Inflation Reduction Act boosts wind power investment

The U.S. offshore wind market is growing exponentially, reaching $9.8 billion by 2022. Investment in alternative energy is being spurred by the Inflation Reduction Act, but the industry still faces challenges such as supply chain development and permitting.

Share:

Investment in the U.S. offshore wind market has more than tripled year-over-year to $9.8 billion by 2022. Going forward, the Inflation Reduction Act will spur alternative uses of offshore wind energy, according to the annual U.S. Offshore Wind Market Report released Feb. 21 by the Business Network for Offshore Wind.

Successful auctions took place in 2022, leasing 11.4 GW of new generation capacity and bringing in more than $5.4 billion to the U.S. Treasury, making the U.S. market more attractive, the report said.

Development of the industry

Permitting is the biggest challenge for the U.S. offshore wind industry, according to Andrew Berg, offshore wind analyst at S&P Global Commodity Insights. “It takes up to 10 years (and sometimes longer) to develop a large-scale offshore wind project, obtain environmental licenses and all the necessary documents, and begin construction. This is a global problem that also applies to the US, Germany, Japan, etc. If local authorities can cut the time it takes to get permits in half, everything else will adapt (supply chain, ports, ships, etc.).”

Supply issues will continue to plague the U.S. until it can develop Jones Act-compliant wind turbine installation vessels and port infrastructure that can accommodate larger turbine vessels. According to Berg, the challenge is that the ship design, the port design and the turbine design must be synchronized. “As the turbines get bigger, the ships have to keep up, and at that point, the ports have to be able to accommodate these larger ships,” he says. “The U.S. offshore wind infrastructure is still immature and stifling the domestic supply chain.”

Outlook for 2023

Berg expects to see capacity additions, particularly in deeper Pacific waters such as California and Oregon, due to float-specific technology innovations and interest from new markets where only deepwater sites are available.

The U.S. offshore wind market will be driven primarily by state electricity demand, but new opportunities are developing around the world to harness offshore wind generation for other purposes, such as green hydrogen production, green ammonia, and carbon sequestration activities. A first major partnership between green hydrogen and offshore wind power was announced last year in Louisiana.

The IRA investment tax credit is expected to accelerate the industry’s progress and help developers mitigate the effects of inflation and economic uncertainty.

New offshore wind energy acquisitions

The report states that new offshore wind acquisitions in 2022 were primarily driven by lease auction fees, but more than $4.4 billion was invested in port infrastructure, supply chain development and transmission. States’ long-term wind energy goals have also increased by 79% in 2022, with states such as California, Louisiana, New Jersey and Rhode Island announcing new goals.

 

The rapid development of new leasing areas in the New York region could help close the gap between the goals set by the Biden-Harris administration and the goal of 30 GW of offshore wind energy by 2030. However, even with the IRA, it is unlikely that the U.S. will achieve this goal due to limited domestic supply chain capacity.

Masdar and Iberdrola announce a joint investment of €5.2 billion in the East Anglia THREE offshore wind farm in the United Kingdom and full commissioning of the German Baltic Eagle project (476 MW).
Energiekontor AG has secured contracts for four wind projects with a total capacity of 125 megawatts, following the Federal Network Agency's May 2025 tender in Germany.
Ecopetrol S.A. finalises the acquisition of Wind Autogeneración from Enel S.A.S., thereby taking over the Windpeshi wind project in Colombia, with a planned capacity of 205 MW, aimed at the Colombian oil group's energy self-consumption.
Oceanic Wind Energy Inc. and Coast Tsimshian Enterprises Ltd. secured an exclusive investigative use permit in the Hecate Strait, paving the way for Canada's first major offshore wind project, targeting capacity of up to 700 MW.
German manufacturer Nordex will supply 13 N163/6.X wind turbines to developer SAB WindTeam for a 91 MW wind farm in Brandenburg, with commissioning scheduled for early 2027 and an extended 20-year service agreement.
EDF is delaying the start-up of the Calvados offshore wind farm by more than two years, citing extended adjustments to a drilling tool vital for installing the sixty-four monopile foundations off Courseulles-sur-Mer.
German company NeXtWind signs historic €1.4 billion debt financing to accelerate expansion and modernisation of its onshore wind farms and reach a total capacity of 3 GW by 2028.
Energy company TGS has won a major high-resolution geophysical imaging contract for offshore wind site characterization in Norway, strengthening its position in this rapidly growing market.
Iberdrola Australia secures crucial approval from Australian authorities to begin metocean studies for its 3GW Aurora Green offshore project off the coast of Victoria, marking a decisive stage in its development.
ENGIE begins full operation of the Red Sea Wind Energy wind farm in Egypt, increasing its capacity to 650 MW, four months ahead of schedule, now powering over one million homes in the region.
Tokyo Gas, through TOWII Renewables, a joint venture with EWII, purchases two onshore wind projects developed by Finnish company Puhuri, totalling 74.4 MW, marking its expansion beyond the Danish market.
The European Investment Bank grants EWE AG historic €450mn financing for the installation of 2,600 km of underground power lines and the upgrade of over 1,100 substations in Lower Saxony.
Japan’s Ministry of Industry and Siemens Gamesa Renewable Energy launch a strategic partnership to develop local offshore wind supply chains and strengthen the country's industrial competitiveness in this energy sector.
Energiekontor AG confirms financial close for the Nartum wind farm, adding 23 megawatts to its owned portfolio and starting the construction phase in the Rotenburg district, Lower Saxony.
Airloom Energy begins construction of a pilot site in Wyoming to test an innovative turbine aimed at enhancing American energy security in the face of anticipated growth in electricity demand.
ACCIONA Energía transfers the San Juan de Marcona wind farm to Luz del Sur S.A.A., a major player in Peru's energy sector, for up to USD 253 million, pending necessary regulatory approvals.
German operator Encavis AG strengthens its portfolio by acquiring two wind farms in Lower Saxony and Saxony, totalling 59 MW, in a transaction with Energiequelle GmbH, thereby expanding its renewable energy assets.
Ocergy officially launches an industrial project aiming to install by 2028 a new-generation floating wind turbine of over 15 MW, in partnership with EnBW, Kyuden Mirai, and TEPCO Renewable Power.
France officially commissions its first floating wind farm, consisting of three turbines with a combined capacity of 25 megawatts, introducing strategic technology in the Mediterranean, vital for national energy goals.
Inaugurated on 20 June, the five-turbine plant of wpd onshore France feeds 18 MW into the grid and unlocks new tax revenue for four Côtes-d’Armor municipalities.