Competition fierce for offshore wind's a 'once in a generation opportunity'

Where will the components of the planned offshore wind turbine structures be manufactured? The answer is crucial for area communities.

In 2013, with Cape Wind edging closer to the federal approval that it would never receive, a Massachusetts delegation that included New Bedford municipal officials and members of the business community toured German and Danish port cities to learn about the offshore wind industry. 

Bremerhaven, Germany, was one of the cities that most impressed the delegation. A city of around 110,000 people, similar in size to New Bedford, Bremerhaven had suffered through a decline in its fishing industry, the withdrawal of American troops after the end of the Cold War, and shipyard closures due to competition from Asian and European shipyards. This resulted in the loss of 3,500 jobs, Bremerhaven’s Lord Mayor Jorg Schulz said in a 2009 article on the Renewable Energy World website.

The city population plummeted from 150,000 to 115,000. The city council, worried the exodus would continue, decided the city needed to play to its strengths: its experience in maritime technology and a skilled workforce focused on shipbuilding, heavy machinery, design and manufacturing, Schulz said. 

“The key focus area became (offshore) wind power,” Schulz told the website. 

With a long history in the vanguard of the nation’s developing offshore wind industry stretching back 20 years to the beginning of the arduous Cape Wind permitting process, Massachusetts was always ahead of the rest of the U.S.

But, even with the nation’s first wind farm, Vineyard Wind 1, now in its construction phase, Massachusetts risks losing that advantage as Connecticut, New York, New Jersey and other states invest in the infrastructure to encourage the manufacturing and supply chain industries that will provide the bulk of the jobs and billions in investments. State officials are working with a new sense of urgency to maintain their advantage.

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In 2013, the New Bedford delegation felt a kinship with cities like Bremerhaven, and the English coastal cities of Grimsby and Hull, that some visited on subsequent trips. 

That year, New Bedford’s unemployment rate topped 12%, similar to that in Bremerhaven, and the Massachusetts city’s fishing fleet was suffering through increasingly strict regulations to try and rebuild bread-and-butter fish stocks such as cod, flounder, and other bottom-feeding groundfish. That year, the city’s poverty rate was nearly 30% and remains above 20% today.

We feel like Massachusetts is going to compete and compete very well for some of that manufacturing opportunity.

“They were fishing industry cities that really resembled Fall River and New Bedford,” Jennifer Menard, vice president of economic and business development at Bristol Community College, said of her own visits to Bremerhaven and the British ports of Hull and Grimsby. “They were really booming, and they had all this great economic investment and activity going on, all coming off these offshore wind farms,” 

What encouraged the New Bedford visitors was the turnaround brought about by the German government’s decision to invest heavily in developing an offshore wind industry. Bremerhaven overhauled its port infrastructure so that it could accommodate the massive foundations, towers and turbines to be assembled for transport out to offshore wind farm areas. 

But the city wasn’t just a convenient departure point for ships and materials during offshore wind farm construction, operations and maintenance. This dying port became the hub for a new industry with research and development, manufacturing, design, planning and construction companies drawn to the area. By 2013, the lost shipyard jobs in Bremerhaven had been replaced by offshore wind jobs and its unemployment rate slashed nearly in half from a high of 22.3% in 1998. 

“We saw a real opportunity and started working with the state (of Massachusetts),” Menard said.

Once the center of the whaling industry and then home to a thriving textile industry, and the perennial capital city of U.S. fishing, New Bedford has reinvented itself multiple times over the centuries. With the arrival of the offshore wind industry, New Bedford Mayor Jon Mitchell thinks his city and the surrounding region are about to add another bright economic chapter. 

“In the last 20 years, the capital and talent in the U.S. have been gravitating to so-called superstar cities, such as Boston and New York,” Mitchell said. “Offshore wind presents a unique opportunity for a city like ours …This is an industry we can play well in.”

Offshore wind 'a once-in-a-generation opportunity'

Like Bremerhaven, Southeastern Massachusetts has a deep well of maritime experience. The region also boasts marine-focused research institutions such as the UMass School of Marine Science and Technology in Dartmouth and the Woods Hole academic and research institutions along with the high-tech industries spun off from them. 

Landing some of the supply chain (business) in Massachusetts really depends on ensuring that we have ports that can deliver the space and the technical requirements and have properly sized and sited harbors.

The area’s deepwater harbors, waterfront infrastructure, a collection of underused waterfront properties, and, most importantly, the proximity to offshore wind farm lease areas are all attractive to the wind industry. 

In 2017, the Massachusetts Clean Energy Center evaluated the state’s ports and infrastructure for potential reuse and redevelopment. Eleven of 18 sites were in the New Bedford, Fall River/Somerset areas. The remaining seven were in Boston and Quincy. Since then, New Bedford acquired another potential site, a $30 million waterfront facility the U.S. Environmental Protection Agency turned over to the city that was used to treat contaminated harbor water. 

In 2010, the state chose New Bedford, with one of the shortest travel distances to the Massachusetts lease sites south of Martha’s Vineyard and Nantucket, to build a $100 million marine commerce terminal on a 29-acre waterfront site.

Built as a staging facility, it has a hardened and reinforced lot to store the ultra-heavy turbine components and is equipped with a crane capable of lifting them onto specially-built vessels that travel to the wind farm site for installation. It is the only such facility on the East Coast and both Vineyard Wind and Mayflower Wind recently signed contracts worth nearly $33 million to use the facility for their first wind farm projects. 

Mitchell describes the burgeoning offshore wind industry as a once-in-a-generation opportunity. It’s an ironic comparison, but Elise Rapoza, assistant director for corporate engagement at UMass Dartmouth, thinks the offshore wind industry could do for New Bedford and Southeastern Massachusetts what the offshore oil and gas industry did for states along the Gulf of Mexico.

“The Southern states did well because of offshore oil and gas … this is our chance to do that,” said Rapoza, former project manager for the Offshore Wind Economics Project at UMass Dartmouth’s Public Policy Center.  

Massachusetts not aggressive in fostering manufacturing, supply chain jobs

“(Offshore wind) is a huge opportunity, because it will create local manufacturing,” Rapoza said. It’s expensive to ship those massive components from overseas and cheaper to make them locally. Manufacturing will generate over 80% of full-time equivalent job years in offshore wind over the next decade, the American Clean Power Association estimated in its 2021 Clean Energy Labor Supply report. 

“But Massachusetts is lagging in that game. Other states are way more aggressive to secure local manufacturing,” Rapoza said.

New York, New Jersey, Connecticut, Rhode Island and Virginia also want manufacturing and supply chain jobs and investments. Some included requirements that wind companies invest in developing onshore manufacturing and supply chain businesses as part of their bids for power contracts.

Two years ago, Connecticut partnered with Bay State Wind to invest $93 million to develop a state pier in New London into a marshaling facility similar to New Bedford’s Marine Commerce Terminal.

In August, the New Jersey Board of Public Utilities awarded over 3,700 megawatts to two companies contingent upon them building new manufacturing facilities at what is called the New Jersey Wind Port.

Anything that can be built onshore, onshore cabling, a substation, will be from U.S. manufacturers. But this being the first project, a lot of offshore infrastructure, those don’t exist in the U.S. and will be delivered from elsewhere.

New York invested $644 million in port and infrastructure upgrades and in January, Albany announced a partnership between the Norwegian company Equinor, the wind developer building the Empire Wind Farm off Long Island, and Danish and U.S. companies to manufacture wind towers at a factory in Bethlehem, New York, that will create 500 jobs in the construction phase and employ 300 at the factory.   

Virginia’s Dominion Energy also announced an agreement last year for the Spanish company Siemens Gamesa to build an offshore wind turbine factory to supply the country’s largest single wind farm installation, 2,600 megawatts off the Virginia coastline.

Focused on low energy prices from offshore wind left the state vulnerable

State Rep. Sarah Peake, D-Provincetown, said the Baker administration, in its almost single-minded focus on low energy prices, was caught flat-footed by the technological leaps in the industry that led to greater turbine efficiency and productivity and big drops in the price of offshore wind power. Massachusetts is now in the third round of bids for state contracts to produce power for electrical distribution companies such as Eversource, Unitil, and National Grid. 

There’s a reason why state officials might be worried about pricing. According to a survey by ElectricChoice.com, in September of 2021 Massachusetts had the fourth highest electricity rate in the country behind only Alaska, Hawaii and Connecticut. 

Competition fierce for offshore wind's 'once in a generation opportunity'

It was the high cost of its power, in a state seeking relief from notoriously expensive electricity, that helped sink Cape Wind. Massachusetts required that each succeeding round of bids for state electricity contracts have a lower price for electricity than the previous round.

But rapidly increasing turbine efficiency meant bids in the latest round came in with power prices much lower than expected, Peake said. Because the price was no longer an issue, Peake said the state should have required that developers' bids include investments in manufacturing and supply chain businesses. 

It’s not a new complaint. In an April 11, 2019 letter to Mark Marini, Secretary of the Department of Public Utilities, Mitchell and over 50 state legislators, municipal officials and business leaders complained that the process that emphasizes the price of electricity over requiring wind companies to invest in onshore industries “has yielded little in the way of permanent industry investment in Southeastern Massachusetts.”

“I fault the Baker administration for not being nimble enough for the market,” said Peake, second assistant majority leader advising House Speaker Ronald Mariano. “They could have included infrastructure and jobs (in the request for proposals for offshore wind electrical generating contracts.)”

In response to the pressure, Gov. Charlie Baker recently filed his own legislation that he said would remove the price cap on future bids for energy contracts to ensure that projects have the flexibility to incorporate storage, improve reliability, and offer greater economic development is part of their bids.”

Speaking at the American Clean Power Association Offshore Wind Conference in Boston on Oct. 13, Baker said he wanted to make sure that Massachusetts retained its position on the “leading edge” of wind power, and, among other things, that the bid process would “offer greater economic development.”

And he proposed using $750 million in federal stimulus funds to establish a clean energy investment fund to aid this effort.

Recently, Massachusetts Secretary of Energy and the Environment  Kathleen Theoharides said the state is considering changes.

“We had a process in 2016," she said. "The industry’s evolved and we’ve learned a lot since then and we are looking for ways to update that procurement process going forward."

No state incentives for offshore wind to foster manufacturing, supply chain

The state process has also been criticized for not offering incentives. But big state subsidies for private industry have had a dicey history in Massachusetts and elsewhere.

Recently, General Electric had to pay back $87 million in state incentives when it reduced the size of the workforce at its new Boston headquarters from 800 to just 250. And in 2009 Evergreen Solar, closed its photovoltaic cell plant at Ft. Devens in Ayer after receiving $56 million in state incentives, and then moved that factory to China. 

On the other hand, the state played a big role in the rapid buildup of Massachusetts’ biotech industry with a $1 billion commitment in 2008 that resulted in the Massachusetts Life Sciences Center whose mandate is “supporting and stimulating research and development, manufacturing and commercialization in the life sciences.” 

The quasi-public agency is similar to Massachusetts Clean Energy Center and vaulted the state’s biotech industry past that of California and other states. By 2019, the Bay State had more than 430 biotech companies with nearly 40,000 jobs in research and development, more than 74,000 jobs in biopharma and $11.9 billion in total wages according to a 2019 article from WeWork. 

The Massachusetts Clean Energy Center has played that role for offshore wind. Along with building the marine commerce terminal in New Bedford and doing port analysis and numerous research studies, it has been instrumental in coordinating state job training and research on everything from wildlife surveys to transmission planning. The center also built a wind technology testing facility in Charlestown.  

“We know there are improvements that need to happen,” said Bruce Carlisle, managing director of offshore wind for the Clean Energy Center. “It’s going to take a little bit of public dollars to energize and activate very significant private investment.”

Offshore wind developers not waiting for state

But offshore wind developers already are moving in that direction on their own, sweetening the pot in the third round of energy contract bids by including shoreside investments.

In September, Vineyard Wind, along with its partners Avangrid and Copenhagen International Partners conditionally entered into an agreement with Crowley Maritime Corporation, a Florida-based American-owned logistic, supply chain, fuel and shipping company, to buy a 42-acre site with a defunct coal power plant to create a windport in Salem. 

Vineyard Wind’s proposal is contingent upon it being awarded a contract and creatinganother marshaling port in Salem similar to what has been done in New Bedford to assemble wind turbine components and load them onto vessels for transport to its lease area approximately 30 miles south of Martha’s Vineyard. The company estimates that will result in 900 full-time equivalent job years. 

Mayflower Wind submitted multiple proposals in its most recent bid and announced last month that if awarded a contract for its top proposal of 1,200 megawatts, it would include up to $81 million to support the building of the offshore wind supply chain, for workforce education and training and local port investments. The company also committed to building an operation and maintenance port in Fall River at an old ironworks facility.

Mayflower Wind is already in the permitting phase for an 804-megawatt Massachusetts wind farm and supply chain manager Will Cotta said that job estimates for the two projects total about 14,000 full-time equivalent job years with 360 long-term jobs and a commitment to 75% local hiring. That estimate depends on which of its bids the state selects.  

The state has indicated that a decision on energy contracts could happen in December, according to a Mayflower Wind spokesperson.   

Peake thinks the state should be setting the bar on how much investment in Massachusetts businesses and infrastructure should be required in the energy contract bid process. 

The Massachusetts House of Representatives will work on legislation to that effect, she said.

“Broadly speaking, what Speaker Mariano is ensuring is that there are Massachusetts jobs coming out of this new industry,” Peake said.

Potential offshore wind manufacturing sites smaller than those in Germany

It’s unlikely, say wind industry experts, that the single hub approach seen in Europe where manufacturing, construction and operations and maintenance take place out of a single port, will happen in the U.S. 

“Setting up manufacturing facilities is easier (in Europe) than in the US, because in Northern Europe a higher share of the waterfront is publicly owned. Here in New England most of the seaboard is privately owned,” Mitchell said. “At the Hull blade plant in England, it’s set on 200 acres on the Humber River. The place is massive. That’s the kind of land you need to build and store those components.” 

Instead, the offshore wind industry will be split up among multiple of ports in each region. The Massachusetts Clean Energy Center site survey showed that Massachusetts sites were mostly in the 30- to 40-acre category. Only two topped 100 acres: The 199-acre Quirk Auto site at the former Quincy Shipyard and the 307-acre Brayton Point Power Plant site. Both sites are privately owned, as are half the sites in the survey and the cost of repurposing almost all the properties on the state list is expensive. 

Depending on the use, the total costs for redevelopment of the Somerset site tops $100 million for any of the large turbine manufacturing categories such as towers, nacelles and blades.

To manufacture foundations (the base of the monopole tower), would take over $190 million in redevelopment costs. At the Quincy site, which had been used for shipbuilding, the costs were lower, running from around $56 to $64 million for towers, nacelles, or blades to $96 million for jacket foundations.    

Theoharides sees upgrading Massachusetts ports as the number one priority right now and the main impediment to developing an offshore wind manufacturing and supply chain industry here. The Legislature needs to approve Baker’s proposed use of $100 million of American Rescue Plan Act funds to kick start private and additional federal investments to upgrade port infrastructure.  

“Landing some of the supply chain (business) in Massachusetts really depends on ensuring that we have ports that can deliver the space and the technical requirements and have properly sized and sited harbors,” Theoharides said. Baker’s bill is currently in hearings in the House, but there is a sense of urgency because ARPA funds have to be allocated by 2024 and spent by 2026, Theoharides said.  

Carlisle said that while the focus was on manufacturing big components like blades and towers, we shouldn’t forget about other opportunities within the supply chain.

“There’s tons of other activities,” he said. “Yes, it would be great to have a blade manufacturer. Will we get one? I can’t tell you … We feel like we’ve got some other opportunities whether it’s blades or its high voltage submarine cables or inter-array cables or it’s the … high-technology systems that go into a nacelle. We feel like Massachusetts is going to compete and compete very well for some of that manufacturing opportunity.”

While everyone agrees that manufacturing and supply chain business is where the long-term community benefits lie, the stop-and-go progress of the permitting phase has, to this point, inhibited its development in the U.S., according to wind energy experts. 

“We really need to have everything start taking off. There’s been delays and setbacks which have sort of prevented supply chains from getting started. You don’t want to build a factory if you’re not sure you have any buyers,” Brendan Casey, research and analytics manager for the American Clean Power Association.

What that means is that with the first U.S. large-scale wind farm now about to be built, the major components will all have to be shipped from Europe.

“Anything that can be built onshore, onshore cabling, a substation, will be from U.S. manufacturers. But this being the first project, a lot of offshore infrastructure, those don’t exist in the U.S. and will be delivered from elsewhere,” said Vineyard Wind CEO Lars Pedersen.

The European experience showed that manufacturing and supply chain businesses stand to be the big players in job creation, said UMass Dartmouth’s Rapoza. 

She pointed to a blade manufacturing plant that opened in Hull, England. The fishing industry there was moribund, but as the British offshore wind industry boomed, port facilities in Hull and nearby Grimsby became centers for construction, operations and maintenance for wind farms.

Manufacturers who make large turbine parts need to be located on waterfronts where those massive pieces can easily be lifted onto a vessel for transport.

In 2016, the Spanish turbine blade manufacturer Siemens Gamesa opened a massive plant on the waterfront in Hull that employs 1,000 workers. This summer, the company announced it would be expanding the plant and hiring another 260 workers. Employees include retrained unemployed fishermen. 

“That’s the kind of jobs we really want, making blades or nacelles,” Rapoza said.