President Biden has signed a $430 billion economic and energy bill – an omnibus spending bill that seeks to address climate change, inflation and Medicare costs while allocating billions to cut carbon emissions and incenting clean energy production and development.
In a big victory for the Biden Administration, The Inflation Reduction Act of 2022 quickly gathered momentum in Congress in late July after Sens. Joe Manchin (D-WV) and Kyrsten Sinema (D-AZ) – two holdouts that opposed Biden’s original climate bill – agreed to lend their support.
The legislation – which aims to cut emissions 40% by 2030 – contains $369 billion in climate and energy provisions, devoting nearly $280 billion to clean energy tax incentives.
Generally speaking, renewables in the US are facing pressure from rising supply chain costs, global supply chain disruptions and spiking commodity costs. The IRA will stimulate green technologies and ramp up domestic supply chains, creating favorable conditions for US offshore wind.
The act extends and expands several new clean energy tax credits, such as the Investment Tax Credit (ITC), Production Tax Credit (PTC) and Advanced Manufacturing Production Credit. Such long-term extensions are crucial for developers and suppliers to plan future projects without the fear of tax incentives expiring.
Perhaps the most impactful measure for offshore wind is an extension of an existing ITC, which was set to expire in 2025. The bill allows for the 30% ITC available to projects placed in service after 2024. Notably, the ITC and PTC would phase out when emission reductions meet target levels of 25% of 2022 levels or after 2032, whichever is later.
“The Inflation Reduction Act provides certainty for clean energy as this legislation breaks the ‘on-again off-again’ policy cycle,” notes Doug Pfeister, Managing Director of The Renewables Consulting Group, an ERM Group company. “This game-changing legislation will set-up US offshore wind for years to come and go a long way in helping President Biden achieve his stated target of 30 GW of US offshore wind by 2030.”
A long-term extension should also help to alleviate wind developer concerns about the rising cost of raw materials. Projects meeting certain domestic content requirements are eligible for a bonus credit. The act supplements the offshore wind supply chain with a broad array of supportive tax measures, such as extra deductions for US-made content like offshore wind shipbuilding but also for production costs of critical minerals, nacelles, tower foundations, inverters, batteries, and other components in the offshore wind supply chain.
The Act also opens up wide swaths of seabed available for future leasing opportunities. For starters, the IRA will resume offshore wind leasing off the southeast seaboard, reversing a 2020 executive order issued under President Trump. The IRA also directs the Bureau of Ocean Energy Management to issue Calls for Information before September 2025 for offshore wind areas within the exclusive economic zone adjacent to US Territories such as Puerto Rico, Guam, American Samoa, the US Virgin Islands and the Northern Mariana Islands.
For the first time, the act includes significant new incentives for clean hydrogen production, such as a Clean Hydrogen PTC/ITC. The bill provides a separate credit stream for integrated hydrogen projects and is available during the first 10 years of facility operation provided projects begin construction before 2033.
London, United Kingdom – The world’s largest pure-play sustainability advisory firm, ERM, announces the acquisition of RCG (The Renewables Consulting Group) – a global market intelligence, management consulting, and technical advisory firm operating exclusively in the renewable energy sector.
The acquisition expands ERM’s capabilities to support clients across the entire lifecycle of large-scale renewable energy projects, from market intelligence and strategy development through to the development, construction, operations, and decommissioning of projects. It further strengthens the firm’s ability to advise clients on the purchase and sale of renewable energy assets, and adds deep sector experience in offshore wind projects.
The team of RCG grows ERM’s +5,500-strong firm by approximately 60 experts, based in Europe, the Americas and Asia-Pacific. RCG’s leadership team joins the ERM partnership.
ERM continues to expand and diversify its market presence through acquisitions. The deal marks ERM’s sixth acquisition announced in 2021, including related acquisitions in next-generation low-carbon technology advisory, and renewables consulting.
Keryn James, CEO, ERM said: “Our purpose is to shape a sustainable future with the world’s leading organizations. Navigating the new opportunities presented by renewables and low-carbon technologies is central to this ambition. With the acquisition of RCG, we are in an even stronger position to help our clients unlock the enormous potential of the clean energy revolution. We warmly welcome the talented RCG team to the ERM Group.”
Sebastian Chivers, CEO, RCG said: “From the outset, our vision for RCG has focused on building the most respected firm in renewable energy consulting, globally. Becoming part of the ERM Group will help us accelerate that vision and become a global leader for our clients in the energy transition. The backing of ERM will allow us to take the business to the next level.”
Lee Clarke, COO, RCG said: “We already have a track record of successfully collaborating closely with ERM across global markets and have shared values and ways of working. Operating together as a single team unlocks competitive advantage for clients throughout the project lifecycle.”
London, England – More than 200 GW of new offshore wind projects have been announced since the beginning of 2020 – accounting for more than 44% of all global capacity at the pre-construction or early development phase, according to the 2020 Global Offshore Wind Annual Market Report issued today from The Renewables Consulting Group (RCG).
Despite a global pandemic, 2020 was a year of substantial milestones for global offshore wind. With new projects announced from Colombia to Brazil in the Americas, Spain to Estonia in Europe and Australia to the Philippines in the APAC region, the technology has been adopted by markets at contrasting levels of socio-economic development and distinct geographies. New projects exceeding 500 MW in capacity were announced in Spain, Ireland, Norway, Taiwan, South Korea, Italy, Brazil and Vietnam through to early 2021. Technology continues to emerge as floating offshore wind continues to emerge as a utility-scale option for markets with deep-water seabed areas.
While offshore wind enjoyed a transformative year for market growth, new policies, and targets, fostering development at a government level and ongoing installation across all regions, there remain significant challenges to the industry in meeting ambitious targets and enabling the realisation of projects in the pipeline beyond 2030.
Supply chain constraints across all regions, as well as undefined development frameworks and route to market mechanisms, will limit deployment of capacity across the sector through to 2030. The rate of deployment in the near-term should not be underestimated, however the ambition of government authorities and investors may exceed sector capability in some areas.
Source: RCG’s Global Renewable Infrastructure Projects (GRIP) database*
* Note: Q1 2021 update. Recent project announcements bring the active global portfolio to 510.5 GW
Commenting on the Global Offshore Wind: Annual Market Report, RCG’s COO, Dr Lee Clarke said:
“This year’s Annual Market Report is an invaluable data source and its findings clearly demonstrate that global offshore wind continued to its impressive growth in all sectors during 2020. With a steady and predictable framework, we continue to see positive developments emanating from emerging markets, such as in the APAC and the Americas regions. The ongoing maturation of technology and declining costs for offtake have inspired governments and investors to embrace offshore wind, with many authorities touting offshore wind as a cornerstone to a green economic recovery in the wake of a global recession.” – Lee Clarke, COO
There are five key takeaways from RCG’s latest 2020 Global Offshore Wind Annual Market Report:
The total capacity financed for offshore wind in 2020 reached 8,370 megawatts (MW) across the European, Americas and Asia Pacific (excl. China)* regions, eclipsing the previous total of 6,438 MW financed in 2018. Global investment for offshore wind also set new highs last year as investment reached USD 30 billion, surpassing the previous high of USD 22 billion set in 2018.
For the first time, the APAC market portfolio has surpassed the EMEA region in project development capacity. For the first time, the UK – the market leader – will lose its No. 1 global offshore ranking by the end of the year to Vietnam and China, respectively.
Vietnam, with just 99 MW of inter-tidal capacity operational, sports a massive development pipeline of 64.9 GW. Vietnam’s early-stage development capacity is almost entirely comprised of projects proposed under the recent national power development plan (PDP8). Of the offshore wind farms proposed under the PDP 8, many have not disclosed site characteristics beyond prospective capacity. It is therefore expected that large projects located in areas of prominent resources will overlap. As result of potential overlapping boundaries, as well as other constraints such as grid availability and demand, it is unlikely all projects will advance to operation.
China, which has 8.5 GW of offshore wind operational and 30.2 GW underdevelopment – is in second place with a total portfolio of 63.6 GW. Project commissioning took place at an unprecedented rate during 2020. The offshore wind feed-in-tariff (FiT) supporting rapid development and installation timelines is due to expire in 2022, with no new subsidy mechanism announced to date. Developers, meanwhile, race to install projects by the commissioning deadline.
Floating offshore wind continues to emerge as a utility-scale option for markets with deep-water seabed areas. The floating market expanded rapidly in 2020 and early 2021, embracing more innovative technology concepts at a large scale. The first competitive tender for a commercial scale floating sites is currently underway in France, while more projects are set to be offered in competitive processes in Scotland and Norway later in 2021, with plans to lease projects in California also ongoing. Development of new projects of over 100 MW in capacity across at least eight different countries to date has shown floating technology to be a viable power generation option in a wide range of environments.
Leasing headlines for the year were dominated by the results of the Round 4 auction for new sites in England and Wales. The cost-based competitive allocation drew in bids from oil and gas majors exceeding £230 million per year in option fees. The explosion of growth in the portfolio capacity of projects in the APAC region was encouraged by the prospect of new leasing rounds and offshore wind frameworks. However, not all projects will proceed beyond an auction round and there is heavy risk associated with pre-tender project development. The success of offshore wind allocation frameworks has encouraged the formulation of new policies supporting development in markets such as Brazil, Sweden, Ireland, Australia, Spain, Romania, Greece and Vietnam.
As new project announcements in the United States stalled in 2020, the Brazilian market flourished with over 31GW of new projects announced throughout the year and into 2021. Despite a slowdown in federal permitting and new leasing in the last year of the Trump presidency, state authorities issued solicitations for offtake contracts in New Jersey and New York. The first project installed in federal waters, the 12 MW CVOW demonstrator, was commissioned by Dominion Energy in October 2020. The development and operations of the project will inform the build out of the adjacent 2.64GW CVOW offshore wind farm. Other project developers also advanced sites, with construction and operations plans submitted for three projects on the north-eastern coast of the country. There was also increased interest in pursuing offshore wind projects off the coasts of California, Louisiana and Oregon. The development and operations of the project will inform the build out of the adjacent 2.64GW CVOW offshore wind farm.
Offshore wind projects were explored in both Colombia and Chile in 2020. Local onshore renewables developer Prime Energia submitted plans for a 200 MW project near the Port of Cartagena to Colombian authorities in late December, while turbine supplier GE announced it was exploring floating opportunities off the Chilean coast in September.
The data and the analysis compiled for this report were compiled from RCG’s GRIP 2.0 online database. For more information about GRIP 2.0 and how to subscribe, visit thinkrcg.com/data-services/
RCG’s full analysis and forecasts can be viewed in its Global Offshore Wind: Annual Market Report. The 191-page summary includes details on each offshore wind market with analysis of the resources that will allow projects to reach route to market, financial close, and commissioning milestones. It contains more than 150 detailed charts, 45 tables and numerous maps. An overview of the global supply chain is also provided for various aspects of the wind farm engineering procurement construction installation (EPCI) process, as well as a breakdown on all development activity for each offshore wind market in 2020. To purchase a copy of the Annual Market Report, click HERE thinkrcg.com/data-services/
London, England – The Renewables Consulting Group (RCG) has launched the next generation of its proprietary Global Renewable Infrastructure Projects (GRIP) database platform.
Featuring new functionality and enhanced features, GRIP 2.0 provides the market’s most authoritative source for essential offshore wind project data and forecasts. It provides critical data, updated in real time, on a platform that is easy-to-use and which can be targeted toward client needs.
RCG’s sophisticated and tailored market modelling and understanding of levelised energy costs allows clients to benchmark projects, build merit orders, and compare public data with their proprietary information. We combine our database and geographic information system (GIS) services to manage, interrogate, and present data. Our team of subject matter experts can work with you to customise our reliable and flexible data to meet your specific needs, delivering it in the format you require.
The online database allows users to query and extract data by country, project, participant, status, associated infrastructure, assets, among many other items and permits in-depth comparisons and other types of data analysis.
Commenting on the product’s enhancement, market intelligence expert Sebastian Rae, Associate Director, said:
“GRIP 2.0 turns data into valuable insights. Through GRIP 2.0, we are delivering a new way of accessing data and forecasts that will give our customers faster and higher quality information to support growth in their businesses.” – Sebastian Rae, Associate Director
We apply our analytical workflow to assess the quality of the data before incorporating information into our proprietary databases and forecasting models. Add to the mix the knowledge and industry foresight of the highly experienced team at RCG and you have at your fingertips high quality information you can rely on to support the growth of your business.
Dynamic forecast from RCG’s GRIP 2.0 dashboard.
GRIP Offshore Wind is a dynamic tool that provides the following:
For more information about GRIP 2.0 and how to subscribe, visit thinkrcg.com/data-services/
London, England – The Renewables Consulting Group (RCG) has been recognised by Her Majesty The Queen by winning a Queen’s Award for Enterprise in the International Trade category for significant growth in overseas sales. RCG is one of 205 organisations nationally to be recognised with this prestigious Queen’s Award.
Now in its 55th year, the Queen’s Awards for Enterprise are the most prestigious business awards in the country. The awards celebrate the success of exciting and innovative businesses which are leading the way with pioneering products or services, delivering impressive social mobility programmes or showing their commitment to excellent sustainable development practices.
Employing a staff of 60 consultants across nine offices, RCG provides top-tier market intelligence, management consulting and technical advisory services across wind, solar and energy storage technologies, serving the organizations leading the transition to a low-carbon economy.
As was RCG’s mission upon its founding, the company’s reach is global. The firm is organised into three regional business units covering Europe, Middle East & Africa, the Americas and Asia-Pacific. With a deep understanding of businesses and industries they serve, RCG works with the world’s leading corporations, financial institutions, governments and public sector organisations.
Commenting on the award, Sebastian Chivers, RCG’s CEO, said:
“We are absolutely delighted to win this prestigious award for international trade. RCG was established in 2015 with a clear mission of building the most respected renewable energy advisory firm, on a global scale. Receiving this Royal recognition is a huge honour, and the ultimate endorsement of our position as a trusted advisor to our clients.
“From New York to London to Tokyo, our outstanding team of engineers, economists and scientists is playing a pivotal role in the transition to a net zero economy. This award belongs to every employee who has been part of our journey to date. We look forward to continuing our global expansion, proudly as a Queen’s Award recipient.” – Sebastian Chivers, CEO
RCG’s expertise covers the full value chain, from strategy and development, through transactions and financing to engineering construction, and operations.
London, England – Global financial investment for offshore wind capacity set records in 2020, according to research from The Renewables Consulting Group (RCG).
According to RCG’s Global Renewable Infrastructure Projects (GRIP) database, the total capacity financed for offshore wind last year reached 8,370 megawatts (MW) across the European, Americas and Asia Pacific (excl. China)* regions, eclipsing the previous total of 6,438 MW financed in 2018. Global investment for offshore wind also set new highs last year as investment reached USD 30 billion, surpassing the previous high of USD 22 billion set in 2018.
“Global offshore wind continues its extraordinary growth,” explains Maxwell Clarke, an Associate in RCG’s market intelligence team. “Despite the pandemic, 2020 saw more offshore wind capacity financed than any year before. Across global markets, record capacity investments were not only seen in firm commitments to build projects, but also in capacity acquired through mergers and acquisitions.”
Several notable offshore wind projects, such as Dogger Bank A&B, the world’s largest offshore wind project, reached their final investment decisions (FID) in 2020. The FID – the point where major equipment orders are placed, and contracts executed for the engineering, procurement and construction stage – signifies that developers and owners/operators have made a firm commitment to move forward with the project.
Each country where offshore wind projects attained the FID milestone – the United Kingdom, France, Netherlands, Germany and Taiwan – utilized some type of framework agreement such as the UK’s contracts for differences or the feed-in-tariff model used in Taiwan and China.
“Our analysis demonstrates the importance of markets having a proper route-to-market to push offshore wind projects to completion” notes RCG’s Clarke. “The build out of commercial-scale offshore wind globally remains centred on markets with structured route to market mechanisms reducing investment risk.”
The UK saw more than 3,658 MW in capacity secure investment with 2,950 MW supported by the contracts for difference (CFD) mechanism. In the Netherlands, the centrally planned and developed Hollandse Kust Zuid and Hollandse Kust Noord sites were advanced through the subsidy-free tendering mechanism allocating a combined 2,299 MW in capacity.
In Taiwan, the Changfang and Xaido projects reached FID having signed power purchase agreements (PPAs) with an associated feed-in-tariff (FiT) as part of the Zonal Application planning process, allowing 589 MW to move to the pre-construction phase.
In France, the Saint Brieuc and Fecamp projects both reached FID after being awarded FiTs in 2018 (after revisions to the FiT rates previously awarded in 2012). In Germany, Innogy (as part of RWE Renewables) committed to the Kaskasi 2 project in April, after winning the second interim tender for offshore wind in Germany.
The UK led the way with both CfD subsidy secured and merchant supported projects from the third allocation round (AR3) in 2019 committing to firm investments. The Seagreen Alpha and Seagreen Bravo project, initially developed by SSE Renewables, notably reached FID in June with oil and gas major Total partnering them on the project. The CfD awarded for the Seagreen project covers 454 MW of the combined 1,140 MW site, or 39% of the combined capacity for site A and site B.
Seagreen will therefore be the first commercial-scale offshore wind project in Europe to be majority-funded without subsidy support. Total’s partnership on the project both raised the necessary capital for the investment decision and de-risked the investment for the project. The French oil major acquired a 51% interest in the project as part of the acquisition.
Elsewhere in the UK, having also secured a route to market in the AR3 CfD auction the Dogger Bank A&B projects reached FID in November. While the project partners Equinor, SSE and Eni have only progressed the first two phases of the three-phase project in 2020, it remains the largest offshore wind capacity investment commitment in the industry’s history. Upon completion of the two sites, forecast for 2025, the A&B development will be the largest offshore wind farm in the world. Eni was announced as a project partner following the FID on the projects, securing a 10% interest from Equinor and SSE respectively.
China’s offshore wind market – which is slated to surpass the UK as the leading global market in operational capacity by the end of this year – experienced unprecedented growth and project deployment last year. In 2019 the Chinese market introduced price-based offshore wind tenders and announced that the FiT rate for projects consented in future tenders would be phased out for 2022, requiring bid prices to compete with wholesale market rates from then on. In order to qualify for the soon-to-expire FiT, projects successful in lease auctions since 2019 must commission the site by the end of 2021 resulting in a massive development rush that has seen over 5 GW of new capacity come online in 2020, with over 10 GW at various stages of construction.
“The data clearly demonstrates the importance of markets that feature a clear mechanism to market,” Clarke says. While emerging markets have seen unprecedented growth in 2020, in terms of new project announcements and portfolio development, firm investment to take projects forward still requires a reduction in relative asset risk.
“The importance of risk-free project development was further highlighted this week with the announcement of winners in the UK’s Round 4 offshore wind lease auction. Although not a firm commitment to construct projects, winning bids submitted by consortium partners of BP and EnBW of £231m per project site illustrates the value of securing a lease area for project development in a low-risk environment with an established route-to-market framework.
“With offshore wind and renewable energy touted by many as a global success story in the face of the COVID-19 pandemic and a pillar of future energy generation and economic growth, emerging markets must formalize secure route-to-market mechanisms for real project investment to be realized.”
In 2020 and early 2021, this need for project de-risking has been recognized in Greece, Sweden, Brazil, Romania and Bulgaria, with respective governments openly exploring offshore wind frameworks and incentivizing forward market growth.
*Comprehensive project detail for offshore wind farms in China has been added to RCG’s proprietary GRIP database in 2020, after expanding its market intelligence capabilities in the sector. Despite signs that China is gradually opening up to international developers and supply chain players, the market remains very isolationist and project details are not made public in a structured format that reciprocates development phases of offshore wind markets in Europe, the Americas and elsewhere in the APAC region.