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The offshore wind industry has been navigating some choppy seas as of late, so Oliver Metcalfe, Head of Wind Research at BloombergNEF, stops by the show to outline what the industry must do to chart a course for sustained growth. Oliver recently returned from an industry conference in China, so he shares his expert insights on that market — including how Chinese turbine companies are starting to boost their export efforts. When it comes to policy, Oliver details how the early steps in the UK market that put offshore wind on a path for success could be copied in other developing markets. And finally, we turn our attention to the US, where tough economic conditions are beginning to recede, but much work lies ahead for the offshore wind industry to reach its full potential.

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Transcript

(Note: This transcript was created using artificial intelligence. It has not been edited verbatim.)

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Sean McMahon 00:45

What’s up everyone and welcome to the Renewable Energy SmartPod. I’m your host, Sean McMahon, and today we’re going to be bringing you the first of two back to back episodes about the state of the offshore wind industry. In a minute, I’m going to be joined by Oliver Metcalfe. Ollie is the Head of Wind Research at BloombergNEF, and he’s going to share his perspective on the global outlook for offshore wind.

Ollie just returned from a trip to China, so we’ll talk to him about that ginormous market, as well as other less developed markets that are starting to take shape in other parts of Asia. We’ll also hear from Ollie about what’s going on in Europe, and hear how policy moves made decades ago in the UK have helped that market continue to grow and serve as an excellent footprint for other markets as they navigate the earlier phases of development. And of course, Ollie and I will also talk about the state of the US offshore wind market.

Pardon the pun, but the US offshore wind industry has certainly experienced some choppy seas as of late. So Ollie is going to talk about what needs to happen for the US to chart a course for sustained growth in offshore wind.

On our next episode, we’ll hear from Walt Musial, a principal engineer and the leader of the offshore wind research platform at the US National Renewable Energy Laboratory. Walt’s going to come on the show to help us dive into NREL’s latest Offshore Wind Market Report and share his expert views on the headwinds and tailwinds the offshore wind industry is facing.

So yep, we’re doing a double dose of offshore wind, a gale force, if you will. And while I could go on forever with these terrible puns, I better stop right now and get things started with Ollie Metcalfe from BloombergNEF.

Ollie, how you doing today?

Oliver Metcalfe  02:42

Good. Thanks, Sean. Thanks for having me on.

Sean McMahon  02:44

Yeah, I’m excited to have you on here. We’re here to talk about offshore wind, and someone like you, you have a global perspective on how the markets are shaping up. So I want to ask you, when you look at the global picture for offshore wind, how would you describe it?

Oliver Metcalfe  02:58

So this year, we’re expecting a record year of offshore wind installations. So we’re expecting around 18 gigawatts of new build just over. That’s largely because of building the world’s largest market, China, where we’re seeing a lot of new offshore wind projects go into the water. We’re also seeing an increasing number number of markets around the world start to install their first projects at scale. So that’s examples like Taiwan and France are starting to build their first major commercial scale offshore wind farms. So that’s really exciting for the sector, the sector just coming out of a couple of really difficult years. That’s because cost inflation that we saw after the pandemic, supply chain bottlenecks and particularly high interest rates, which have really hit a technology that’s got really high capital costs, really hit the sector hard. It meant we saw the delaying of some investment decisions in some markets, even the cancelation of projects. So while we’re seeing this general, really exciting growth story for offshore wind, the sector’s coming off a couple of really difficult years. We’re expecting that to change over the next few years, so interest rates have started coming down. That will be a plus for the sector, and we’re expecting 10 fold growth over the whole horizon of BloombergNEF offshore wind forecast. So at the end of last year, cumulative offshore wind capacity around the world stood at 73 gigawatts. We’re expecting that to rise tenfold to 742, gigawatts by the end of 2014

Sean McMahon  04:27

Wow. That’s a tremendous growth. That’s for sure. Are there any areas or countries, I should say, that have policies in place that have helped spur offshore wind or policies that are kind of holding it back?

Oliver Metcalfe  04:40

I think the best place to look are the world’s two largest markets so far. So that’s Mainland China and the UK. Now we’re expecting those two still to be the two largest markets in terms of cumulative capacity all the way up to 2040 now the market looks very different in both of those countries. The UK has had. Had a long history of support for the offshore wind sector, and a lot of that, historically, was providing subsidies, so providing developers with revenue certainty, so they knew what they were going to earn over the first 1520, years of their project’s life. That means a developer can go to a bank and ask for a loan with a very strong business case, because they know what they’re going to get paid for their electricity. That means that in the UK, over time, it’s the offshore wind sector, has gone from a place where the industries need needed a lot of subsidies to bringing down the costs to a point where today they’re still asking the government for that revenue certainty, but often that contract they’re signing for the provision of electricity is below average round the clock power prices, and so while it’s still really important for developers to build that business case, that history of subsidies and the continuing regime it’s got in the UK, of providing developers with that revenue security has been one of the key things that have driven such a successful market over the past 2030, years for UK offshore wind in China, we’ve really started to see the sector begin to scale as the government has set out installation targets, and provinces have been really ramping up the allocation of development rights and then the construction of offshore wind farms to meet those targets. So China tends to do things in five year cycles. It’s five year industrial plans, and we’ve really seen this kind of rapid increase every five years of offshore wind build in China. Things aren’t looking so rosy right now, in the market at the moment, and that’s because of conflicts with with military activities. So often developers will be building a project, things are very secretive in China in terms of where these military conflicts can occur. So it means that we’re speaking developers at the moment who are building projects, and they’re finding out kind of later in the process, after they’ve invested some money, that their project area conflicts with areas that are cordoned off for military activities, and so that’s a bit of a break on the Chinese market at the moment that many developers are worrying about. In general, China tends to do things bigger than everywhere else in the world, and so it’s still a really, really big part of our offshore wind forecast. But there are some things that the market could resolve to accelerate growth.

Sean McMahon  07:19

Yeah, that seems like such a contrast. You know what you were saying about the military? How you know, in the US, we get all these clearances and collaboration to make sure that an offshore farm won’t conflict with military activity, and yet, in China, they’re finding out later in the game, and it’s kind of blowing up projects.

Oliver Metcalfe  07:34

I think there’s, there’s issues around the world for offshore wind, about competing uses for seabed areas in a lot of markets that’s conflicting with military radars, or just where military activities might take place. In other markets, it’s around fisheries and it’s around other commercial uses for seabed areas, and so offshore wind has to be built in an ecosystem of other industries and other important uses or protected areas for ecological purposes, and so it’s really important that countries develop in depth what we call maritime spatial plans to cordon off certain areas for offshore wind projects, because we’ve seen a lot of cases in the past where conflicts with other industries has really held back growth for the offshore wind sector,

Sean McMahon  08:22

Alrighty. And then you touched on the UK and China. Are there any other places around the world where there’s offshore wind resources that are perhaps underutilized or maybe on the way to being tapped, but not quite fully realized?

Oliver Metcalfe  08:34

Well, a lot of the activity we’ve seen so far, so far has been in the European North Sea, and as I was saying, off the coast of mainland China, we’re beginning to see more markets start to pick up in their installations, and particularly some exciting markets in East Asia. So South Korea is building its first commercial scale offshore wind projects, and one of its first really kind of larger, several 100 megawatt projects got financed earlier this year. Japan is holding offshore wind project tenders, and so the government is tendering out project sites for private developers to build projects. And we’re expecting to see those larger projects start to come online later on this decade, and then other newer markets in in Europe are starting to pick up. So we expect to see the first projects in Poland, more markets towards the end of the decade in Ireland. So when I show clients our chart of offshore wind installations, what I love most about the chart is how colorful it gets as you move further on into the decade and beyond. And each one of those new colors represents a new offshore wind market installing capacity at scale. So we’re beginning to see the geographical diversification of the global offshore wind industry, and that’s going to continue as we move into next decade as well and markets further afield. So India, Brazil, Australia, are kind of just beginning to lay out the regulatory pathway that projects are going to have to take to get all their permits to get their grid connection. Come online, and so those markets are a little bit further behind. But we’re expecting to see this increasing globalization of your offshore wind industry as we move into next decade as well.

Sean McMahon  10:12

Yeah, that sounds like it’s good to hear, you know, growth in markets all over the place, but I want to bring it back to China for a second. So I understand you just came off the plane, you know, yesterday, the day before, from a trip to China, visiting with people in the industry. The industry. What was that trip like for you?

Oliver Metcalfe  10:26

It was really interesting. I think the Chinese wind industry is so big, the wind industry in general has been kind of split between what’s been going on in China and what’s been going on in the rest of the world for a couple of decades. Really, the Chinese wind projects and developers are typically served, especially from a turbine manufacturer perspective, by domestic players. Those domestic players have had little success and have had less of a push in the recent past to try and export their technologies to to other markets. Their home market has been so big there hasn’t necessarily been the commercial driver there that they have to look to export their technology. That’s really beginning to change. So the turbine supply market in China is very fragmented. There are a lot of players all fighting desperately to maximize their market share, but recently, that’s come at the cost of profitability. And so when I was out there, the conference I attended, there was actually an agreement signed between the major turbine manufacturers in China to make efforts to try and end this price war we’ve seen in their domestic market. But there are a few major Chinese players that are now much more actively trying to target export markets, and that’s for onshore wind turbines. We’re also starting to see some more progress for offshore wind turbines as well. So a major Chinese turbine maker called Ming Yang, earlier this year, signed a contract to supply a pretty large project in Germany being developed by a German developer called luxkara. That project is probably set to come online later this decade, and represents the first major success of a Chinese turbine maker exporting offshore wind turbines, or plans to export offshore wind turbines in the future. So we’re beginning to see this situation where what’s been the status quo in the past, where there’s been kind of limited mingling of the China market versus the rest of rest of the world. We’re beginning to see that change. And so that’s what’s so interesting hearing about the different Chinese turbine makers, differing strategies when they’re when they’re looking to target these export markets where maybe they can sell turbines for slightly higher prices, higher margin, and kind of lift up that business that’s struggling, particularly on turbine sales at home.

Sean McMahon  12:36

Gosh, I got to tell you that, you know, the thought of a bunch of Chinese players entering the international market. You know, we’ll see how that goes. Seems like it’d be a competitive landscape. Now I want to shift to the US, and I want to ask you the same question we asked at the top about the global state of the industry. When you look at the state of the industry here in the US, how would you describe it?

Oliver Metcalfe  12:57

Well, I’d say that the US offshore wind sector is right at the beginning of its growth story. So there are just three operational projects today accounting for 174 megawatts across all three. That’s just 19 turbines operating spinning in the water today. So when compared with the onshore wind sector, for example, where the US is by quite some distance, the second largest market globally. Offshore wind has seen many false starts in the US, and we’re just beginning to see those first commercial scale projects start to secure finance and begin construction. So when you look at what’s under construction, we’re going to see really rapid growth in the US, and we count just over five gigawatts, or 5000 megawatts of us offshore wind projects that have secured finance, and they’re just beginning to start that construction process. Having said that, the US offshore wind industry is just coming off a really, really difficult couple of years. I mentioned previously some of the kind of financial pressures and supply chain pressures that the offshore wind industry globally has been facing recently. Nowhere else around the world have faced those problems more than in the US. By our calculations, the cost of delivering a US offshore wind project from 2021 to 2024 rose by about 60% due to those factors, like about high interest rates, cost inflation, supply chain bottlenecks, and the sector is kind of still dealing with some of those issues. So some of the projects that we’re expecting to come online over the next year or two, we’re now predicting will come online much later in the decade, as they’ve had to kind of reformulate those projects, rethink about the economics, in some cases, cancel their off, take contracts that they’d signed with states. Mostly projects are in the US northeast and having to kind of rebid for subsidies, probably at a higher contract price, in order to make the economics work on those projects. So we’ve kind of seen the US market and some of those Pathfinder. Projects run into some serious issues over the last couple of years and have to kind of delay their their plans to come online. So really rapid growth we’re expecting over the next few years, but maybe not quite as rosy a picture as many were predicting three or four years ago, before we saw all these financial pressures hit the industry. One of the reasons that things have been so difficult in the US compared with other markets globally is typically there’s a really long time in the US between a developer locking in their subsidy contract, so locking in the price they’re going to get paid for their electricity, and then actually the project’s coming online, so the project securing their key supply chain agreements, securing their financing package, and so that really long time between those two events allows more things to change between that time when you lock in your price and you start delivering your project. So when the pandemic did hit, we had this situation where developers were trying to deliver these projects in a completely different cost environment, into an environment where the cost of finance, the cost of debt, was far higher than they were assuming when they were delivering these projects. And in the US, we typically don’t see the electricity price that developers earn on their projects linked to inflation like we do in other markets. So sometimes you get a fixed inflator, like your contract price might increase by 3% each year when inflation’s running at nine 10% then that puts your project in a really difficult spot. So I think particularly in the US, that’s why we saw some of these impacts hit even harder than we did in some other international markets.

Sean McMahon  16:34

Okay. And I guess there’s kind of a, kind of a gamble there, right? If the price during that time frame, that gap, if it if it goes up, developers in trouble, if it goes down, then they’re kind of winning, right, exactly.

Oliver Metcalfe  16:45

So we’re beginning to see some states react to the difficulties that the sector has faced over the last couple of years, and adjusting their support mechanisms in place for offshore wind to account for some of the some of these issues that projects have faced. So we’re beginning to see more states implement indexing mechanisms in contracts, so the price that you get paid for electricity might be indexed to movements in steel prices, or greater indexing to inflation metrics, in order to share some of those risks between the investors and the utilities and states that are providing the support for these projects, one of the things that makes me more optimistic about the US offshore wind industry is we’re beginning to see a policy reaction to the difficult events that the sector has faced over the last couple of years. But there are still several projects in the pipeline where developers are going to be making significantly lower returns than maybe they were initially envisioning when they when they were designing the projects in the first place.

Sean McMahon  17:47

We’ll be right back.

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And now back to my conversation with Oliver Metcalf from Bloomberg, NEF.

Sean McMahon 18:35

Now you mentioned how some states are starting to to link pricing to certain indexes for, you know, things like steel. But I know she said some states, and I’m wondering, you know, when you look around the US, rather than have a centralized federal plan, a lot of these things are done by state or maybe in a regional basis. So are there any regions or states? Well, you know, two questions, are any regions or states that you see hold extreme promise and things look good? And are there any areas where there’s headwinds? You know, no pun intended, but there’s headwinds for the growth of offshore wind.

Oliver Metcalfe  19:10

I think in the US, it’s a bit of a complex picture, and a patchwork of federal support and then state support for offshore wind. So on a federal basis, there are tax credit subsidies. So usually, developers can claim back a certain proportion of their of their capex of a project in the form of tax credit, so they can offset that against tax they pay. That’s a big federal subsidy. But when it comes to the actual electricity off taker, the utility that’s going to be purchasing the electricity that’s generated from these offshore wind projects that’s done on the state level, and typically, so far, we’ve seen northeastern states take the lead on offshore wind development so far in the US. So this decade, we’re expecting the majority of offshore wind. Capacity to come in states like New York, New Jersey and Massachusetts, there were some of the first movers in terms of holding auctions for subsidies and supporting some of the earliest projects in the pipeline. We’re beginning to see more regions across the US start to look to build offshore wind. So one of the largest projects in the world, actually, which is currently under construction off the coast of Virginia. But there’s other markets where there’s this kind of federal push to maybe lease some areas for offshore wind projects. So lease seabed areas for developers to build. There isn’t necessarily that state level driver. So for example, looking at the Gulf of Mexico, there was very little interest in a federal auction for seabed sites recently, and that’s because many of the states that have coastlines on the Gulf of Mexico haven’t necessarily indicated that they’re willing to provide the level of support or provide off take contracts for projects, and so It’s a really speculative play for developers to be securing seabed areas, not knowing which state or whether there’ll be a state that will be willing to purchase the purchase the electricity. Then you’ve got states on the west coast. It’s often really difficult to secure a permit to build an onshore wind project in California, for example, so the state is now looking towards offshore wind to add to its electricity mix, but the continental shelf drops off very quickly off the west coast of the US, so waters get deep very quickly. So if the states want to make offshore wind a key part of their energy transition strategy, they’re going to have to look towards floating wind projects. So rather than bottom fixed offshore wind, which is what we’ve seen for the vast majority of projects being installed globally so far, and all of those projects in the northeast, those commercial scale projects that are getting installed on northeast, are bottom fixed, floating wind is a much more nascent technology, so those are turbines installed on floating platforms and then moored and anchored to the to the seabed. At the moment, that sector globally is very much at a demonstrator scale, and there aren’t any projects that have been installed so so far in waters as deep as as those off of California, where some there are early plans to install these things, and these are waters 1000 meters deep or even even greater. So I think we’re a lot more pessimistic on Californian offshore wind, and that’s just because of the pure technical constraints and progress the floating wind sector has to make before we start seeing those really big projects off the Californian coast.

Sean McMahon  22:31

Would you group Oregon with that as well? Because I know there was a auction was canceled for the offshore wind off of Oregon. Would you put it the same reason technological hurdles?

Oliver Metcalfe  22:40

Yeah. So it’s a similar issue in Oregon. And again, the waters get very deep there. There’s a lot of uncertainty on the kind of concrete plans to support these projects, which will will require a much higher price for their energy to meet those higher costs you need for a more nascent technology. And so looking right down the West Coast, Washington, Oregon, California. Have all been looking at offshore wind, but there are significant technical constraints that could face these markets if we’re going to see projects in the water.

Sean McMahon  23:13

All right. Well, you know, I live on the West Coast, and so that’s a little disheartening, I guess, but I understand the logic of it for sure. And I want to talk about the industries that would be poised to support this growth. You know, we’re talking about ship building, Port infrastructure and things like that. Do you think the US will have the supply chain and we’ll be able to build up that supply chain to keep pace with the demand for some of these offshore wind projects

Oliver Metcalfe  23:38

So when we’re talking about an equipment manufacturer. So like the components that make up the turbines, the US, offshore wind industry still has to rely heavily on a European supply chain. I think some of the uncertainty and the project delays, the project cancelations we’ve seen over the last couple of years have really increased the uncertainty for supply chain players. That’s a big pain, because if you’re going to build a factory in the US, you want to know that you’re going to get a nice, clean, clear pipeline of projects that you can supply to make that investment worth it. So all this uncertainty has, I think, delayed some of these plans that we might have seen for new supply chain facilities in the US. Hopefully we see that change over the next few years, when we start seeing these projects in the water. So maybe the US will have to rely a little bit longer on that European supply chain. But a lot of the condition that the states have outlined when handing out some of these subsidies have been to establish local manufacturing facilities. It’s been to invest in Port infrastructure. And so there’s definitely a big prize in terms of a local industry that there is to win as the sector grows for us, offshore wind, when we think specifically about ports, developers, along with state and federal governments, have invested, or plan to invest, $7.6 billion by our calculations, in staging ports to bolster us offshore wind growth so we’re already seeing. Seeing a lot of investment or planned investment to support some of this exciting growth that we’re predicting for the market over the next few years. It still doesn’t mean there’s not going to be a tight supply. And I think one of the issues with some of those projects being pushed out further into the decade after the issues they faced over the last couple of years has meant that now we’re seeing an even bigger spike in some of those years towards the end of the decade, of loads of projects looking to secure port capacity to come online at a similar time before 2030 that means that we are predicting some port constraints towards the end of the decade. BNF expects to see port deficits in New England and New York, New Jersey regions in the next decade, and that specifically has delayed projects, amplified demand, and projects could use distant ports in other regions, but that does add significant logistical complications and added cost. So we’re looking at a tight market rather than one that’s going to be like a really bottleneck for the industry, but there’s been a lot of investment, and we are seeing a scale up of infrastructure.

Sean McMahon  26:05

Yeah. And then what are you seeing when it comes to the ship building, you know, the vessels that are required to build these massive offshore farms?

Oliver Metcalfe  26:12

One nuance of the US offshore wind industry is this piece of legislation called the Jones Act. And that legislation basically says that any ship that’s bringing goods or personnel between two points has to be a US flagged vessel staffed mainly with a US crew, that provides significant additional constraints to the vessels you can use on an offshore wind project. So that’s incentivized the construction of new wind turbine installation vessel. So we’re seeing Dominion currently building a new wind turbine installation vessel called caribdis. One vessel won’t be enough to deliver the whole US offshore wind pipeline from a turbine installation perspective, but other companies are having to get really creative in how they manage this. This Jones Act, building one of these turbine installation vessels is super expensive, so if you’re building one in other markets around the world, it costs around $300 million according to our estimations, that corrupted vessel, I think, was initially benchmarked at around $500 million in terms of cost, but it looks like costs are spiraling a little bit higher than that. So we’re seeing developers take approaches, what we call a feeder barge method. So instead of the installation vessel going to and from the port, kind of ferrying components, we’re seeing a European installation vessel or an installation vessel. They’ve been built somewhere else in the world, Park, up at an offshore wind farm, and then being supported by feeder vessels that are going to the port picking up the vessels. Those are being taken from the from the barge, by the installation vessel, and then installed on the foundations that are in place. That’s added complexity. It adds to cost at the moment, and so that’s kind of an additional hurdle that developers face in the in the US market. So the Jones Act, although it’s a very old piece of legislation, and it wasn’t designed for the offshore wind sector, it’s incentivized the production of a couple of us flagged vessels, but when we think about the whole sector, what it’s doing more is it’s raising costs and forcing developers into these difficult workarounds.

Sean McMahon  28:28

Yeah, I was familiar with the Jones Act, and it sounds like it’s something that’s either going to have to be dealt with on the policy front, or, like you outlined some creative solutions to get around it, I guess. What about workforce? Do you think the US will be able to build up, train up the workforce needed to stand up all these offshore wind farms?

Oliver Metcalfe  28:47

I think one of the big benefits of offshore wind, and why governments around the world are so excited about it, is the opportunity to realize green growth. So it’s not just about the clean electricity that these projects going to be generating, but it’s about realizing some of the local economic benefits that come along with building these projects. So part of that is around supply chain facilities, but you’re going to have to have workers that are able to staff those facilities. And there’s a lot of initiatives at the moment that are being put in place by states, but also some of the developers that are building these projects to build up the local supply chain, and part of that is skilling up local workers, like I say, at the moment, the US offshore wind industry is going to have to rely on that European supply chain. And a lot of the big companies that are building these projects are European, but all of these companies are establishing US bases. A lot of them are clients of BNF, and we speak to them all the time, and the vast majority of people we speak to in those teams are American, which is great to see. So we’re already beginning to see a lot of job growth, and there are initiatives to train and establish a US workforce for this. So again, I think this is a challenge. Much. It’s a challenge that the global offshore wind sectors facing at the moment. So every offshore wind conference I go to now there’s a careers fair that sits on the side of it, where companies are trying to attract young, smart people into the sector. Often I hear people are worried about the number of specific professions, like, Are there going to be enough welders to produce the offshore wind foundations of the future. I think that’s a bigger opportunity, but also it will require a lot of investment in the local workforce in order to kind of realize this growth that we’re expecting over the next decade or so.

Sean McMahon  30:31

So now I want to talk for a second about technology. You know, when we talked about the West Coast, you mentioned there’s some technological challenges to standing up wind farms because of the continental shelf. So it sounds like there’s an opportunity for technological advancement there. Do you see any revolutionary things coming down the pipeline that could change this market and maybe help some of these wind farms get built either quicker or cheaper, or any of the above?

Oliver Metcalfe  30:55

So one of the key things that have been crucial to driving down the cost of offshore wind historically has just been the increasing scale of projects, but also the turbines that are generating the electricity. So we’ve seen the sector move really quickly from using three megawatt turbines to six megawatt turbines. The projects we’re seeing installed today and getting financed today are using 1314, 15 megawatt turbines. That’s crucial, because using a larger turbine means that you need fewer machines for a project of the same capacity. That also means fewer foundations. It means fewer cables. It means less days hiring one of these expensive construction vessels to install the turbines so that increasing technology scale has been really crucial to driving down costs in the future. It’s also brought quite a few troubles for turbine makers. This increasing pressure from developers for turbine makers to increase the scale of these machines has meant that we’ve seen a decreasing commercial lifespan of each of these models, so the amount of time that turbine makers have to make back that research and development investment that they made in the new platform has shrunk as their and their competitors are always looking to produce the next bigger, better machine for developers to use. So that’s been really crucial historically, but I think we’ve seen a bit of pushback from the supply chain now, so we’re beginning to see that process slow and turbine makers, who’ve struggled a little bit over the last couple of years with those same issues, like all of the input costs, the cost of materials, the cost of logistics and things rose over the last couple of years, and that hit turbine makers balance sheets as well. So I think we may actually see a bit of a slowdown in the pace of technological change in terms of turbine scale, at least as turbine makers really try and make back those investments and focus on profitability, rather than maximizing market share and trying to deliver that kind of latest and greatest turbine model. So I think actually, for the for the industry’s health, it might be a good thing, from a turbine perspective, to pause a little bit at the current turbine size we’re looking at, so that we can really have a healthy industry that’s producing this equipment that’s going to be crucial to delivering the energy transition.

Sean McMahon  33:17

And then now here in the US, there was a lot of headlines made by the Biden administration about setting a goal to have 30 gigawatts of offshore wind by 2030 I’m kind of skeptical we’ll get there. What’s your take? Or will we get there? And if not, how many gigawatts Do you think we will have out in the water by 2030

Oliver Metcalfe  33:38

Yeah, so at the time, we thought that was a pretty unrealistic goal. If anything, things have got even less realistic as the decade has progressed, and as we’ve seen, some of those early projects would have been critical to getting closer to that 2030 goal. Have seen those delays, some of which have been pushed into next decade. So at the moment in our forecast, we’re predicting almost 13 gigawatts of offshore wind by 2030 that’s amazing growth from where we are today. If you remember, at the beginning of this podcast, I said there are only 174 megawatts, or under naught point two gigawatts of currently operational offshore wind in the US today. So 13 gigawatts is tremendous growth, and we’re expecting the US to become the third largest market globally by 2040 the horizon of our market. So really exciting growth in store. But I think by now that 30 gigawatt by 2030 target is a bit of a pipe dream.

Sean McMahon  34:35

Yeah, it seems like something we can kind of let that goal Rest in peace, if you will. Bold predictions. So one of the things I do on this show is I ask all my guests for bold predictions about their area of expertise. And so if you and I get together in, say, five years, maybe 10 years, what are we talking about the most? What are some of the hot topics when it comes to offshore wind?

Oliver Metcalfe  34:56

So I think what’s going to be really. Important for the offshore wind sector in the US is for the technology to become competitive on a cost basis compared with other generating technologies. So at the moment, we’re seeing real progress in markets that are struggling to build onshore wind. They really need offshore wind to meet their energy transition goals. For markets in the central Atlantic, in the Gulf of Mexico, at the moment, they have alternative technologies that can provide energy at a much cheaper price, and that means that offshore wind is a really hard sell in those regions. So I hope in 10 years, we’ll be looking at a sector where costs have come down significantly. I think that’s possible, especially from today, where baked into some of those early project costs are those investments that are required in Port infrastructure, in building up that local workforce that we were talking about before. And so once some of that kind of initial investment has been made, you can expect the price for offshore wind energy that’s delivered to decrease significantly, but I’m hoping in 10 years, we’ll be talking about a much more geographically diverse us offshore wind sector. So not just looking at the northeast, but looking at projects spinning in the water around the country.

Sean McMahon  36:11

All right. Well, Ollie, listen. I really appreciate all your insights. This has been a fascinating conversation about not only the global but also the US state of the industry for offshore wind. Thank you very much.

Oliver Metcalfe 36:22

Thanks for having me on.

Sean McMahon  36:28

Well, that’s our show for today, but before we get out of here, I want to say one final thank you to the exclusive sponsor of today’s episode, EDF Renewables.

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