April 3, 2014

Jobs from Offshore Wind: It’s Already Starting

By Val Stori

The New Jersey Board of Public Utilities’ (BPU) decision last week to reject the Fishermen’s Energy offshore wind project is another setback to building an offshore wind industry in the US, but at heart really points out a Catch 22—how do you get jobs in a newly emerging industry that requires substantial upfront public capital before those jobs are present?  This dilemma is at the heart of emerging US offshore wind policy.

The BPU maintained that the project failed to demonstrate clear economic benefits and also questioned the use of lower-cost Chinese-manufactured turbines, citing the machines as an unnecessary technology risk.

The irony of the decision is that the same week, the economic benefits of the Cape Wind offshore project in New Jersey were on full display. Cape Wind, a proposed 420MW project off Nantucket sound, recently announced two new contracts, ensuring US-based labor.  One of those contracts was awarded to New Jersey-based Caldwell Marine International to install the submarine intra array and export cables, which, incidentally, would be manufactured by Prysmian Cables in South Carolina.

New Jersey is not the only Atlantic state to reap some economic benefit from offshore wind development.  Although the U.S. lacks specialized port facilities, factories built to scale, and the load-bearing railways required of a heavy-structure industry, there are specialized industries, especially in land-based construction, here in the states with the workforce and skills to contribute to offshore wind’s development. In addition to contractors in NJ and South Carolina, Cape Wind has contracted with Cianbro Corporation to design and construct its electrical services platform at Cianbro’s Maine facility.  This $100 million contract should support up to 350 construction jobs.  Falmouth-based Lawrence Lynch Corp. was awarded the contract for laying the series of duct banks between the point of landfall and the grid interconnection station.

Cape Wind’s major construction contracts have yet to be finalized and contract figures have yet to be disclosed, but the project is well on its way to sourcing over 50% of its labor and components from US-based manufacturers.  That’s pretty impressive for a project under close scrutiny to cut costs and meet cost-benefit tests.

Further north, the proposed Maine Aqua Ventus project has 3 Maine-based partners that support the manufacturing of the unique, cost-cutting composite hull.  And South Carolina, a state with relatively low on-shore wind potential, is home to GE, a leading global wind manufacturer. Other large companies have also set up shop in the state–in 2012, Clemson University identified 1110 wind industry employees in 33 businesses in South Carolina alone.

If we can figure out how to get our state offshore wind policy off the ground in the US, these are significant economic benefits that states will obviously see.  In Europe, offshore wind farms have generated nearly 60,000 jobs along the entire supply chain.  These jobs are a direct result not only of long-term policy commitments, but also of the risks investors are willing to take.  Europe—its policy makers, developers, financiers, and investors—have supported this renewable energy industry for a decade, building a robust pipeline of projects that has ultimately led to European economic development.

The challenge for states is developing the right policies and support structures that create a pipeline of projects and de-risk the industry.  Partnership with European companies would be a way to leverage America’s manufacturing capabilities and reduce costs.  Joint ventures, at this time, are the most reasonable option and leave the door wide open for early market and specialized US supply chain entrants.  The rewards are enormous—the US Department of Energy estimates that as many as 40,000 jobs could be supported by offshore wind on the Atlantic coast.

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