What Will Determine Offshore Wind Supply Chain Development in the U.S.

The ability of a region’s to support the development of the offshore wind (OSW) supply chain will greatly affect the size of the industry’s impact on the state. The economic impacts of OSW are higher when the industry employs people from the region and spends its dollars at the region’s businesses because this keeps dollars in the community. Several factors will affect the level of local content:

Existing industrial base: The ability of a region to attract investment from a new industry is often tied to the presence or absence of similar or complementary industries. For example, the Gulf Coast states may be able to transition from making marine structures for oil & gas to those for OSW wind farms, which would help this region compensate for the drop in demand from the offshore oil & gas industry. The jacket foundations for the first OSW farm in the United States —the Block Island Wind Farm—were manufactured by Gulf Island Fabrication, a company that made large-scale steel structures for the offshore oil and gas industry. A similar pattern was observed in the U.K., with many of the workers with experience working in offshore oil and gas settings finding new employment opportunities in the OSW industry.

Local content requirements and supply chain investment: In the U.K., the development of an OSW supply chain has been actively promoted through local content targets and government investment. For example, the contract with the developer of the Humber Gateway Project in the U.K. specifically stated that local employment must be used. In addition, the U.K. government has contributed £20 million toward the Manufacturing Advisory Service Offshore Wind Supply Chain Growth Programme (GROW: Offshore Wind) and has set aside funding and resources to create the Offshore Wind Investment Organisation, a private-sector-led body to attract inward investment.[1] Local content requirements are not likely to occur in the U.S., where OSW development is being led at the state level, since the Commerce Clause of the U.S. Constitution prevents states from passing laws mandating local procurement and hiring as they serve to restrict interstate commerce.[2] However, vigorous interstate competition to attract investment in OSW supply chain manufacturing facilities can be expected as the nascent OSW industry along the Eastern seaboard of the U.S. develops to scale.

Infrastructure: The massive size of modern OSW turbines limits the transport of finished products over land. As a result, the manufacturing of the primary, finished components must occur at waterfront locations with a large amount of acreage and a quay that has been reinforced to withstand heavy loads. For example, for OSW farms in the U.K., the tower pieces were sent in from Denmark or Spain and assembled on-site. Without a reinforced quay to accommodate on-site assembly and production, all components would have been imported fully assembled from Denmark or Spain, directly to the OSW farm. In addition, the height of some components limits the locations to those without height limitations from features such as bridges. One tower manufacturer cited the need for a 175,000- to 200,000-square-foot facility, Class 1 rail, 50 acres of storage with quayside access, and interstate access. A detailed assessment of potential sites in Massachusetts is provided by the Massachusetts Clean Energy Center’s Massachusetts has laid the groundwork for private investment in secondary locations for future turbine and foundation component manufacturing through MassCEC’s 2017 Massachusetts Offshore Wind Ports & Infrastructure Assessment.[3]

Logistics and the distance to ship components: The sheer distance to transport the components overseas from Europe may incentivize investment in U.S. manufacturing facilities. In one study, which examined the Levelized Cost of Electricity (LCOE) for OSW in Denmark, the logistics cost was conservatively estimated to account for 18 percent of the total cost.[4] The distance to the U.S. market substantially increases these costs. For example, according to one European foundation manufacturer, it would cost tens of millions of dollars to import the foundations from European to the U.S for one 400 MW project.[5] In comparison, a new manufacturing facility in the U.S. Atlantic would cost up to $500 million to build and take three years to develop.

Workforce: The skills of the local workforce can play a large role in a manufacturer’s location decisions. For example, Hull, U.K. was originally slated to host a nacelle manufacturing plant, but to date this has not happened, reportedly because the region’s workforce lacked the electrical engineering and magnetism skills required. Instead, Hull became the home to a blade manufacturing facility, because they had the substantial deep-water port acreage needed and a workforce skilled in fiberglass manufacturing. In other words, blade manufacturing has skill requirements that better aligned with the capacity of the local labor market.

Size and timing of the pipeline: Manufacturers need to know that there will be consistent demand for their products before they make massive investment decisions. In the case of U.S. OSW developments, interview subjects consistently reported the need for a long pipeline of future OSW developments as a major prerequisite for establishing a U.S. manufacturing facility. One manufacturer described their expectation of a five-gigawatt pipeline in the U.K. when investment decisions were made. However, manufacturers we interviewed consistently noted that the Northeast U.S. is a major emerging market that is too big to ignore. The timing of OSW projects is also important. A dormant foundation factory, for example, can cost up to $6 million per year in facility debt alone. A steady flow of smaller, faster projects or larger projects with long lead times can be expected to increase the chances of a substantial investment in OSW production facilities in the U.S.

[1] Her Majesty’s Government. Offshore Wind Industrial Strategy: Business and Government Action. (2013). https://ore.catapult.org.uk/wp-content/uploads/2016/05/Offshore-Wind-Industrial-Strategy-Business-and-Government-Action.pdf

[2] Building Trades v. Mayor of Camden. 465 U.S. 208. (1984).

[3] http://www.masscec.com/ports

[4] Poulsen, T., & Hasager, C. B. (2016). How Expensive Is Expensive Enough? Opportunities for Cost Reductions in Offshore Wind Energy Logistics. Energies, 9(6), 437.

[5] Tim Mack, Head of Offshore Wind Development, North America, EEW. (2017). Presentation to the Clean Energy Center’s Offshore Wind Supply Chain Forum, May 31, 2017. [PowerPoint Slides.]

A Bad Case of Redaction

By James DeArruda, Graduate Research Assistant

The Commonwealth of Massachusetts’ effort to create and sustain an offshore wind industry in the United States took a step forward with the receipt of bids Dec. 20 by the Massachusetts Department of Energy Resources from the three developers holding leases for parcels in the Massachusetts and the Rhode Island-Massachusetts Wind Energy Areas. The bids are public and have been made available by the Commonwealth.

Those following this process were eager to see the individual bids and the different proposals offered by the three developers, Bay State Wind, Deepwater Wind, and Vineyard Wind. However, each of the bids includes a great amount of redacted information, particularly concerning specifics about the size and number of turbines, contract terms and pricing, potential collaborators, and maintenance routines that explain how often turbines will be offline. Not only that, but dozens of appendices that are provided for DOER are completely redacted in the public versions.

Concerns about competition are justifiable, but can be frustrating for those interested in the process. Here are interesting examples of redactions from each of the developers:

The Commonwealth will have all the information when it analyzes the bids, but the public will not be able to compare electricity prices …

… or maintenance schedules …

… or my favorite, Section 17 from the Vineyard Wind proposal, which concludes the bid publication with a five-page redaction that blacks out even the title of the section.

A deeper dive into the redactions may be of little value as far as sleuthing out secrets. The bidders followed their own formats in response to the RFP so comparison is tricky, but it’s always fun for fans of statistics and data to look around regardless.

To wit, here is a simple chart showing redactions by developer, separated by section. These weren’t exhaustive counts of every single redaction or type of redaction, but of redactions under the labels of the different sections. For example, I counted 12 different types of redactions in the Executive Summary (Section 2) in the Bay State Wind bid. They ran the gamut, from pricing, capacity and number of permanent jobs, to impact on the Commonwealth’s carbon footprint to wind tower specifications. Deepwater Wind’s Executive Summary included redactions of environmental impact, jobs and specs, as well, but the section also saw information about infrastructure and contracts redacted. Vineyard Wind’s bid had redactions of only three types in the first section: pricing, turbine specifications and expansion plans. These disparities and similarities, however, offer very little analytical power because of the uniqueness of each bid, so these charts stick to the section labels.

They show generally that Sections 5, 6, 8, and 15 account for the most redactions. Not much surprise there, as legal and technical topics are most likely to address intellectual property, engineering, finances, and logistics that have an impact on competition among bidders.

Redactions notwithstanding, there is a lot to learn from the bids, particularly in the areas of worksites, benefits to low-income Massachusetts residents, research and collaborations, and energy storage solutions, among other gleanings.


Renewables like wind and solar, in addition to the relative immaturity of their industries, also present the challenge of intermittency: the sun doesn’t always shine; the wind doesn’t always blow. Each of the bidders has proposed storage solutions that allow for the eventual consumption of the energy generated by their proposed wind farms  when supply outstrips demand.

Two of the bidders propose battery storage systems, and each is unique. Bay State Wind proposes a storage system at the site of the onshore substation (perhaps at the defunct Brayton Point Generation Station in Somerset), with a larger system proposed for the larger of its two bids (800 megawatts MW vs 400 MW). Vineyard Wind proposes spending $15 million to create distributed battery storage, meaning the developer intends to subsidize the purchase of batteries by individual, low-income ratepayers.

Deepwater Wind’s bid proposes storing energy not in batteries but in water, at the Northfield Mountain Pumped Hydro Storage Facility in Turners Falls. Surplus energy will be used to pump water from a lower to an upper reservoir, and will be recovered when demand carries the water down again to spin dam turbines.

Shore Side Facilities

The purpose-built heavy lift facility the Commonwealth constructed in New Bedford—with the express purpose of supporting a new industry in offshore wind—has already attracted interest from each of the three bidders. Each has an office in New Bedford, and each plans to do much of the assembly, staging, and deployment in the construction phase in New Bedford, with some of the staging taking place at other locations, which may include the Port of Providence and Brayton Point, among others. Two of the developers—Bay State Wind and Deepwater Wind—have plans for most or all of the Operations & Maintenance (O&M) phase to be centered in New Bedford as well. Vineyard Wind, as its name suggests, plans to base its O&M in the town of Vineyard Haven.

Benefits to Low-Income Residents

A section of the Commonwealth’s request for proposals requires an accounting of what will be done on the behalf of low-income residents. Bay State Wind proposes to provide $17.5 million over 20 years to the Weatherization Assistance and the Low-Income Heating Assistance programs. Vineyard Wind aims to create a Resiliency and Affordability Fund, seeded with $15 million, that will help install solar and distributed battery systems. Deepwater Wind touts the savings for all ratepayers, noting low-income payers will be especially benefited, but proposes a specific program for low-income high school students to do dual enrollment on the campus of the Massachusetts Maritime Academy in Bourne, with an eye toward income-based tuition support. The Maritime Scholars’ program aims “to help Massachusetts high school students prepare for careers in the growing offshore wind industry,” according to the bid.

Onshore Substation Connection

Generating companies will have to bring the electricity to shore. Bay State Wind has set its eyes on the Brayton Point plant. Deepwater Wind redacted much of their discussion of decisions regarding the shore side connection, but does note the benefits of using that former industrial area and its heavy-duty infrastructure to bring ashore up to 1,000 MW, and, in the case of expansion up to as much as 600 MW, Deepwater notes the availability of the existing Davisville substation in North Kingstown, RI, which services their Block Island Wind Farm, which has been operating since December 2017.

Vineyard Wind proposes to bring the cable ashore near Yarmouth and Barnstable. The location of the farm, at the northeast end of the green Wind Energy Area in the illustration below, and its proximity to Martha’s Vineyard makes its Cape-based landfall seem obvious; the distance from Vineyard Wind’s proposed offshore substation to Brayton point is 10 to 15 miles farther than the distance to the Cape site.

The parcels leased by the other two bidders are both closer to Somerset’s Brayton Point than to Cape Cod.

Economic Development

Part of the application process is the bidder’s explanation of economic development and job training goals, with an obvious emphasis on local benefits. Bay State Wind promises to train and hire locally as much as is practicable, considering the lack of specialized workers in this imported, exotic (for us) industry. It has already secured commitments from vendors willing to move “significant new manufacturing facilities” to Massachusetts. It has also signed a memorandum of understanding with Bristol Community College specifically for offshore wind workforce development, and one with Mass. Maritime.

Vineyard Wind proposes a program called the Wind Accelerator, a four-pronged approach to help the Commonwealth take advantage of its position as an early mover in offshore wind. The training prong presents Vineyard Wind’s commitment to the development of a local workforce in concert with supply chain real estate and recruitment policies.

Deepwater Wind’s scholar program with the MMA appears to be the extent of its training programs, though as many as 80 high school students might eventually benefit from the scholar program. Deepwater Wind’s bid is replete with expressions of its commitment to the local workforce, promising to follow its example on the Block Island Wind Farm on local hiring and trades decisions.

Jones Act Vessels

The Merchant Marine Act of 1920, commonly referred to as the Jones Act, requires any goods transported from one U.S. port to another U.S. port be transported by U.S.-flagged vessels. The vessels needed in this new industry are large, expensive, and purpose built. Deepwater Wind constructed a five-turbine farm with workarounds that, logistically, would likely be insufficient for full-scale deployment. Bay State Wind stated in their bid that they’re working to see that Jones Act-compliant vessels are constructed, and Vineyard Wind’s attention to the item has had a great deal redacted, including interpretation of the law, implications on the projects, and Vineyard Wind’s proposed solution. Deepwater makes no mention of the Jones Act in its bid.

The Path Ahead

Reading between the lines is a challenge when so many are covered with black, but there is plenty more available in the thousands of pages submitted to the state. A state-designated Evaluation Team—including the state Department of Energy Resources, electric distribution companies, and a technical consultant—will evaluate the bids in three stages to determine eligibility and to rank the bids on the price competitiveness and economic and environmental impacts of each bid. Selections of the winning bidder or bidders will be made in April 2018, with the aim of submitting long-term contracts to the state Department of Public Utilities at the end of July.

The Sections

If your thirst for minutiae remains unsatisfied, here’s a list of the 17 sections contained in the DOER’s Request for Proposals:

Section 1: Certification, Project, and Pricing Data

Section 2: Executive Summary of the Proposal

Section 3: Operation Parameters

Section 4: Energy Resource and Delivery Plan

Section 5: Financial/Legal

Section 6: Siting, Interconnection, and Deliverability

Section 7: Environmental Assessment, Permit Acquisition Plan, and New Class IRPS Classification

Section 8: Engineering and Technology; Commercial Access to Equipment

Section 9: Project Schedule

Section 10: Construction and Logistics

Section 11: Operation and Maintenance

Section 12: Project Management/Experience

Section 13: Emissions

Section 14: Contribution to Employment and Economic Development and Other Direct and Indirect Benefits

Section 15: Additional Information Required for Transmission Projects (and All System Upgrades Associated with Proposed Transmission Projects)

Section 16: Exceptions to Form PPAs

Section 17: Response to Transmission Tariff/Contract Requirements


The UMass Dartmouth Public Policy Center was a contractor for the portion of the Vineyard Wind bid involving job creation, Section 14. The PPC is expected to be used by Vineyard Wind to track economic development metrics if that bidder wins an award from the Commonwealth.