Alarming weather patterns, damaging coastal flooding, thickening smoke-filled skies, and fluctuating energy costs are clear reminders we must stay steadfast in our transition to clean energy, including offshore wind. But, a perfect storm creating financial turbulence — interest rate hikes, supply chain bottlenecks, inflation — has acutely hit the capital-intensive offshore wind industry, raising concerns that this clean energy future may be out of reach.
Rest assured — the offshore wind industry is committed to New York for the long haul.
With the right investments, these past few months of economic challenges for offshore wind will be seen as a blip, not a change in direction.
The support is there — from President Joe Biden, Gov. Kathy Hochul, and the public, as seen in polling. Officials have set a high bar for the industry. The ambition is not to simply install turbines at sea, but rather to build an entirely new domestic industry — including a localized manufacturing base, a skilled domestic workforce, modernized ports and harbors, and investments in communities touched by these projects. These are laudable and achievable goals, but they have upfront costs.
Unlike natural gas and oil, the cost of renewables lies mostly in the initial capital needed to build and install turbines or solar panels. Once this initial cost is paid, the energy that flows does not change in price over the 30-to-35-year useful life of the project. Thanks to government investments and incentives, ratepayers will not bear these upfront costs alone. The remaining cost, divided among everyone’s bills across the life span of a wind farm, will be nominal — estimates expect monthly bill changes to come in under $3. It will also bring much-needed stabilization to New Yorkers’ volatile energy bills.
Further, as we build out supply chains for turbine manufacturing, initial capital costs will only decrease. Right now, we need to build not just the turbines, but the factories and infrastructure to make those turbines. Once those systems are set up, we don’t have to pay for them again. Joining forces with neighboring states to share ports, manufacturing, and other supply chain investments would further reduce costs.
New York is taking a smart approach to pushing forward offshore wind. New York recently accepted proposed bids from offshore wind developers in an effort to backfill terminated projects and better insulate future projects from inflation. At least two projects at risk of being canceled are rebidding, demonstrating developers’ commitment to the Empire State. New York expects to award these projects in March, a lightning-speed timeline for projects of this scale.
Another promising indicator for offshore wind is that costs appear to be stabilizing and returning to their historic declining trends. New Jersey recently announced two major offshore wind projects whose energy costs were lower than projected.
Switching to clean energy is imperative to maintaining a livable planet and an efficient, modern energy grid. Due to the population density of downstate New York, offshore wind needs to be part of the equation. There simply is not enough open space to build adequate onshore wind and solar. The Atlantic coast has some of the most consistent wind in the world, making it an ideal location for offshore wind production. We need to take advantage.
The journey to a clean energy future was never going to be easy, but the benefits will ultimately be well worth the effort.
This guest essay reflects the views of Fred Zalcman, director of the New York Offshore Wind Alliance, a coalition of project developers, environmental groups, and labor with a shared interest in promoting the responsible development of offshore wind for New York.