A Delaware port could capture growing wind farm industry

The University of Delaware released a study on feasibility of wind ports to store, assemble and ship components of turbines like ones at Block Island, R.I. With several states committed to more than 8,000 megawatts in wind energy, UD researchers say this is could be a $100 million industry waiting to happen. | PHOTO COURTESY GE RENEWABLE ENERGY

WILMINGTON – With several states committed to more than 8,000 megawatts of offshore wind energy in the next 15 years, Delaware could have a strong wind at its back for a burgeoning industry if an investor builds a port just north of Delaware City.

An 831-acre site near the Delaware City Refinery was recently endorsed by a University of Delaware study as a prime location to ship, store and assemble parts needed for wind farms as far north as Connecticut and as far south as the Carolinas. Turbines are growing larger – many are already taller than the Statue of Liberty – so there is greater need for large tracts of land within a 365-mile radius.

Right now there is only one East Coast marshalling port for wind turbine shipment in New Bedford, Mass., but three more are planned. Even with those online, it might not be enough for the projected market demand. Four ports could deploy 916 megawatts annually, but the UD report projects an annual deployment of up to 2 gigawatts under current contracts and state energy benchmarks – or more than twice the capacity of the operating and planned ports.

“This isn’t something speculative. These are contracts and law creating $100 million in investment by 2035,” said Willett Kempton, the UD professor who oversaw the study. “Just for redeployment, that’s several thousand people working jobs in loading, unloading and assembly at that port.”

A marshalling port would need enough undeveloped land for blades about 250-feet long and 500-feet high, which ruled out many New England states and the Carolinas. It would also need to be clear of bridges and have deep channels for ships. The study ruled out the Port of Wilmington because of height restrictions imposed by the Delaware Memorial Bridge and a power line that stretches across the Delaware River. Lewes does not have enough land for the large pieces of equipment nor strong enough roads to bear heavy equipment.

The Delaware City site, just north of Wrangle Hill Road and south of Red Lion Creek, fits many of those requirements with easy access to the Delaware River and established access to roads and railway, according to the UD report. The site was used as a chemical plant by Occidental Chemical, which still owns 106 acres to the north. Meanwhile, the Delaware City Refinery, operated by PBF Energy, holds the remaining three parcels that total 725 acres.

Kempton and his team propose an independent investor buy the property to develop the wind port, and opine that Occidental Chemical is willing to sell the land while PBF may be more hesitant, according to the study. A challenge at the site would be permitting, however, including an agreement with the U.S. Army Corps of Engineers for dredging and a Coastal Zone Act (CZA) permit for changing the land use. Permitting could take up to two years from pre-application studies to completion.

The UD study also endorsed a 265-acre site in Salem County, N.J., and its future looks more certain as the state has made strong commitments to wind energy. In June, New Jersey Gov. Phil Murphy revealed plans to build a $400 million wind port that could create up to 1,500 jobs. The facility would be used for staging and assembly, complementing the state’s plan to use 7.5 gigawatts of offshore wind energy by 2035.

In comparison, Delaware was poised to have the first offshore wind farm when Bluewater Wind won the first lease from the U.S. Interior Department to develop wind energy off the coast of Rehoboth Beach. But that plan never became reality when its parent company, NRG Energy, struggled to obtain financing and federal loan guarantees. 

Right now the closest project is Skipjack about 13 miles out to sea from Bethany Beach, but since the Maryland Public Service Commission approved it, Maryland will claim the renewable energy credits.

While Gov. John Carney was not familiar with the UD study, he said that wind energy should be continued to be examined and would need aid from the Delaware legislature. The state has required power distributors to buy 25% of clean energy by 2025. During the 2020 session, State Sen. Harris McDowell (D-Wilmington) proposed raising that requirement to 40% by 2035, but the bill stalled amid the pandemic’s impact on the State House.

“We clearly need to pursue a role, [because] as the Maryland legislature approved [Skipjack], all those associated support services and jobs had to go across the bay. There wasn’t a lot of benefit for us there. But it’s something we need to continue to look at, and this would be a good way of meeting our standards,” Carney said.

However, Skipjack developer Ørsted maintains that job creation is not limited to state borders. The wind farm is projected to create 1,400 jobs in its lifetime, including 913 jobs during construction and 484 jobs during operation. In a previous interview with Delaware Business Times, Ørsted Lead Sourcing & Onshore Facilities Manager Matt Drew pointed out there’s an opportunity to jumpstart a supply chain in Delaware.

“Subcontractors and the job base will be the main economic impact, since geographically, Delaware is in the center of this. Because of its close proximity, there’s long-term benefits for the manufacturing industry … Technology changes, and so will the service industry will to meet it,” Drew told DBT. “There’s also a chance for impact through ports, since Wilmington already has handled 200-foot long turbines from Brazil in the past.”

Looking at the prospect of building a port regionally, Delaware Contractor Association Executive Vice President Bryon Short believes this could be Delaware’s opportunity to rise as a leader in wind energy. He’s confident that the workforce for a service industry – steel workers and electricians – is already there to meet it. 

But if Delaware became a stop on the way to the 11 proposed offshore wind farm sites in the Mid-Atlantic region, Short said it would open the door for further industries down the line.

“The port would be good in New Jersey, but even better in Delaware,” Short said. “Not only do we have the talent, but we have a driven workforce. In my mind, there’s logical steps from assembly to distribution to manufacturing possibilities, perhaps the motor blades and towers.”

For now, offshore wind developers rely on shipping parts overseas from Europe where a well-established manufacturing industry has been built up for decades. But Kempton argues that when more wind farms are built in America, it’s likely that the need would drive more locally-sourced parts. For example, Spanish turbine developer Gamesa Corp. Tecnologica SA transitioned from shipping 70% of its parts to manufacturing them in American factories.

“These developers are working in a new regulatory environment, and they want to make sure the parts work for the first round. But like the automotive industry, you wouldn’t want to keep shipping parts from all over. This will be done gradually,” Kempton said of the move to domestic production..

While Gamesa closed down a turbine blade factory in 2014 and other offices worldwide before it merged with another offshore wind developer, Kempton sees encouraging signs that manufacturing jobs are still on the way. Ørsted signed a memorandum of understanding last year to create a factory for steel plate foundation pieces in Paulsboro, N.J. 

All of the excitement what-ifs are contingent on whether federal regulators clear wind farms and complementary large-scale projects for construction to create the market though. 

“It’s unlikely developers would want to spend $300 million on a factory, when they don’t know if the projects would be approved. If they don’t get approved, they don’t have a market,” Kempton said. “But many of my conversations with developers suggest they think it will be dragged out in the next three or four years, and once you get past the regulatory phase, they have the timeline down pat.”

In 2018, the offshore wind working group formed by Carney recommended not to move forward with buying energy from Skipjack. But it did recommend making a large-scale or incremental purchase of offshore wind power, and waiting until developers propose more projects off the Mid-Atlantic coast. 

Now that surrounding states are looking at turning wind turbines, Carney said he did have concerns about the state being left behind. But there is some time left when it comes to buying energy.

“I always wonder whether it would be best to purchase energy right off our coast. It would make sense while in addition meeting our Renewable Energy Portfolio Standard,” he said. “When [Bluewater Wind] didn’t turn out, there was a significant drop in natural gas prices that made it less expensive than wind. Now there are some views that wind has gotten less expensive.”

“But in respect to jobs and ports, there clearly is a first mover advantage, and we may have lost that,” Carney added.

Participation in power purchases is key to catching the attention of any offshore wind developer, as Kempton said many signaled to him over the course of years of research and conversations that if a state is not interested in buying wind energy, it will be even harder to relocate manufacturing and distribution jobs there.

“It does seem perplexing that we’re not moving on it … If we’re going to attract these kinds of industries, we have to be participating in power purchases with all of our other states in the region,” he said.

From a workforce standpoint, Short hopes that Delaware leaders recognize the project’s potential and begin laying groundwork for the state to become a real player in the wind farm industry, even without having one off its coast.

“There is a future in renewable energy, and we will be reaching critical mass soon. It’s an exciting prospect, and we need to keep our eye on this to make sure the workforce is there for it,” Short said.

By Katie Tabeling

ktabeling@delawarebusinesstimes.com