The nascent US offshore wind industry holds great environmental and economic promise for our region and is coming through a period of significant flux with a challenging year behind us. But the signs of optimism that closed out 2023 have continued into 2024, giving us reasons to be hopeful for what comes next.

All three states in the tri-state region have ambitious climate goals. New York, New Jersey, and Connecticut all aim to dramatically reduce greenhouse gas emissions by 2050 and significantly increase the amount of energy generated by renewable sources in the coming decades. In order to hit these targets, all three states have made commitments to developing an offshore wind industry that delivers clean power to the grid — 9,000 megawatts in New York by 2035, 11,000 megawatts in New Jersey by 2040, and at least 2,000 megawatts in Connecticut by 2030.

By reducing each state’s contribution to greenhouse gas emissions, implementing offshore wind is essential in helping us avoid the worst impacts of climate change, helping us to transition away from health-damaging, fossil-powered facilities, and scaling up a new industry with jobs and other economic opportunities.

But the process to develop offshore wind is complex and long, with multiple points of approval needed by federal, state, and local entities, informed by public input, and with areas of development 10 or more miles out in the ocean, along the ocean floor between those areas and the shore, and in the communities where transmission infrastructure will be needed to connect the farms to our power grid. In total, there are currently 15 established offshore wind farm lease areas available to serve our region. If all are completed with projects, over 9 million homes across New York, New Jersey, and Connecticut could receive energy from wind.

Global Supply Chain & Inflation

A number of the projects that were moving ahead in 2023 had been selected in or around the time of the COVID-19 pandemic. Unforeseen in those agreements was the degree to which pandemic ripple effects would shake up the global supply chain, affecting the manufacturing, shipping, and delivery of essential goods and services required to construct offshore wind components. Additionally, while projects were being selected in the United States, a significant uptick in European offshore wind projects was also occurring, further stressing the supply chain and demand for the same goods. Finally, the Russian invasion of Ukraine led to a dramatic drop in the production of Ukrainian steel, which ha accounted for about 40% of global steel production and is an essential component of offshore wind turbines. Similarly, the post-pandemic inflation that sent prices surging across the globe directly affected the price of materials required to develop offshore wind turbines.

Altogether, the disruption in the global supply chain, the increased demand for products and the inflation that occurred post-pandemic led to wildly different costs in reality than developers had committed to in their offtake agreements (contract stipulating the details for the purchase and sale of generated electricity) with states.

Anticipated Construction Bottlenecks

Another factor that is testing the economic assumptions in contracts made between developers and the states is the timeline for ports and vessels required to construct offshore wind projects. Presently, there is only one port in our region actively supporting the construction of offshore wind farms: the State Pier in New London, Connecticut which is receiving turbine components and assembling them into turbines being installed in our region’s first offshore wind project, South Fork Wind. Both New York and New Jersey have plans in various stages of development to convert or build new port space into offshore wind ports, but most are years away from completion, leading to a bottleneck of space for the offshore wind projects moving towards implementation. Further, in order to install the larger farms that are planned, a special installation vessel is required. Currently, there are only 16 of these vessels globally, and the first and only US owned and operated vessel is being built and won’t be in operation until 2024 or 2025. This complicates the delivery and installation of turbines and components due to the Jones Act. The Jones Act, or the Merchant Marine Act of 1920, requires all goods transported on water between ports to be delivered by ships constructed in the U.S., fly an American flag, and are crewed by American seamen. With only one ship under American operation, projects face major delays and cost increases.

Growing Opposition

Finally, the broad support for offshore wind that marked its earliest days has largely declined around the region, most notably in New Jersey. As the lengthy permitting process carries on and approvals for transmission cables are needed at the local level, opposition - fueled by anti-renewable energy forces - has taken root and is trying to stop projects from happening, citing unfounded threats such as reduced property value, harm to marine mammals, and loss of beaches and parkland. RPA and Karp Strategies detailed in our report this summer how stakeholders can ensure that offshore wind can work for all communities, including through coalition-building, meaningful engagement, centering equity and justice, and investments in communities through benefits packages.

As a number of projects in our region moved closer to implementation in 2023, it became clear that the challenges described above would impact a number of them. Despite efforts by some of the states--along with appeals from some offshore wind developers--to try and make economic conditions more favorable, three projects were canceled in 2023 (Park City Wind in Connecticut, and Ocean Wind 1 & 2 in New Jersey). Early this year, the contract to sell power from the Empire Wind 2 project in New York, was also canceled, though it is anticipated that this project will be re-bid under more favorable conditions.

Despite those setbacks, more projects were given the green light to proceed, driven by an emerging clarity around the challenges facing the offshore wind industry, and the policy and political response to those challenges.

While the past year saw the cancellation of four projects, there have been and continue to be signs of hope then in how both the states and companies have responded to challenging conditions that point to a bright future for offshore wind.

Political support remains strong

Despite the setbacks of canceled projects in New York, New Jersey, and Connecticut, each of the states’ Governors have remained committed champions for offshore wind when they could have distanced themselves from an industry facing challenges.

Challenging factors are being addressed

In addition to remaining vocal champions, New York, New Jersey, and Connecticut’s Governors and their administrations have worked to address the issues that have threatened projects through more flexible procurement contracts in the most recent awards (Connecticut, New York, and New Jersey), entering into regional partnerships with neighboring states (Connecticut), and allowing for projects already in development to re-bid those projects with new assumptions that better reflect economic realities (New York’s 4th solicitation, closing on January 25). While there are remaining threats (including local opposition to transmission siting and slow progress on ports and supply chain), many of the greatest threats to individual projects are becoming issues of the past.

Work on current projects continue

Even as offshore wind companies were canceling projects in one part of the region, others elsewhere continued. For example, Ørsted canceled two projects in New Jersey but reinforced its commitment to its Connecticut project, while installing our region’s first working turbine off the East End of Long Island. Related work on transmission and ports continued in all three states, and partnerships with communities and local organizations were forged.

New projects keep coming

Finally, the cycle of states entering into agreements with companies to build projects that deliver offshore wind power has not slowed down. New York made an unprecedented investment in renewable energy, including the selection of three new offshore wind projects for a total of over 4GW of power. Connecticut issued an RFP for 2GW of offshore wind power (closing on January 31), and New Jersey announced the selection of x new wind projects, totaling over XGW, with an anticipated accelerated 4th solicitation to come.

While some threats to offshore wind projects currently being developed remain, the bulk of projects now in the pipeline have been recalibrated to our current economic realities, backed by states committed to advancing offshore wind for its economic, community, and environmental benefits. Offshore wind is alive and well and - with continued commitment and investments - has a bright future ahead in our region.