ENERGY OUTLOOK: WHAT DOES THE FUTURE HOLD FOR US?
02.03.2023
The recent energy crisis has triggered unprecedented momentum behind the green transition. According to the International Energy Agency's (IEA) 2022 report, the world will add as much renewable power in the next five years as it did in the past 20. Turning our heads towards North America, the picture is no different.
Full steam ahead for renewable energy in the United States
Zooming in on the U.S., one of the key accelerators of the green transition is the recently adopted U.S. Inflation Reduction Act (IRA). The IRA, which pledges USD 368 billion to further the green transition, is an important lever for reaching The Biden-Harris Administration’s ambitious targets of reducing CO2 emissions by 50% by 2030 and deploying 30 GW of offshore wind by 2030 and 15 GW of floating wind by 2035. The IRA also primes green hydrogen production by giving producers a $3 tax credit per kilogram of clean hydrogen produced, making it competitive with hydrogen made from natural gas (methane). With hydrogen production projected to increase from 90 Mt/year in 2022 (with less than 1% coming from renewable-sourced energy) to around 660 Mt/year with an estimated 65% being green hydrogen, the IRA puts the U.S. in a favorable position to realize these projections.
Furthermore, Catapult’s latest international market opportunities report, ranks the U.S. 7th in the world for its technical and socioeconomic readiness for floating offshore wind development and its onshore renewables industry has proven that it only takes a few projects to prove the concept and smooth regulatory barriers before the market will naturally accelerate.
Søren Adamsen, Executive Market Director in COWI, said: "Globally, Scandinavia has been the fastest mover within renewables, which has allowed us to develop competencies and capacity within sustainable energy for many years, including more recent developments like floating offshore wind, green fuels and carbon capture. Now it’s time to make use of these competencies across the Atlantic.
"Another interesting thing about IEA’s forecast is that even the most conservative scenario would mean a dramatic increase in investments in renewables in the years ahead. To succeed in this, we must all work together towards these ambitious goals and do our outmost to ensure that the necessary developments can happen rapidly."
Large-scale undertaking does not come without challenges
The most pertinent challenge in serving such an ambitious goal is building out the local supply chains, interconnection with the existing electrical grid, and finding and constructing sufficient foundation fabrication, assembly, and turbine integration port facilities. While the U.S. Gulf Coast has ample offshore engineering and marine construction expertise because of oil and gas activities and the west coast has numerous large shipping ports, the western seaboard currently lacks sufficient port capacity in terms of facilities for foundation fabrication, assembly, and turbine integration to support the build-out rates required to meet Biden’s target.
There are also barriers to be overcome before the commercial aspect of green hydrogen can be advanced. Today, we have a low electrolyser production capacity, a weak hydrogen infrastructure, little experience with technology interaction in the green fuels value chain, and a high levelized cost of hydrogen. At the same time, the storage of electricity generated is still too inefficient and the storage of hydrogen too volatile. As such, there is an urgent need for clear routes to market through secure infrastructure and certainty in offtake, a strong sector coupling, large scale operational experience, and project optimization.
Greg Matzat, Market Director, COWI in North America, said: “The growth in offshore wind and green fuels in North America is strong. Our first offshore wind projects in the U.S. are as big as our current projects in Europe with a mature supply chain. While there are challenges in building new industries, several developments are already happening in this area and, with COWI’s experience with large U.S. energy and infrastructure projects including port facility development and offshore wind engineering, we can help speed up the process.”
Ramping up in North America
COWI is working with its current international clients assisting them in their journey to enter the American market for sustainable energy from offshore wind, green fuels and other projects. Additionally, COWI is looking to form long-term strategic partnerships with new U.S. and international customers developing American projects.
COWI’s sustainable energy business is growing at an annual rate of more than 20% and the company expects to maintain that rate into the future to meet demand. COWI is expanding its U.S. renewable energy team and will continue to invest in energy tech know-how, build on the competencies needed for the green transition and deliver services for the full project life cycle, while always honouring its customer-centric delivery model.
