Free trade is crucial to US offshore wind industry

After years of delays, the US offshore wind industry is gaining momentum. State governments are increasingly committed to the growth of the nascent sector. However, wind businesses are now getting worried about what would happen to offshore wind if the national government was to adopt protectionist policies.

When we look at the trade restrictions imposed by US President Donald Trump on solar panels, their fear is not unfounded. Last month, he signed into law a 30% tariff to be imposed on imported solar cells and modules, as part of a broader protectionist agenda that would aim to boost US manufacturing firms. And the growing US offshore wind industry could be hit by Trump’s agenda.

The market undoubtedly has great potential. According to the US Department of Energy, there is now a pipeline of 28 US offshore wind projects in development totalling almost 24GW, which could unleash investment of up to $56bn.

There is a long way to go, though. Deepwater Wind’s 30MW Block Island is the only scheme that has reached completion so far, and such a huge pipeline would require a great commitment from governments, including to bring in the expertise of Europe's major offshore wind turbine manufacturers.

In fact, there is only one significant offshore turbine platform made in the US at present. GE Renewable Energy produces its Haliade 150-6MW turbine, five of which are now spinning at Block Island.

But interest from European manufacturers is picking up. Last year, MHI Vestas picked Clemson University in South Carolina to test its 9.5MW turbine. It will be eyeing orders for some of the first round of utility-scale US offshore wind farms. And, no doubt, its big-hitting European rival Siemens Gamesa will be on the lookout too.

But free trade will be crucial to bring in these European firms.

The manufacturing operations of Siemens Gamesa and Vestas in US onshore may not be a big help. For example, even though Vestas already produces wind turbines in the US, large turbine parts like nacelles, towers and rotors would still need to be made in Europe. The firm needs to see a stable US offshore market emerge before it invests in setting up factories that could produce offshore wind turbines entirely in the US.

If there are trade restrictions on imported parts would this would affect both the pace of growth of the sector, and the costs of offshore wind farms.

According to the US Energy Information Administration, the cost of building offshore wind farms in the US is initially projected to be $157/MWh. This is almost double the $80/MWh (£57.50/MWh) at which the 1.4GW Hornsea 2 and 950MW Moray East schemes won Contract for Differences in the UK in September.

The costs of building offshore wind farms in US waters will fall fast, especially when manufacturing operations and supply chains are established. The US sector has a well of knowledge gained in Europe from which it can draw.

But for this to happen, free trade is needed in these early stages. Europe has created an efficient manufacturing industry in the last two decades, which has helped drive down costs to their current lows. A free trade approach would allow the US to take advantage of the European expertise and to bolster the growth of the sector.

This would enable quicker development of the local manufacturing industry and create more factory jobs. A perfect scenario to make President Trump happy? We'd like to think so.