2030 will spark a surge of U.S. offshore wind farms simultaneously under construction for planned COD between 2030 and 2032. In 2023, there were many offtake contract cancellations, the industry has rebounded with the recent and pending awards of more than 13 gigawatts, led by New York, New Jersey and three New England States. Had the contracts not been cancelled, the construction of those projects would have been dispersed over many years, instead the recovery has created a 2030 surge of simultaneous construction.
Developers planning to deliver projects in these years need to secure capacity today. Some components and construction services are in short supply and have very long-lead times, added supply chain capacity will not be sufficient to meet the demand in many areas. Suppliers are committing to reservation agreements and are running out of spare capacity needed to support delivery of projects in the 2030 – 2032 COD window.
HVDC
Topsides and HV Equipment
HVDC topsides and high-voltage equipment (e.g. transformers and converter valves) are the prime examples, lead times for these items can be greater than seven years. Globally, this equipment is produced by just a handful of very specialized fabricators and expanding capacity for reliable equipment will be incredibly challenging for meeting the 2030 surge.
Tennet’s 2GW Program has procured HVDC equipment to support 30 GW of offshore wind and National Grid UK is currently tendering for HVDC equipment to support 50 GW of offshore wind by 2030. These massive orders and preferred customers will take priority of the scarce capacity, putting at risk smaller orders for the 2030 surge projects. There are even risks for developers who have already reserved their capacity, what happens if the suppliers have accepted more reservations than they can deliver?
Installation and Coordination
HVDC topsides can weigh more than 6,000 tons, there are only a select few of the world’s largest vessels that can install them. Availability for these vessels during the 2030 surge is running thin. However, if developers can coordinate their lifting schedules for the same vessel, availability will be increased to make best use of the unproductive mob/demob time. This would also generate significant cost savings for those coordinating developers.
WTGs, FOUs, and Cables
Capacity shortfalls also exist in other packages, specifically with the WTG, foundation (including the steel plates), and cables packages. These major components have limited global supply capacities because of the rapidly growing demand for offshore wind globally. Additional capacity is being built, but whether this comes online in-time with suitable ramp-up volume and quality will be something to watch closely. For example, an unplanned outage like a damaged blade mold can have serious implications for planned deliveries and project viability.
Installation Vessels
The primary components are not the only areas of the supply chain facing constraints. Installation vessels for wind turbine generators (WTGs) and foundations (FOUs) will also be in short supply to meet the surge in demand expected by 2030. This shortage will be exacerbated by the increasing size of WTGs and foundations, which will surpass any previously installed units. The demand will rely heavily on the limited number of existing vessels with the highest lifting capacities, as well as on newly built and retrofitted vessels.
A significant concern for these new or retrofitted vessels is the potential for delays at the shipyard. Such delays have been known to derail projects or necessitate costly contingency plans. To mitigate these risks, it will be crucial to implement well-structured contractual incentives and maintain diligent contract management.
Challenges Emerging Deeper in the Supply Chain from Demand Outside of Offshore Wind
Supply constraints for the 2030 surge will not be limited to just the major offshore wind components and construction services. The shortages will be felt across many other areas of the supply chain and the surging demand will come from other industries.
The 2030 surge will create an enormous demand for Jones Act Qualified support vessels, mostly as a sub-contract to the major T&I contracts. Most of these vessels will be mobilized from the Gulf of Mexico. If the offshore oil industry is experiencing a boom during these years, there will be a coincidental peak severely limiting availability of these needed vessels. Had the 2030 surge happened just a few years earlier, this effect would have been severe because of the high volume of marine assets that will be mobilized to Alaska for ConocoPhillips’ Willow project.
The emergence of artificial intelligence is driving a surge in demand for data centers, leading to increased needs for energy generation and power capacity. This rapid growth can result in significant shortages of transmission-related equipment and the skilled labor required for electrical design and installations. Additionally, there is likely to be a scarcity of critical components such as semiconductors for control system circuit boards, which are harder to predict and manage.
Proactively reserving capacity can mitigate these issues by informing the supply chain and enabling it to make subsequent reservations or pre-orders, ensuring better preparedness for future demands.
While the recent recovery in the U.S. offshore wind industry is a cause for celebration, it also brings new challenges. The anticipated surge by 2030 will present some of the most significant supply chain challenges the global industry has ever encountered. To avoid project delays or worse, developers aiming to deliver projects during this period must be prudent and initiate their procurement processes exceptionally early, ensuring they are skillfully executed to navigate these complexities.
Grant van Wyngaarden is the Country Managing Director for JUMBO Consulting Group North America, a highly specialised advisory offering strategic services and project delivery consultancy for offshore wind, offshore transmission systems and energy island projects, covering the entire project lifecycle from early development, procurement, construction to O&M. Headquartered in Denmark, JUMBO Consulting Group’s services are founded on deep sector knowledge and delivery of contractual and commercial solutions within its core disciplines, development services, supply chain development, category-, procurement- and contract management and advisory.