Nearly 200 companies in Southwest Virginia have the potential to play a role in the growing offshore wind industry, a regional analysis has found.
Figuring out whether they’re interested – and whether the existing workforce can support that kind of pivot – is a crucial next step for Project Veer, an effort launched late last year to investigate whether Southwest Virginia should try to stake a claim in the industry sector that supports offshore wind energy.
Delia Warren with Xodus, the energy consulting firm that is conducting analysis for Project Veer, on Tuesday said her firm’s work to date has identified some strengths for the region to tout – and some areas where it will face challenges.
“This is really, really early in the development of a massive industry,” she said, speaking to the Southwest Virginia Energy Research and Development Authority. “So now is the time for Southwest Virginia to identify potential supply chain opportunities and prepare to enter the industry.”
While the U.S. has been slow to embrace offshore wind compared to some other countries, the White House last year announced a federal goal of 30 gigawatts of offshore wind by 2030.
Virginia has set a target of 5.2 gigawatts by 2034; the combined Virginia-North Carolina-Maryland region has a goal of 14.8 gigawatts by 2040, Warren said.
The first two U.S. commercial-scale offshore wind projects are under construction in New York (800 megawatts) and Massachusetts (130 megawatts). Dominion Energy plans to build a 2.6-gigawatt wind farm 27 miles off the coast of Virginia Beach that’s expected to be operational by 2026. (Dominion is a major donor to Cardinal News.)
Estimates predict that U.S. capital expenditures on offshore wind infrastructure will reach $100 billion by 2030, Warren said.
With that much capacity coming online so quickly, Warren predicted supply chain bottlenecks – and opportunities for companies to get into the industry.
“I don’t want to oversell this,” she said. “This is a huge opportunity, but it has to be intentional. If your region really wants to benefit, it’s not going to happen by accident.”
While some turbine components must be manufactured as close as possible to the shore – blades, for instance, are simply too large and heavy to be transported long distances over land – other parts could be built inland. A U.S. Department of Energy reported that the average utility-scale wind turbine is made up of roughly 8,000 parts.
Southwest Virginia has a rich history of heavy-duty and precision manufacturing, thanks to decades of providing equipment for the coal industry and for farming. About 12% of the region’s workforce is in manufacturing, Warren said.
Xodus evaluated 385 companies across the 13 counties and three cities of GO Virginia’s Region 1 – what they make, where they’re located, what their capacity is – and found that 195 of them have the potential to work with the offshore wind industry, in roles including building parts for substations and for rotors and towers.
A next step will be to survey those companies to determine whether they’re interested in shifting to the offshore wind industry.
It’s not necessarily an easy sector to break into, especially for smaller companies, because of the long timelines involved – a supplier might bid for a project and not do any work for two years, Warren said. It will be critical, she said, to make sure that companies understand both the opportunities and the challenges of getting involved with what she called a “very complex” industry.
In an interview later Tuesday, she said that financial incentives, like bridge financing to tide over a manufacturer involved in a long-term project, could encourage companies to explore the wind industry.
Budget amendments currently being considered by the General Assembly also could help the sector, said Will Payne, director of InvestSWVA, which designed Project Veer. Xodus also has worked with the Hampton Roads region on identifying offshore wind supply chain opportunities, and out of the work on both ends of the state came the idea for a fund that would support smaller companies with equipment or workforce development.
Collaboration among companies, and broader regional coordination, will be critical, Warren told the authority. Many of the major contracts for wind turbine manufacturing already have been awarded, she said, but there’s an opportunity for smaller manufacturers to work with those companies and with their suppliers.
Another key question that Project Veer will be trying to answer: What does the potential workforce for this industry look like? Xodus will be looking at how many workers would be available, what skills they already have, and what kind of training would be needed.
A potential hurdle for the region is that it lacks an obvious industrial hub for this kind of work, Warren noted. Industrial centers tend to attract other companies, she said, because they can offer improved logistics and economies of scale, and it can be easier for a manufacturer to do business when suppliers are close by.
But Hampton Roads is establishing itself as a hub for offshore wind energy, she said – the only offshore wind turbine blade facility planned in the U.S. so far will be in Portsmouth – and Southwest Virginia should work to piggyback off of that.
And Virginia also offers lower labor costs, corporate tax rates and electricity rates than states that might be competing for this work, she said.
The study is being funded by GO Virginia, the state Tobacco Commission and Coalfield Strategies, an economic development consulting firm headed by Payne. He said he expects that the final report and recommendations will be presented at the end of the month.