Once in a generation wind opportunity

At the close of 2019, offshore wind in the United States consisted of a tiny pilot project off the coast of Block Island (in the state of Rhode Island), with 30 megawatts (mW) produced by 5 turbines. By the mid-2020s, the business is expected to boom, with 8-10 gW (8,000 to 10,000 megawatts) expected to be generated along the mid-Atlantic and New England coasts.

New York and New Jersey have targets for offshore electricity production of 9.0 gW and 7.5 gW, respectively, by 2035. For ports in the region which seek to react to trade flow shifts typically happening over decades, it’s a potential once-in-a-generation type of opportunity.

Patrick Bird, Managing Director and Global Head of Advisory at New York based Seabury Maritime, confirmed, “I wouldn’t be surprised if at some time in the past few months, nearly every terminal, public or private, between Maine and Virginia has been contemplating at least a partial shift in cargo focus to accommodate this burgeoning and increasingly more sustainable industry.”

Ports in the region are targeting the construction phases and then ongoing maintenance and support of the offshore turbines and the electrical infrastructure (cables and offshore substations for gathering power feeds). But the journey is far from straightforward. In a 2019 presentation at the Workboat conference (in New Orleans), Mr. Arnstein Eknes, Segment director Offshore Service Vessels and Special ships, Classification Society DNV GL, explained the complexities, saying supply chains in the U.S. from manufacturing to logistics are in early stages of development.

He pointed to a circular argument, where businesses need to build scale, but cannot do so when there is no commerce. “Everyone wants local content and that brings a lack of efficiency,” he said.

RHODE ISLAND IN THE GAME

Davisville, Rhode Island, Quonset Point (a one-time U.S. Navy air station) at Narragansett Bay, was an assembly hub for the 30mW Block Island Wind project, which came online in late 2017. The dimensions of tower components and blades necessitated large open staging areas and Davisville’s specialty in automobile imports made it ideal for this role.

Plans exist for expansion at the port, with a proposal to invest $90 million for further site development. The port is the home base for a crew transfer vessel (built at the nearby Blount shipyard, just across Narragansett Bay) to service the Block Island wind farm.

Provport, at the top of the bay is also in the game. An executive from Deepwater Wind (a developer owned by the Danish behemoth Ørsted) said, in a statement: “The state is home to great port facilities at Quonset Point and ProvPort that were each essential to the development of the Block Island Wind Farm and are well-positioned to support future offshore wind development.”

EVOLVING COMPETITION

As the offshore business evolves, the rules between cooperation and competition among ports are also evolving. Mr. Bird, from Seabury Maritime, stresses that there is a role for multiple ports, and not always for the well-known names, stating, “Many of the major international gateways are limited in capacity but largely focused on other throughput intensive commitments, so it is difficult for large port complexes to adapt to the necessary functionality that offshore wind facilitation sites require.”

Mr. Bird elaborates further. “With the majority of niche ports and terminals in the Northeast having some sort of operational constraint, whether related to air-draft, laydown area or other limitations, the emerging offshore wind industry is creating a variety of exciting opportunities to handle at least some portion of the dynamic supply chain.”

OFFSHORE COMPLEMENTS EXISTING FLOWS?

Offshore wind complements existing cargo flows, so says Patrick Bird, from Seabury Maritime, but admits, “Of course, breakbulk and other traditional commercial cargoes in the region are also not going away.”

Seabury Maritime recently worked with the Connecticut Port Authority and State officials to identify a terminal operating partner for its 30-acre New London State Pier site that could accommodate both the wind opportunity and the State’s historic cargoes.

As a result, terminal operator Gateway Terminals, alongside offshore wind developers Bay State Wind, signed a Terms Sheet in May 2019 to bring over $90 million of investment to New London, ultimately revitalising and transforming the facility as it narrows its operations around this amazing opportunity.” The Bay State Wind (also to be developed by Ørsted and Eversource) will serve utility customers in Massachusetts.

South of Connecticut, a spate of contract awards in New York and New Jersey has brought excitement to port planners. In New York, development of Sunrise Wind (880 mW, Ørsted and Eversource), offshore Montauk and Empire Wind (900 mW, Equinor), in the New York Bight area gained approval to negotiate long-term power purchase agreements in July 2019.

With awards comes investment. “Equinor will also invest over $60 million in port upgrades in New York that will support future offshore wind projects and further strengthen the state’s position as the U.S. hub for offshore wind,” the company confirmed. In New Jersey, Ørsted received the goahead for a 1.1 gW (1,100 mW) project, “Ocean Wind,” to be sighted offshore Atlantic City. Ports around the Outerbridge area (near Staten Island) and those on the Delaware River are likely to vie for participation in supply chains.

FUTURE METROPOLITAN NEW YORK ROLE

Two existing facilities in the New York area have been promoting their future roles. Roughly 100 miles up the Hudson River, the private Port of Coeymans is playing a role in regional infrastructure projects, is already active in cement trades and is now producing “gravity-based foundations” for towers that would be barged downward out to offshore project locations, supported by Mammoet.

In metropolitan New York, along the Brooklyn waterfront, the reactivated South Brooklyn Marine Terminal is hoping to be a landside hub for offshore project work. The terminal’s operators state, “…the site’s adjacency to Industry City, a six million square foot innovation ecosystem, provides opportunities for R&D, support services, light manufacturing, and workforce development partnerships.”

Also, Atlantic Offshore Terminals, located on the Arthur Kill on Staten Island outside of highway bridges, could have a very important advantage – unlimited airdraft. If its plan moves forward, this facility could play an important role in assembly and trans-shipment of offshore wind components, particularly those that need to be transported in a vertical position.

Seabury Maritime’s Mr. Bird stresses opportunities exist beyond the larger cargo ports. “We’ve witnessed many of the regional State power procurements of late see bidders include dedicated funding for facility improvements, to the benefit of some of these more niche ports.” Unlike the decades-long reduction in jobs on the waterfront, offshore wind could bring beneficial employment and economic vitality on the coast.

Connecticut benefits from not in my backyard?

Though the press is full of positive headlines, investment for the burgeoning offshore business requires serious commitments to boost local economies. In the early 2000’s though a final scuttling in 2017, the “Cape Wind” project (which would have seen 100 + turbines erected south of Cape Cod) was pummeled by all manner of rejections, including Not in My Backyard cries from local prominent residents.

A possible Vineyard Wind project, 15 miles south of Martha’s Vineyard (with construction originally slated for early 2019) has been slowed by the U.S. Bureau of Ocean Energy Management (BOEM, which awards leases on the U.S. Outer Continental Shelf), which has requested further information to supplement an earlier Environmental Impact Statement.

Meantime, Vineyard Wind (owned by Spanish utility Iberdola- through its U.S. subsidiary Avangrid Renewables, along with a Danish infrastructure investment consortium) is also cooperating with the State of Connecticut in creating a hub, with significant employment of local trades and education for work offshore, at Bridgeport, Connecticut. It will serve a project called Park City Wind (named after an area on the port’s waterfront) to be situated in Vineyard Wind lease area south of Massachusetts.

Illustrating the evolving relationship between local and regional roles for ports, Vineyard Wind, in describing its Park City project, says: “Bridgeport will play an integral role in many project opportunities in both Connecticut and on the East Coast.” But, up and down the entire East Coast, coopetition considerations are far from resolved.

In mid-2019, the Connecticut State Port Authority announced it would invest $57 million at New London port, with an eye on a competing project (ultimately not chosen by Connecticut’s energy planners) dubbed Constitution Wind that would have been developed by Ørsted and Eversource (a large New England utility).