Status of the Offshore Wind Cable Market in the U.S.

Categories // March 2019

The offshore wind industry in the United States has made incredible strides in the last two years.  Following the completion of the first demonstration-scale wind farm, a number of states in the Northeast began a concerted effort to make offshore wind part of their renewable energy portfolio.  Sizeable state procurements occurred in 2018 and the federal Bureau of Ocean Energy Management (BOEM) threw its support behind the industry, resulting in a record-breaking lease sale at the end of the year.  The first weeks of 2019 showed continued strength with additional state procurement plans. 

These developments are moving the US market closer and closer to the implementation stage for large-scale offshore wind development.  This also means that the market is moving closer to procuring large quantities of offshore wind cable (OWC); a critical component to any offshore wind farm. 

At a conference in June 2018, a number of panelists and attendees talked about needing 2-3 GW of procurement annually to have a healthy level of demand that would support the creation of a US supply chain.  At that time, procurement stood at about 1.5 GW.  In February 2019, just eight months later, more than 20GW of offshore wind procurements are in the pipeline – an order of magnitude increase. 

Procurement on this scale will not just support the creation of a US offshore wind supply chain; it will require it.  The governmental efforts that are driving demand will need to be matched by similar efforts from industry to build a domestic supply chain.  The purpose of this report is to help the industry understand how the offshore wind cable market is developing and what efforts will be needed to meet growing demand.

The entire issue of a supply chain for offshore wind in the US presents an interesting subject for analysis.  In Europe, offshore wind is a developed hi-tech industry with a solid supply chain, but in the US, there is virtually no supply chain at all.  This is a highly unusual situation, as the US is often the leader in the development of a new hi-tech industry.  Whether aerospace, electronics, the Internet or so many other hi-tech industries, US companies have been in the forefront of the technology.  Yet for offshore wind in general, and offshore wind cabling in particular, the US supply chain is starting at almost ground level. 

Specifically for offshore wind cables, there is no domestic production capacity.  Offshore wind cable factories are located throughout Europe and Asia, but not one is in the US.  For the first offshore wind farm, the 30-MW Block Island Wind Farm (BIWF), the cable was imported from South Korea.  The first industrial-scale wind farms also are likely to use imported cable. 

So basically, there is no US supply chain for offshore wind cable at this time.  But for offshore wind to thrive in the US, it must have a fully-developed domestic supply chain.  This will happen, and hopefully for the industry it will happen sooner than later.

We should take a moment to look at why the US has no submarine power cable manufacturing capacity, at a time when there are four huge European suppliers and several significant Asian suppliers.  First, the submarine power cable market in the US has always been minimal.  With no offshore wind market and with severe technical limitations on the distances that submarine interconnectors could operate and the depths of water into which they could be laid, there were very few applications for subsea power cables.  In addition, the geography of the US precluded major submarine power cable projects.  The contiguous nature of the Lower 48 states meant that there were very few routes for subsea power cables that could not be reached more cheaply with terrestrial cables.  Most islands off the US coast are very small and sparsely populated, thus the installation of submarine power cables serving these islands is not cost effective.  Large US territories outside of the Lower 48 – Alaska, Hawaii, Puerto Rico, etc. – were well outside the range that submarine power cables could reach. 

As a result, submarine cable projects in the US were few and far between.  With the tiny amount of domestic manufacturing primarily dedicated to the defense industry, it was cheaper to import small amounts of submarine power cable for the handful of small projects, such as crossing a bay, that were required.  With virtually no domestic market and years passing between projects, there was no need for a submarine cable supply chain. 

In Europe, however, the situation was very different.  Many European national suppliers of submarine power cables date back to pre-European Union times.  As with the US, there was a need for subsea cables for defense applications, but unlike the US there was the development of the North Sea oil & gas industry, which created high demand for cables to connect offshore rigs. 

Europe’s geography also played a role.  There are many more islands that can be reached by submarine power cables.  Unlike the US where nearby islands are small and thinly populated, many European countries have a need to connect large islands near the coast that have high demand for reliable power for a variety of reasons – military installations, tourism economies, industrial activities, etc. 

With the advent of the EU, the power cable market really began to take off.  With the EU’s desire to create a single energy market, there became a need for large-scale interconnectors, particularly in Northern Europe.  Technological developments quickly increased the distances and water depths that submarine power cable could operate.  At this same time, offshore wind began to take off. 

Europe’s suppliers grew quickly and also consolidated.  Now there are four major suppliers where there were once twice that number, and all four now have a strong offshore wind cable business. 

The outlook for offshore wind cable in the US is bright.  With demand in the US just beginning to register and no domestic supply chain, 2019 is the time to begin looking at this market.  For the domestic supply chain to develop efficiently, information is needed on the US offshore wind market and to what levels the demand for cable will reach.  This is the goal of this report.  If we can start the conversation about the development of the US offshore wind cable market and begin creating models of the market’s growth in the next decade, the supply chain will have a chance to “lead from the front” rather than playing catch-up. 

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