Virginia's Offshore Wind Supply Chain and Service Industry Opportunity

U.S. offshore wind is accelerating rapidly, challenging the global and regional supply chain with at least 10 GW of capacity to be installed by 2030. Approximately 2 GW of power purchase agreements are in place in the Northeast, and an additional 3 GW is anticipated in 2019.

Virginia is well positioned to derive economic benefit by establishing a supply chain to serve first-mover projects. Growing the industrial base at this early stage will prepare Virginia to competitively deliver its own 2 GW in the coming years. A timely supply chain entry will equip Virginia with the skills and infrastructure required to participate in a growing pipeline along the East Coast, future activity such as 2 GW off the coast of North Carolina and potential wind energy lease areas beyond those currently established.

As the demand for wind energy increases, experts predict that over 14,000 jobs will be created in Virginia in the construction, maintenance, manufacturing and other service-related industries. The Virginia Offshore Wind Team, led by the Department of Mines, Minerals and Energy (DMME), recognizes the long-term economic development opportunity to capitalize on the Commonwealth’s logistical and workforce advantage. In fact, the Team regularly hosts site tours with globally recognized offshore wind developers, procurement and logistics experts, European foundation fabricators and other potential supply chain businesses.

“Virginia has a clear opportunity to act as a first-mover in driving the development of the U.S. offshore wind industry. Growing the supply chain sector at this early stage will prepare Virginia to competitively deliver the development of our own offshore wind resources in the coming years.”
— Secretary of Commerce and Trade Brian Ball

Virginia’ Offshore Wind Supply Chain Roadmap

DMME contracted with BVG Associates LLC (BVGA) in the summer of 2018 to analyze Virginia’s potential strategic role and opportunity associated with the rapidly emerging U.S. Atlantic offshore wind industry. The firm leveraged its North American and global partners with extensive offshore wind industry experience, including Ramboll Group A/S, Timmons Group, Greentree Consulting, LLC and the Business Network for Offshore Wind.

BVGA issued its report, “The Virginia Advantage: The Roadmap for the Offshore Wind Supply Chain in Virginia,” after a thorough review of the Commonwealth’s unique advantages, business climate, workforce readiness as well as its ports, marine terminals and waterfront areas.

The report’s top recommendations include:

  • Establishing a regional supply chain collaborative with neighboring states,

  • Creating a Virginia Office for Offshore Wind,

  • Soliciting anchor tenant suppliers, and

  • Expanding workforce development opportunities.

Supplying the materials, equipment and skilled workforce required to build out currently designated U.S. East Coast wind lease areas is the biggest challenge facing offshore wind developers. Virginia seeks to provide the industry what it needs most through a wide network of supply chain options and the best of what each state in the collaborative has to offer.

The Department of Mines, Minerals and Energy (DMME) initiated discussions with Maryland, North Carolina and South Carolina for the development of a multi-state regional supply cluster and seeks to be inclusive of other states interested in participating in order to provide the industry the broadest network possible.

BVGA’s report details the large pipeline of U.S. East Coast projects and provides insight to what the industry regards as priority: a reliable, broad-based supplier network coupled with regionally optimized logistics. As for logistics, the report highlights Virginia as a location of choice for a supply chain hub due to a host of unique advantages in Virginia’s coastal region, including infrastructure, location and maritime capacity.

Offshore wind development in the Northeast is advancing rapidly and will likely rely on a combination of European supply chain support and a variety of U.S. ports to include Virginia. The supply chain covers everything from development, construction, operation and maintenance, and all other related services. Components include: turbine blades, generators, nacelles, towers, foundations, cables, and construction staging. The Commonwealth’s objective is to capture an anchor tenant in the business of structures or major equipment, such as foundations and offshore substations.

In completing its work, BVGA partnered with the Department of Mines, Minerals and Energy, Virginia Economic Development Partnership, Port of Virginia, and Virginia’s maritime industry trade associations. The team engaged Hampton Roads-area local government, economic and workforce development officials in its opportunity analysis.

BVGA also created the Virginia Offshore Wind Supply Chain Resource Network Directory, which connects offshore wind developers, wind turbine suppliers and other prime contractors with Virginia professional services, manufacturers, equipment and material suppliers and other general service providers relative to all phases of an offshore wind project. Supply chain prospects are encouraged to promote their services by adding their information to the Virginia Offshore Wind Supply Chain New Supplier Form.

“The Commonwealth’s lead-by-example effort to align businesses interested in offshore wind with an industry at the early stages of development is the most important step in enabling the East Coast offshore wind build-out. A timely supply chain entry will equip Virginia with the skills and infrastructure needed to participate in this major industry growth opportunity.”
— Department of Mines, Minerals and Energy Director John Warren

Virginia’s Port Readiness

DMME contracted with BVG Associates (BVGA) in 2015 to evaluate 10 Virginia ports for their readiness to accommodate seven offshore wind manufacturing and construction activities (blades, generators, nacelles, towers, foundations, cables, construction staging). BVGA also evaluated five Virginia commercial shipyards for their readiness to manufacture offshore substations.

Drawing on intelligence from established offshore wind industry suppliers, the BVGA team developed a set of optimal requirements for each offshore wind activity. The requirements included waterside infrastructure, onshore infrastructure for the activities themselves and access requirements for vessels associated with offshore wind activities. BVGA also developed estimates of construction jobs and permanent manufacturing jobs. It developed port utilization scenarios, including a ‘super-port’, a series of cluster ports and a distributed network. It also engaged ten industry partners to validate the optimal port requirements and review the port utilization scenarios.

Although offshore wind activity is more demanding on port infrastructure than many other commercial port activities, Virginia’s ports offer a high level of readiness. The study concluded that five ports have a realistic potential to be used for one or more offshore wind activities. The five ports include:

  • Portsmouth Marine Terminal;

  • Newport News Marine Terminal;

  • Peck Marine Terminal;

  • Virginia Renaissance Center; and

  • BASF Portsmouth

Each of the ports requires various levels of upgrades to meet offshore wind power requirements. While the full report provides details of the required upgrades specific to each activity at each port, the following is a summary of key findings:

  • Portsmouth and Newport News Marine Terminals have the highest level of port readiness. They each have sufficient space to accommodate multiple, co-located offshore wind activities, making them candidates for a future offshore wind manufacturing and deployment hub. The necessary upgrades to meet offshore wind requirements would cost up to $10 million at each port.

  • Peck Marine Terminal has the space and vessel access to accommodate many of the offshore wind manufacturing activities. Overhead navigational clearance precludes using Peck Marine Terminal for foundation manufacturing and construction staging. Necessary upgrades at Peck would cost up to $14 million.

  • Virginia Renaissance Center (VRC) has a high level of readiness but faces navigation constraints. Blade manufacturing and submarine cable manufacturing could be located at VRC and necessary upgrades would cost up to $5 million.

  • BASF Portsmouth represents an opportunity to develop new port infrastructure and would require a larger investment of $8 million to $45 million.

  • Cape Charles Harbor, a privately owned port of the Eastern Shore of Virginia with close proximity to deep water, has the potential to be a strategic offshore wind site but will need basic ground improvements and an upgrade to the waterside infrastructure.

  • Five Virginia shipyards studied are capable of manufacturing conventional offshore substations without further infrastructure investment. Two of these facilities had dry docks suitable for manufacturing self-installing substations.