A significant portion of my career was focused on electrical products, training, certification, and inspection. This has meant I’ve had the luxury of doing business with a large cross-section of the traditional energy supply chain, with anyone who had to turn something on/off - end users, developers, operators, drillers, engineering companies, OEM’s, package equipment vendors, yards and contractors around the world.
As a company, cSolutions focus on developing opportunities for our partners to participate in marine, oil & gas and renewables projects. Working across the supply chain to ensure their products, technologies or services are technically and commercially viable and approved for the projects in question.
My initial foray into Offshore Substation (OSS) platforms started the same way I approached a large offshore oil and gas project. Engaging with the developers and attempting to get written into their specifications, then working down through the engineering firms and yards to ring-fence the project.
What became quickly evident was that the developers didn’t have a detailed specification, at least to the level of having an approved makers list or approved vendor list beyond key technology. As such, I was connected with consulting engineering firms based in Europe with decades of experience working with these developers.
These consulting engineering firms seeking to support the development of US offshore wind didn’t have the US supply chain to support their ambitions. So, we started creating potential collaborative partnerships that could work with these consulting engineers to support them in executing projects. In essence, putting together a winning team to approach the developers with a solution to complete their project in the US.
What we found was a lot of the Gulf Coast supply chain had previously obtained stakeholder buy-in to allocate time and resources to bid for the first round of offshore windfarm projects. Unfortunately, as they had bid and rebid these projects multiple times with no orders being placed or projects progressing, there was a certain amount of understandable reticence about making that same investment of time and resources. However, what we see now are live projects and active bid cycles.
Ørsted alone has 5000MW of offshore wind capacity on the East Coast, stimulating $2B of investments across the US. At the end of 2022, we had the following projects operational or under construction:
· Ørsted Coastal Virginia Pilot (12MW) operational
· Ørsted Block Island (30MW operational powering 17K homes - 2016
· Avangrid/Vineyard Wind 1 (800MW) under construction
· Ørsted South Fork Wind (132MW - NY) under construction at Kiewits yard in Ingleside
· Ørsted Revolution Wind 1 & 2 (304MW - CT & 400MW - NY) under construction in Singapore
But we have a supply chain that is challenged for a variety of reasons.
You have developers with European designs and material selection, based on decades of honing their supply chain and project execution strategies for Europe.
You have EU suppliers with decades of experience in their offshore wind sector, trying to figure out where they should establish a beachhead in the US to allow them access to as many projects as possible. Trying to find the right location or partner with the vision or experience to handle large, complex, offshore projects.
Each state has its desire to have a complete supply chain, but as we’ve seen in Europe where each country has its set of resources that are then pooled together, so too must the Northeast look at combining their forces. They must look at collaborating more with neighboring states and to states with experience with complex offshore projects.
In the Northeast, you have limited resources in terms of land, access to companies, materials, or a skilled supply chain with personnel experienced in dealing with offshore projects. If developers want to ensure “local content”, that term needs to extend beyond the state level. As such you’re seeing, talent and resources being utilized here in Texas.
The Northeast has shipyards, but there is a significant difference between a shipyard and a fabrication yard. We have fabrication yards along the Gulf Coast that could build offshore substation platforms (topsides and jacket), as well as shipyards for offshore windfarm vessels.
Fabrication yards tend to be engineer one, build one (maybe two). They too will have to look at efficiencies if we want to meet the 30GW by 2030 goal for the US by producing one of two types of Offshore Substation (OSS) platform:
· HVAC OSS platform with approx. 3-5000T topsides
· HVDC OSS platform with 12-15,000T topsides
By contrast, a typical Gulf of Mexico wellhead platform is 3-5000T topsides, with the footprint and dimensions virtually identical to that of an HVAC substation platform. There is already plenty of experience in Texas to design, engineer, procure, fabricate, commission, and install these types of structures.
There are also opportunities to adapt current European designs to a fit-for-purpose US platform design, to expedite time to installation and dramatically lower project cost. My hope is that adherence to an EU design isn’t used to justify awarding contracts overseas.
With the first US-built offshore substation being engineered and fabricated by Kiewit, Orsted is building a team here in Houston. Equinor is partnered with BP on Empire Wind and has personnel from Houston, while Atlantic Shores has a team with Shell personnel. Principle Power is the market leader in floating offshore wind technology, with two projects operational in Portugal and Scotland, rapidly built a team here in Houston last year.
One of the significant advantages for these growing teams is the O&G personnel who have experience delivering large, complicated, long lead time, offshore projects. These companies have realized if you want to build a project team, it only makes sense to consider the vast offshore project experience here in Houston. The skills and experience needed to build, install and operate a large fixed-bottom or floating offshore project are here in Houston.
Also, in Texas, you have the first Jones Act-compliant WTIV, wind installation vessel for Dominion Energy being built down at Keppel Shipyard in Brownsville. Two other US yards are building Jones Act compliant offshore windfarm vessels; Edison Chouest in Louisiana and Philly Shipyard in Pennsylvania.
Offshore windfarms require a plethora of installation, maintenance, and support vessels, which should ideally be energy efficient and have lower carbon emissions to meet IMO 2030 requirements at the very least, but preferably IMO 2050 if you’re looking at newbuilds. As such, 100’s more purpose-built vessels will be required to meet global offshore windfarm project demand.
One very encouraging thing I’ve seen in the offshore wind sector is strong collaboration. From personal experience at industry events, everyone is leaning in, finding out what each other is doing and where opportunities might lie to help each other. This is essential as the risk is being pushed down onto the supply chain. At some point, developers may need to adapt to the US market and absorb some of that risk to expedite successful projects.
And if you look at the broader landscape of Texas, you have Tesla and SpaceX, both tapping into the vast experience here for complex projects. Fortescue Future Industries establishing a presence here in Houston for their hydrogen projects in the US. New Fortress Energy is building out its team to support multiple LNG projects. TotalEnergies have made a strong commitment here in Houston to help drive them into the forefront of the renewables sector.
Many companies in Houston have diversified their traditional energy business to cater to solar, battery storage, wind, hydrogen carbon capture, e-fuels, and ammonia projects.
In the last two years we have seen a profusion of small, niche, engineering and specialty service companies born off the back of much larger organizations with these teams focusing on the renewables sector. Once again, proving the value of traditional energy experience to successfully bring us through a transition and explore options to meet and service those renewable goals.
The burgeoning US offshore wind industry is being hailed as a catalyst to bring manufacturing back to American communities and revitalize local economies. This reinforces the message that there are opportunities if you can pivot to meet them, and also that the offshore wind industry has echoes of more geographic clustering from a sourcing perspective to support construction and operations.
We already have a geographic clustering of resources here in Houston and along the Gulf Coast for large, complex offshore projects. In Houston and Texas, you have a city and state already actively engaged in an energy evolution.
