For newcomers, success in the US renewable energy market can be elusive. Among the biggest of global prizes, the market is also fragmented, the learning curve steep.

For companies eyeing the US’s offshore wind market, where regulators are still deciding the best way forward, the challenge is even steeper. Much of the country’s energy policy is made not in Washington, D.C. but by lawmakers and regulators in 50 far-flung state capitals. Now three states hoping to grab a bigger slice of the pie have traded winner-takes-all competition for collaboration in order to grow a larger market with shared opportunities.

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Last year, the governors of the coastal Mid-Atlantic states of Maryland, North Carolina and Virginia signed an agreement committing each state to “cooperatively promote, develop, and expand offshore wind energy and the accompanying industry supply chain and workforce”.

The Block Island Wind Farm, Rhode Island, US. (Photo by Eric Thayer/Bloomberg via Getty Images)

“This bipartisan agreement with neighbouring states allows us to leverage our combined economic power and ideas,” North Carolina Governor Roy Cooper said when the Southeast and Mid-Atlantic Regional Transformative Partnership for Offshore Wind Energy Resources (SMART-POWER) memorandum of understanding (MOU) was announced in October 2020.

In the intervening months, representatives from the three states have met regularly to figure out how to transform promises into real-world action.

“It is one thing to sign an MOU with lots of ‘whereas’ clauses. It’s another when you get to the point of the MOU where it says ‘resolve’ what you will actually do,” said Clark Mercer, chief of staff to Virginia Governor Ralph Northam, at the Business Network for Offshore Wind’s International Partnering Forum (IPF) last month in Richmond, Virginia. The annual event is the largest offshore wind conference in North America.

Time and again at the conference, public and private sector stakeholders made clear that Europe’s leading offshore wind companies say they need to see a pipeline of projects, spread over a decade or more, to feel comfortable making significant investments in US-based manufacturing facilities. The SMART-POWER states believe that by working together to clear red tape for project approvals, build a local supply chain and grow a regional workforce, each state can benefit from a larger market than had it charted its own course.

“What I hear from a lot of our European neighbours is, it is very frustrating to have 50 states and 50 different regulatory regimes,” John Warren, director of Virginia’s Department of Mines, Minerals and Energy, said during an IPF panel on the SMART-POWER agreement. “We need to make it as easy as possible on these industry partners.”

The emerging US market

The US offshore wind industry today is an iceberg: nearly all the activity is invisible, below the surface. Just 42MW of offshore wind capacity have been installed in the US. The world’s leading markets, the UK and China, have each installed around 10,000MW.

However, the pipeline of US offshore wind projects under development – 35,324MW at the end of 2020, according to the US Department of Energy – matches the cumulative installed global capacity. Recent events have affirmed what Energy Monitor reported earlier this year: the transition to the Biden administration will mark 2021 as a breakthrough year for the US wind industry.

In late March, the Biden administration set a goal to build 30,000MW of offshore wind capacity in the US by 2030 and complete reviews of construction and operations plans for at least 16 offshore wind projects by 2025. In early May, the Bureau of Ocean Energy Management, the federal offshore energy regulator, approved construction of Vineyard Wind I, an 800MW project located offshore the state of Massachusetts, and the US’s first commercial-scale wind farm. Later that month, the White House announced that the State of California and the US Defense and Interior departments had identified areas that could support an initial 4,600MW of offshore wind development.

Joe Biden’s enthusiastic support for offshore wind is a sea change for an industry frustrated by obstruction and delays from the Trump administration. The states kept the industry alive during these years. Led by New York, Massachusetts and New Jersey, US states now aim to procure nearly 40,000MW of offshore wind capacity by 2040. All along the US East Coast, they are jockeying to host industry hubs, investing in multi-million-dollar upgrades to ports that could serve as pre-assembly and staging areas, and hoping to lure manufacturers to erect factories for turbine blades, towers and other components.

State-level competition is understandable. Mayors and governors will always show up in person at ground-breakings or ribbon-cuttings for projects that provide jobs to their constituents, but the states participating in the SMART-POWER compact believe there is something to be gained by collaborating, too.

Regional collaboration

“As we say in my home on the eastern shore, 'a rising tide lifts all boats',” Northam said at the IPF conference. Work was under way, he continued, to implement the SMART-POWER agreement. Over the summer, officials from Maryland, North Carolina and Virginia “worked on ways to build a framework to grow and expand this initiative”. In the SMART-POWER MOU, the states had agreed to cooperate to provide regulatory certainty to companies, promote the Mid-Atlantic region as a wind energy hub, and coordinate communications with the federal government, among other measures.

“We interviewed tier one, tier two and tier three offshore wind manufacturers and suppliers to find out what you believe our three-state partnership could do that would help your business grow in Virginia,” said Northam in remarks directed at company officials in the audience. “We will look at ways to enhance our state permitting process and create cross-state workforce development initiatives. And we will strengthen our multi-state coordination to help companies work with the various state permitting agencies.”

“Developers really hope this will reduce costs,” John Hardin, from the North Carolina Board of Science, Technology & Innovation, said at the conference. “If states can work together to coordinate development schedules, the projects won’t be so lumpy, where you have a project, and then it dies down for a year or two.”

Manufacturers too, want certainty. “They want predictable demand. They want local content clarity,” said Hardin. Local content rules specify the percentage of a project’s equipment to be produced or supplied within a defined jurisdiction such as a city or state. Some of those local content requirements are set out in law.

“I can assure you there is an expectation for every state that jobs are created,” said Mercer. “You could sprinkle all those companies across the Mid-Atlantic but, practically, establishing a couple of hubs where supply chains are close by is going to make the most business sense. How do we reconcile that with the desire of every elected official I have ever met to grow jobs in their districts?”

“Every state wants a bite of the apple, but every state is not going to get exactly what it wants,” agreed Sam Beirne, with the Maryland Energy Administration. “It would make more sense, from what I  have seen, for there to be regional hubs.”

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New York State Energy Research and Development Authority chairman Richard Kauffman says the federal government may need to help states balance minimising costs for customers with economic development. “Understandably, each state wants to have its share of economic development, since the projects are being developed using public dollars, but that doesn’t necessarily mean that as a region we are developing the industry in the most cost-effective way,” he said on a recent Columbia Energy Exchange podcast.

“Would it be cheaper for customers if we only had a couple of large port facilities? This might be an area where the federal government could help us,” said Kauffman.

Officials from SMART-POWER states who spoke at IPF identified assets that could play a role in making the Mid-Atlantic region an offshore wind hub. Beirne cited the Maritime Institute of Technology and Graduate Studies, a training centre located near Baltimore, Maryland, where crews can learn how to pilot a ship through an offshore wind farm in a simulator. Northam highlighted the role of the Mid-Atlantic Wind Training Alliance, a Virginia-based partnership of educational institutions offering certifications and programmes for wind energy technicians.

Representatives from the SMART-POWER states also expressed an openness to expanding their partnership to neighbouring states, with South Carolina and Delaware the likeliest candidates. Outside the Mid-Atlantic region, it is easy to envisage states on the US West Coast entering a similar offshore wind compact. California, Oregon and Washington, with the Canadian province of British Columbia, already participate in the Pacific Coast Collaborative, a partnership focused on low-carbon energy systems, buildings, transportation and food.

“Competition is good in many ways, but competition is not always optimal,” said Hardin. “This is an opportunity where cooperation, but also friendly competition – or really the combination of those two – will grow the pie bigger for everyone.”

“The more megawatts are being committed off our coast, it is going to make it a lot easier for companies to decide to locate here,” summed up Mercer.