases issued on the outer continental shelf (OCS) until the suspension is withdrawn, existing awarded leases supporting ~40-80 GW will be reviewed to see if there are any legal reasons to cancel the leases and no new construction and operation approvals will be given, which currently impacts ~14 GW of project capacity. In the worst case, at least 50 GW of project capacity which developers had planned to advance over the next four years will not materialize.
As a direct result of the changing environment, several developers have delayed projects and several significant supply chain investments have been cancelled. Utilities and developers in Massachusetts and Rhode Island have recently asked for a three-month extension to negotiations for ~2 GW of power purchase agreements for the South Coast Wind and New England Wind projects. Whilst New England Wind has completed permitting, SouthCoast Wind has yet to secure the award of permits from three federal agencies. As a result, the developer, Ocean Winds, has recognized a ~$270 million impairment on its U.S. offshore wind portfolio and expects a delay in project construction from 2026 to 2030. The permitted Atlantic Shores South development has already seen one of its approved permits withdrawn by the Environmental Protection Agency for further review. Legal challenges outside of federal agencies to permitting projects are also ongoing, including multiple cases addressing permitting issues put forward to district courts and to the Supreme Court.
While not directly targeted at offshore wind, other presidential executive orders and initiatives will impact offshore wind projects, such as tariffs on imports or a proposal to impose penalties on /operators of Chinese-built vessels. Further, disbursement of IRA (Inflation Reduction Act) related tax credits, on which many offshore wind projects rely, is on hold and law makers are reviewing which tax credits will remain in the new federal budget.
Is that it – is the industry in the U.S. dead and buried?
While the industry has taken quite a hit over the last few months, there are some reasons to maintain longer-term optimism premised on the activities of several individual states. The foundation of this optimism is ~81 GW of state procurement targets. Nine Northeast and Mid-Atlantic states have established legally binding offshore wind targets amounting to ~53 GW through 2040. On the Pacific Coast, California and Oregon seek to collectively procure 28 GW of floating wind by 2045. Other states add ~17.5 GW of inferred targets to the planning pipeline. To date, ~9 GW of federally permitted capacity has secured offtake agreements and a further 2.5 GW is expected to be procured within this year.
~5.5 GW of commercial wind farm capacity is being built. Offshore construction works are advancing on Vineyard 1, Revolution, CVOW-C, Sunrise and will start on Empire Wind 1 in early April, and site assessment for future developments continues in other offshore leases.
What does this mean for the maritime supply chain?
Offshore wind construction and O&M vessels were previously designated as vessels of “national interest”, meaning they received priority treatment for preferential financing terms under the Federal Ship Financing Program (MARAD Title XI). It is unclear how this program will be managed going forward but it is assumed that the priority will no longer be on offshore wind vessels.
While there remains space for foreign flag construction vessels, mainly for turbine and foundation installation and cable lay, much of the offshore wind market in the USA is restricted to Jones Act vessels.
One Jones Act compliant WTIV (WTIV Charybdis), one scour protection vessel (Acadia), three Tier 1 SOVs (two ECO new builds, one for Ørsted’s Northeast Cluster and one for Empire Wind, and one Fincantieri Bay vessel for Dominion’s CVOW-C), one Tier 2 SOV (a Hornbeck SOV conversion) and 38 CTVs (excluding around options and SOV daughter craft) are currently either operational or are being built.
Further, ongoing construction of windfarms in the Northeast Atlantic has resulted in numerous short – and medium-term vessel charters for vessels holding a U.S flag, including tugs, AHTSs, PSVs, MPSVs and OSVs, many from the Gulf of Mexico oil & gas fleet.
However, the uncertain outlook for the Jones Act wind fleet is not so positive.
The cost of Dominion’s WTIV Charybdis is forecast to rise to around $625 million by time of delivery (at least one year late) versus an initial $500 million cost estimate and compared to the $325 million cost of WTIVs contracted in Asian yards with similar specifications in the same period. The WTIV will initially be busy with the construction of 176 turbine CVOW project, but thereafter opportunities outside of new construction and major component exchange for existing wind turbines are potentially limited. The Charybdis could possibly take work in the European segment if the market supply tightens and rates increase sufficiently, although this is not an immediate opportunity.
Great Lakes Dredge & Dock is building the first Jones Act compliant purpose-built wind farm fallpipe rock installation vessel, the Acadia. Originally estimated to cost around $197 million, the current cost estimate for the vessel which is being built at Hanwha Philly Shipyard is close to $250 million. The vessel will be delivered too late for its planned first assignment, foundation preparation at Empire Wind, where work will be undertaken by Great Lakes’ partner Van Oord. The delivery date for the vessel has slipped from November 2024 to September 2026. The vessel is contracted to work at Ørsted’s Sunrise Wind and a further unnamed permitted project. Given the current vessel delivery delays and challenges to permitted projects, this vessel may still face significant utilization risks.
Pricing challenges have also impacted the logistics segment.
Three tier one SOVs are being built by ECO (two) and Fincantieri Bay Shipbuilding (one). These vessels currently have secured long-term contracts for permitted projects with offtakes, which currently provides utilization mitigation. If off-hire, it is anticipated that these vessels would struggle to find profitable utilization. The vessels are reported to cost ~$97-168 million. Similar spec SOVs contracted in Europe in the same period were priced at ~$62-69 million.
U.S. CTV pricing is indicated at ~$12-15.5 million per vessel with a construction cycle time of at least 12 months per vessel (and as much as 15-20 months). By comparison, leading Southeast Asian yards will sell European specification CTVs for around ~$6 million per vessel, with build cycles of 8-10 months and capacity to produce 10 vessels a year.The challenge for much of CTV fleet will be redeployment.
Over one quarter of the fleet has secured long-term operations support charters, with the remaining delivered vessels working in the construction and commissioning phases. As project permitting stops and challenges to existing permitted projects and leases increases, the utilization outlook is not positive.
Wait and See
While it would be easy to write-off the U.S. wind market, there remain short- and mid-term opportunities. As long as developer confidence in the market can sustain, the longer-term opportunity continues to have great potential.
