The Grand Challenges of Offshore Wind Financing in the U.S.

Interest and development in offshore wind energy in the U.S. is at an all-time high. The Biden Administration committed to increasing offshore wind capacity from a meager 42 megawatts (MW) in 2022 to 30 gigawatts (GW), or 30,000 MW, by 2030—enough to power 10 million homes. Achieving this target would require over $100 billion in new investments and create 80,000 full-time-equivalent jobs from 2023-2030. In addition, states have committed to procuring 64 GW of offshore wind by 2045, and the pipeline of actual offshore wind projects rose to more than 40 GW by May 2022, representing a nearly 1,000-fold increase from current installed capacity. Such a scale-up would transform the sector and make major strides in enabling the nation to rapidly decarbonize, improve energy security, and support universal access to affordable energy in a climate-changing world. Critical to achieving success is financing. While there is no shortage of financial capital, employing it faces major challenges. We explored these challenges during a two-day business-academia collaboration workshop at Columbia University, June 23-24, 2022, and we identified five grand challenges, i.e., potential showstoppers—challenges that, if not solved, will prevent the massive and rapid scale-up of offshore wind from taking root. These include (1) navigating the complexities, timing mismatches, and high costs of the early years of developing an offshore wind project; (2) addressing the failure of support policy to provide certainty on future costs and revenues; (3) developing a capable workforce in an immature and inexperienced market; (4) building an offshore wind-friendly transmission network; and (5) financing and scaling up floating offshore wind technologies. If solved, the U.S. will move several steps closer to turning the potential for an offshore wind transformation into reality.