AC Link Turn—US Offshore Wind Boosts Cooperation

US offshore wind is uniquely situated to boost cooperation.

A recent study by The National Renewable Energy Laboratory estimated the potential generating capacity from offshore wind farms located off U.S. coastlines to be 4 times the present total U.S. electrical generating capacity. The construction and maintenance of offshore wind farms to tap into even a small percentage of this potential will demand a robust and competent maritime workforce. The U.S. understandably wants to avoid the situation that occurred in England with the installation of the Thanet Wind Farm, currently the largest operating offshore wind farm in the world (300 megawatts). The Thanet project received criticism for its lack of significant British job creation.

The Jones Act, which was enacted in 1920, establishes a system for protecting American maritime jobs and requires that U.S.-flagged vessels be used to transport merchandise between points in U.S. territorial waters (i.e., up to 3 nautical miles off the coastline). Moreover, this requirement is extended 200 miles offshore to the Outer Continental Shelf (OCS) by the Outer Continental Shelf Lands Act (OCSLA) in certain scenarios involving man-made objects that are affixed to the seabed.

Customs and Border Protection (CBP), the federal agency that enforces the Jones Act, has issued a number of rulings that conclude that the Jones Act in certain situations does not apply to the actual installation of wind turbines by large-scale vessels known as jack-up lift vessels. Moreover, there has been some debate on whether the Jones Act would apply to vessels travelling to an established wind farm located over 3 miles off the coastline in the OCS for such things as maintenance and repair. A bill clarifying that the Jones Act would apply in this maintenance/repair scenario (HR 2360) has recently passed the U.S. House of Representatives and is now awaiting a vote in the U.S. Senate. Thus, at present, from a purely legal standpoint, foreign-flagged vessels would likely be able to participate in the installation of the proposed wind farms, but there is some uncertainty as to whether foreign-flagged vessels would be able to participate in maintenance/repair work.

Complicating all of this is the dearth of U.S.-flagged jack-up lift vessels capable of undertaking much of the very heavy work involved in the installation of offshore wind turbines. To further confound matters, with a boom in offshore wind farm construction in Europe and China, many foreign-flagged jack-up lift vessels capable of such work are now booked for the next several years.

Factoring in all of the above, it is likely that large foreign-flagged vessels will play a significant role in the initial installation of wind turbines off U.S. coastlines, with an opportunity for smaller U.S.-flagged vessels to render assistance. However, with the lack of available large scale foreign-flagged vessels, there are obvious long term investment opportunities for the construction of large U.S.-flagged vessels or for the conversion of other large U.S.-flagged vessels to undertake much of the above heavy work. One possible option is to convert U.S.-flagged vessels now working in the oil and gas fields in the Gulf of Mexico for this purpose. Such investment opportunities will obviously become more attractive if a large number of wind farms move forward in the U.S.. 

As to certain maintenance/repair, which could be done by smaller U.S.-flagged vessels already in existence, if Congress passes HR 2360, U.S.-flagged vessels will be required to maintain and repair the wind turbines. Moreover from a practical standpoint, even if HR 2360 does not become law, it may not make economic sense to employ smaller foreign-flagged vessels for certain maintenance/repair work. Thus if U.S. offshore wind farms become a reality, U.S. maritime workers as well as foreign maritime workers will likely be involved in construction and maintenance.