Dive Brief:

• The Department of the Interior could authorize the potential for 28 GW of new offshore wind through a new set of leasing auctions, leading to $17 billion of capital investment by 2025 and $108 billion by 2030, according to a Wood Mackenzie study released Tuesday.
• Future auctions could yield $1.7 billion in U.S. Treasury revenue by 2022 as developers prioritize U.S. buildout, according to the report commissioned by four industry groups. The most recent Interior Department offshore wind lease auction off the coast of Massachusetts brought in more than $400 million in 2018, shattering a previous record of nearly $42.5 million.
• No utility-scale project has commenced operation in the U.S., but making additional leasing areas available will send "a clear market signal" to the growing global industry, Brandon Burke, policy and outreach director of the nonprofit Business Network for Offshore Wind, said in an email. The American Wind Energy Association, National Ocean Industries Association, New York Offshore Wind Alliance (NYOWA) and the Special Initiative on Offshore Wind at the University of Delaware commissioned the report.

Dive Insight:

The U.S. offshore wind industry remains in its early stages, while European and Asian markets are more built out. With foreign markets positioned more aggressively, the U.S. needs to join in on the "global 'gold rush' for offshore wind," according to Burke.

More lease areas are needed for existing U.S. demand, according to the report, even as federal regulators extended their period of consideration for the Vineyard Wind large-scale project off the coast of Massachusetts. The study outlines the economic impact of federal lease auctions in 2020, 2021 and 2022.

Increased offshore wind leasing could lead to large capital investments between 2022 and 2035, according to Wood Mackenzie, including $42 billion for turbine manufacturing and the related supply chain, and $107 billion for the construction industry. But as other countries continue their ambitious offshore wind buildouts, the U.S. government needs to better signal its support for the resource to stoke demand, analysts say.

"By not seizing this opportunity to demonstrate its unwavering commitment to offshore wind, the U.S. risks letting a once-in-a-generation economic development and clean energy opportunity slip through its fingers," Burke said.

The report highlights that the federal government could generate $1.2 billion in revenue by auctioning 2 million acres in federal waters in 2021 in the New York Bight, the Carolinas and California. Additional leases in the Gulf of Maine and California could generate $500 million in 2022, totaling to $1.7 billion in potential revenue.

"The Wood Mackenzie study provides a new impetus for the designation and leasing of new wind energy areas in federal waters off the U.S. coastline," Joe Martens, NYOWA director, said in a statement.

The Global Wind Energy Council (GWEC) released a report on Wednesday forecasting a continuing trend in near-term installations of offshore wind around the world: 6.1 GW of the resource are expected to be installed in 2020, matching the amount of new capacity added globally in 2019 "despite the impacts of the COVID-19 crisis."

In the next decade, at least 6 GW of floating offshore wind turbines will be installed in the world, as the technology will reach full commercialization, per GWEC.

Wood Mackenzie forecasts offshore wind in the U.S. to increase by 9 GW off the California Coast and 5 GW in the Gulf of Maine will be installed between 2030 and 2035. 

While the U.S. does not crack the top five lists for cumulative or new offshore wind installations in 2019, the country is forecast to have the third largest amount of wind installations by 2030, according to the GWEC report.

Top 5 markets forecasted for cumulative offshore wind installations by 2030

The Wood Mackenzie report estimates U.S. offshore wind capacity by 2030 would reach as much as 25 GW.

Potential expansions of the U.S. market remain contingent on action from the U.S. Department of the Interior's Bureau of Ocean Energy Management (BOEM).

BOEM auctions off the lease areas that the agency has created while also serving as the lead federal regulator of projects moving through the National Environmental Policy Act permitting process.