Is the North American East Coast the new heaven for European energy giants?

Europe, USA - Apr 25 2019
  • #esg

Is the North American East Coast the new heaven for European energy giants?

The USA is the second largest wind power market after China with an increase in capacity from 87 Gigawatt in 2017 to 94 Gigawatt in 2018. But these numbers must be put into perspective: wind represents only 8% of the overall US electricity capacity compared to 16% on average in Europe.

Furthermore, as we can see in the chart below, offshore wind farms represent less than 0.5% of the whole wind capacity in the USA compared to nearly 10% on average in Europe and yet the US coasts are 133 000 km long while European coasts only total 66 000 km.

The continental shelf has dictated where the first offshore turbines were located, and large-scale such “grounded” projects have brought down costs to competitive levels in Europe notably. On the US West coast, notwithstanding the seismic risk, the limited continental shelf will require floating big turbines that have not yet been developed on a large enough scale to compete with traditional power sources. But there is no such constraint on the East coast, which is also one of the most densely populated areas on the continent. European energy giants have understood this well.

Indeed, leveraging their experience back home, many of them including EDF, Equinor (former Statoil), Ørsted or Royal Dutch Shell among others[1], have begun to cooperate by creating joint ventures to address this opportunity and benefit from the Business Energy Investment Tax Credit (ITC) which amounts 12% of expenditures for large wind turbines if construction begins by the end of 2019[2].

However, this federal investment tax credit is currently due to expire in 2020 and the absence of a big turbines manufacturer in the region might lead European operators to import some parts, which could slow down this expansion.

Kevin Ratsimiveh, Quantitative Analyst, Data Science Dpt.
Source: Beyond Ratings, Enerdata, World Resources Institute, Reuters

___
[1] https://www.reuters.com/article/us-equinor-renewables-usa/equinor-3-jvs-vie-for-offshore-wind-power-park-in-new-york-idUSKCN1Q40OF
[2] https://www.energy.gov/sites/prod/files/2018/03/f49/eere_wind_funding_fs_2018_0.pdf

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