OK, since I opened a blog professing ignorance, whilst at the same time inferring that I have – or will gain – subject matter expertise, let us start with a bang. Is the EU under-estimating the US, and is the US relying too heavily on the Jones Act to guarantee them Offshore Wind work ashore and afloat?
Two years ago at my first Offshore Wind event in the US, I was immediately struck (as the son of a Scandinavian diplomat and middle child and peacemaker) by how far apart the European and US audience were from understanding each other – like high-school/gymnasium students on opposite ends of a dance floor. I overheard dismay in several languages and thought: “We simply MUST do better if this is going to work, and we all do business together.” In law school they teach that trust – even before contracts – form an integral basis of transactions. So…. let’s be radical and suggest this:
ONE: One European perception of their American (by which I mean USA) counterparts is that they are (for the most part) not knowledgeable about the practicalities of Offshore Wind. If we accept that the perception exists and/or the underlying suspicion has a basis, then: what do both parties propose to do to remedy it? And how many years into the development cycles can the Americans use their “can-do” ingenuity to assume increasing control over development themselves – years? Decades? How soon would the Chinese be expected to control the process? The Taiwanese?
Remember that a week after ordering the Atom bombs dropped, President Truman extended US territorial rights 200 miles to the Outer Continental Shelf (not surprisingly no one objected), and on return from Europe President Eisenhower was so impressed with the German autobahn system that he instigated the massive interstate highway system in the US of 48,000 miles over 35 years starting in 1956. They studied what Europeans had done, and in a decade applied it in the US. SOURCE: en.wikipedia.org/wiki/Interstate_Highway_System
TWO: One assumption by some (not all) prospective US participants is – or may just appear to the Europeans to be – that, by virtue of the protectionism provided by the Jones Act, some prospective US participants may simply assume that their EU developers and sub-contractors “must” eventually call on US providers “anyway.” As though it were inevitable…. Yet for Block Island Wind it was not necessarily inevitable….. What’s changed? Is it? Why can’t – or won’t US innovators be able to build a vessel capable of erecting wind turbines off US shores? And what don’t we know? If it will take years to start construction, who is to say someone might use that time to build….
These are just hypotheticals, I put them forward as provocative theories only. But do you – the roughly 1,500 persons who viewed this blog yesterday – mostly in the US, Baltic, Germany, UK – but few in Scandinavia – think? Does it matter if two major classes of participants in a marketplace are still working on understanding each other’s needs years after hundreds of millions have been spent and the highest government levers have been pulled to sell long-term leases at the doorsteps to the US’s largest population base? Will we all just muddle through, or should we be more pro-active?
What workarounds and compromises – if any – will be attained in the next round of construction vis-à-vis the flag of the mother vessel doing the one-site construction and the order of delivery of equipment, etc. to that vessel and by what vessels, etc. And land – land, that unspoken dilemma – where to find all the land if there is no magic Esbjerg to fall back on in the USEC?
NOTE: The Jones Act was initiated by Majority Whip Senator Wesley L. Jones, Esq. (1863-1932) of Washington State at the request of his constituents, the merchants of Seattle, who tasked him with “making Alaska dependent on Seattle-based shipping.” As he was not empowered to make international treaties, Jones did the next-best thing and effectively drafted a national one… Then his support of alcohol Prohibition cost him his eight-year political career and he died before leaving office.
FOR THE NEXT BLOG: Waterfront Commercial Realty vs. Reality
Waterfront land in the US for Offshore Wind: what is the shortfall in real terms? How to remedy it? Refurbish existing infrastructure? Greenfields? Brownfields? Who is going to surrender piping plover or flounder or horseshoe crab habitat to (even) renewable energy? What will happen to the 306-acre peninsula at Brayton Point Massachusetts, en.wikipedia.org/wiki/Brayton_Point_Power_Station? And when? Is New Bedford the model? How soon could one modify a hurricane barrier?
Can real estate supply meet or keep up with demand? Given that New England is not Denmark, and assuming 100-meter blades won’t travel by truck along I-95 very often, or even rail, then what? They raised Bayonne Bridge in New York, yet how many more would have to be raised – realistically, for Offshore Wind? How much more dredging is needed? One port executive recently cited two decades of “dredge exhaustion.” From concept to shovel-ready, dredging can take decades.
What will the impact of price-wars for staging, assembly and lay-down areas comparable to Esbjerg be on developer’s price projections? What will the burden be vis-à-vis transportation times and costs for equipment – not to mention personnel, by sea and by land – be? In Singapore, Netherlands, Persian Gulf etc. they can “make new land,” but what is a realistic model in the megalopolis which is the northeast US, with its high-grossing fisheries?
Are the larger sites such as Quonset and Davisville, Rhode Island or the Sparrows Point, complex in Maryland, Chesapeake Bay big enough for the task – if they ever were? Are they still marketable as single large entities by one seller or lessor (as in a government agency), or are they already partitioned off to smaller stake-holders, making larger sites harder for one entity to control? Can they be ready soon enough for the several projects?
If there is an underlying supply (much of it may not be waterfront, but with indirect access), say a glut of industrial factories forming a northeastern rust-belt (after jobs moved south then overseas over many decades), and if some mayors like those in New Bedford or Fall River (or Somerset, all hypothetically), would (logically) be keen to reinvigorate their industrial base, can that supply be coupled with the demand requested by the EU developers?
Overall, then, we ask: What is the price to the New England economy of NOT embracing Offshore Wind at this critical juncture? And if we are all in this together, how to start solving these issues in a world of NDAs where transparency may not be the norm….?