Offshore Wind Energy Outlook

Legislative Academy Session: The Mountain Thunder Lodge, Breckenridge CO Walt Musial | National Renewable Energy Laboratory | Offshore Wind Lead Thursday, July 15, 2021 Why Pursue Offshore Wind Energy?

✔ Generation close to load (80% of the population lives on the coast)

✔Stronger winds ✔ Larger scale projects are possible

✔ Unique economic benefits

✔ Revitalizes ports and domestic manufacturing

✔ Less constrained by transport and construction NREL | 2 Offshore Wind Plant Basics • The rotor converts kinetic energy of the wind to create torque (rotational Nacell force) that spins a e generator that produces electricity. • Multiple turbines are connected to a substation which connects a high voltage cable to the land-based grid. • Offshore wind farms are growing beyond 1,000 MW in size and greater, comparable to coal, natural gas, or nuclear power plants • One 12-MW offshore wind

Figure credit: Joshua Bauer, turbine can power 4,500NREL | 3 NREL New York residences Larger Turbines Enable Lower Cost The three leading wind turbine manufacturers, GE, Siemens, and Vestas have announced 12- to 15-MW offshore wind turbines

GE 12-MW Wind Turbine Nacelle (above) and 107-m Blade Below)

NREL | 4 Offshore Wind Turbine Substructure Type Depends on Water Depth

82 MW NREL | 5 32,906 MW Figure by Joshua Bauer, NREL Installed Installed Projected Offshore Wind Industry Growth

• Over 99% of current offshore Based on Developer-Announced COD Through 2026 Chin wind farms have a fixed-bottom foundations.

• Installed United fixed-bottom States capacity is 32,906 MW. • Installed floating capacity is 82 MW. • By 2030, the

UnitedSource: States Musial, W., Beiter, P., Spitsen, P., Duffy, P., Marquis, M., Cooperman, A., Hammond, R., and Shields, M. (2021) 2020 Offshore Wind Technologies Market plansReport to (Technical deploy Report). Washington, D.C.: U.S. Department of Energy Office of Energy Efficiency & Renewable Energy. August 2021. Pending publication. 30 GW of offshore wind. Winning Bid Prices from U.S. and European Offshore Wind Auctions Estimate Cost • Globally, the average levelized cost of energy (LCOE) of fixed-bottom offshore wind energy (2020 COD) is below $95/megawatt-hour (MWh) and falling. • The procurement price for U.S. offshore wind ranges between $96/MWh (Vineyard Wind I) and $71/MWh (Mayflower Wind); projects expected to commence commercial operations between 2022 and 2025. • Floating offshore wind LCOE is

4 Strike prices were adjusted to obtain a “like-for-like” comparison of tendered offshore wind projects globally. Grid connectionpredicted and development to decline costs were from added for those global projects where they are not part of the tender strike price; differences in contract length between global project tendersapproximately were accounted for$160/MWh by converting the in annual 2020 to strike price to a present value. The strike prices are shown in “levelized” terms (i.e., in terms of annualized $/MWh). NREL | 7 $60‒$105/MWh in 2030. Cost Breakdown of an Offshore Wind Plant

* This chart includes both CapEx and OpEx • The wind turbine makes up only 21% of the total cost for a fixed-bottom wind project (1,301 $/kW). • U.S. supply chains can grow around many of these elements. • 11 ports on east coast with up to $3 billion in investments to upgrade so far. • Port investment attracts supply chain investments • $12 billion/year Fixed-Bottom Offshore Wind Capital Cost estimated for U.S. industry Stehly, Tyler, Philipp Beiter and PatrickBreakdown Duffy. 2020. 2019 Cost of Wind Energy Review. Golden, CO: National Renewable Energy Laboratory. NREL/TP-5000-78471. https://www.nrel.gov/docs/fy21osti/78471.pdf. NREL | 8 Elements of a Viable Offshore Wind Industry

• Continued cost reduction to New Jersey State competitive pricing $50/MWh by 2030 – 30% ITC tax credits extend to 2025 Agreement Approach • Market visibility – National goal of 30 GW by 2030 • Regulatory certainty and expansion – site control – political cooperation for equitable sharing of ocean space • Bulk transmission access – political support for coordinated actions • Industry supply chain access – European >>> Domestic/Jobs – Transition existing O&G capabilities • Port facilities to serve local installations and service ports. • Jones Act compliant vessels- heavy lift, survey, foundation installation, crew transfer, and cable lay vessels – https://www.nj.gov/bpu/newsroom Leverage O&G capabilities /2020/approved/20201118a.html

NREL | 9 Snapshot of Emerging U.S. Offshore Wind Industry • 39,298 MW of policy commitments from eight eastern states • 35,324 MW estimated in total pipeline • 42 MW Installed • 800 MW approved (Vineyard Wind) • 10,779 MW in advanced permitting – 14 Construction and Operating Plans • 11, 652 MW with site control • 12,051 MW unleased wind energy areas

NREL | 10 Vineyard Wind 1: First U.S. Commercial Project Approved • Vineyard Wind is an 800-MW fixed-bottom project located 15 miles south of Martha’s Vineyard, expected to be fully operational by 2024. • It will be the first commercial-scale offshore wind energy project in the United States. • Using 62 GE Haliade-X 13-MW turbines, the project will produce enough energy to power 400,000 Massachusetts homes, delivering a maximum capacity of 800 MW. • The project is expected to create about 3,600 gross full-time-equivalent jobs. Source: Vineyard Wind Website NREL | 11 U.S. Offshore Wind State Procurement Policies and Activity as of 5/31/21

NREL | 12 Timeline of U.S. Offshore Wind Procurements by

State • In 2020, Virginia passed the Virginia Clean Economy Act, to procure 5,200 MW by 2034. • In March 2021, Massachusetts passed “An Act Creating a Next Generation Roadmap for Massachusetts Climate Policy”, which expanded the commonwealth’s goal from 3,200 MW to 5,600 MW by 2035. • n June 2021, NC Governor Roy Cooper issued Executive Order 218 which created a 2,800 MW offshore wind goal by 2030 and an

8,000 MW goal by 2040.NREL | 13 Source: Musial et al. (2021) Policy Commitments by State as Percentage of Total Electric Retail Sales

Net Retail Energy Capacity Offshore Wind Percent State State OSW Policy Sales (2020) Factor Energy Retail MW MWh MWh Maryland 1,568 60,720,658 0.44 6,043,699 10 Virginia 5,200 118,435,380 0.44 20,042,880 17 Rhode Island 430 7,349,915 0.48 1,808,064 25 New York 9,000 145,600,345 0.46 36,266,400 25 Connecticutt 2,000 27,899,996 0.48 8,409,600 30 New Jersey 7,500 73,916,704 0.46 30,222,000 41 Massachusetts 5,600 51,336,598 0.48 23,546,880 46

percent of electric retail retail electric of percent sales North Carolina 8,000 136,435,531 0.42 29,433,600 46 Totals 39,298 Retail Energy Sales based on EIA data November 2020 https://www.eia.gov/electricity/state/

Possible New Coastal States to Watch: Maine, New Hampshire, Delaware,

South Carolina, California, Oregon, Hawaii, Washington, Louisiana, Texas NREL | 14 Offshore Wind Summary

• Cost: Necessary cost reductions are likely from commercial domestic and global markets – competitive, unsubsidized • Transmission: Bulk transmission access will be a growing issue requiring government coordination • Regulatory: More leasing will be required as industry expands • Ports: Local port facilities are needed with unique capabilities – port investments bring further private investment and long term economic growth • Supply Chain: Accelerate local manufacturing and construction capabilities for jobs and economic growth. • Vessels: Ship building industry: 5 new U.S. flagged heavy lift ships, many smaller vessels • 30 GW of offshore wind by 2030 is about a $100 billion+ industry opportunity

NREL | 15 Walt Musial Thank you for listening. Offshore Wind Platform Lead [email protected] Questions? National Renewable Energy Laboratory https://www.nrel.gov/about/nwtc.ht ml

NREL | 16 Mr. Walt Musial Speaker Bio Principal Engineer Offshore Wind Research Platform Lead National Renewable Energy Laboratory Golden Colorado, USA

Walt Musial is a Principal Engineer and leads the offshore wind research platform at the National Renewable Energy Laboratory (NREL) where he has worked for 32 years. In 2003 he initiated the offshore wind energy research program at NREL which focuses on a wide range of industry needs and critical technology challenges. He chairs the American Clean Power Association Offshore Wind Standards Subcommittee and is the Senior Technical Advisor to the National Offshore Wind R&D Consortium. Previously, Walt also developed and ran NREL’s full scale blade and drivetrain testing facilities for 15 years. Earlier, Walt worked as a test engineer for five years in the commercial wind energy industry in California. He studied Mechanical Engineering at the University of Massachusetts - Amherst, where he earned his bachelor’s and master’s degrees, specializing in energy conversion with a focus on wind energy engineering. He has over 120 publications and

two patents. NREL | 17