TODAY’S STUDY: The Huge Virginia Offshore Wind Opportunity

The Virginia advantage; The roadmap for the offshore wind supply chain in Virginia

December 2018 (BVG Associates)

Executive Summary

In 2015, BVG Associates carried out a detailed review of Virginia ports and associated opportunities relating to offshore wind.

This study extends that work through the following actions:

• Review of current and projected market development

• Local engagement and development of tools, to help build partnerships between developers and suppliers with regional companies interested in diversifying into offshore wind

• Port review and update

• Review of Virginia’s business climate and workforce readiness and

• Evaluation of the strategic fit with the current and future supply chain.

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Supply chain opportunity

US offshore wind is accelerating rapidly, challenging the global and regional supply chain with at least 10GW of capacity to be installed by 2030. Approximately 2GW of power purchase agreements (PPAs) are in place in the northern states and an additional 3GW is anticipated in 2019.

Virginia is well positioned to derive economic benefit by establishing a supply chain to serve first-mover projects. Growing the industrial base at this early stage will prepare Virginia to competitively deliver its own 2GW in the coming years.

A timely supply chain entry will equip Virginia with the skills and infrastructure required to participate in a growing pipeline along the East Coast, future activity such as 2GW off the coast of North Carolina and potential wind energy lease areas beyond those currently established.

Comprehensive supply chain concept

This report outlines the benefits of a collaborative multistate cluster concept, envisaging a “Mid and South Atlantic Coast supply cluster”. The Virginia Offshore Wind Team holds the view that regional collaboration will deliver the most effective offshore wind supply chain. A multi-state industrial base, aligned with logistics benefits and workforce synergies in each area, would attract anchor tenants and lead toward a supply diversity delivering the best economic benefit. Manufacturing offshore wind components and offering offshore wind services in Virginia and other neighboring states will, once at scale, enable multiple offshore wind competitors to reach substantial cost savings. Logistics efficiencies, risk mitigation and a diverse supply network will enable comprehensive sourcing strategies, aligning global partners with local capabilities, coastal infrastructure and Jones Act marine logistic solutions.

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Recommendations

The Virginia Offshore Wind Team is comprised of a selection of local, state and industry stakeholders. The Team was formed in order to provide local knowledge input into report deliverables as well as serve as a deployment arm for supply-chain tasks and strategies. In coordination with BVG Associates, the Team developed the following recommendations:

1. Create a “Virginia Office for Offshore Wind” to provide a clearinghouse and facilitator to advance offshore wind

• Hire or designate an individual to fulfill the role of leading the office in coordinating stakeholder collaboration and to serve as point-of-contact for offshore wind activities

• Engage with the Offshore Wind Business Team and the Offshore Wind Workforce Development Team and Business Team partnerships to leverage resources and share supply chain expertise

• Support both offshore wind prospects and businesses within the regional cluster, focusing on aligning offshore wind needs with regional business capacity

• Provide regular updates covering market and technology development, project schedules, supply chain opportunities and other resources as appropriate, and

• Develop a roadmap to achieve the Commonwealth’s 2GW offshore wind commercial development goal by 2028.

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2. Work toward a multi-state regional supply chain cluster, offering the industry a wide network and the best of what each state has to offer • Build partnerships in the Mid and South Atlantic region and develop close working relationships with state counterparts • Address federal issues as a single voice or with a common agenda • Work with other states on their core strengths and help secure business opportunities for regional state partners

• Engage collectively with the offshore wind industry to understand supply needs/preferences to help facilitate a 'best fit' scenario, and

• Promote the Virginia advantage as a logistical hub for major components, particularly for foundations, transition pieces and substations.

3. Solicit and attract "anchor tenant" suppliers, with a focus on major components

• Utilize state economic development resources to actively recruit major suppliers and consider engaging an offshore wind subject matter expert to provide introductions and help secure interest of prospects

• Develop a 'tour package', hosting developers and major suppliers and offering clarity on what Virginia can offer to major employers that choose Virginia, and

• Send a strong “open for business” message, addressing areas of interest and concern and reinforcing through commitment of local and state decision-makers.

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4. Enable and grow Virginia’s business opportunity through partnerships and infrastructure

• Keep the Offshore Wind Business Team intact

• Provide clear and timely guidance on eligibility and access to existing resources applicable to offshore wind

• Consider establishing industry specific programs, incentives and resources

• Dedicate assistance to second tier/lower tier suppliers and maintain partnership tools that connect regional cluster businesses with developers and investors, and

• Pursue infrastructure improvements that enable port readiness, consider incentives for private assets and leverage existing programs such as the Virginia Waterway Maintenance Grant Program for dredging.

5. Grow Virginia business opportunity through workforce development

• Keep the Workforce Development Team intact

• Identify and provide clear access to existing training resources applicable to offshore wind

• Establish offshore wind specific programs, training and attraction options for the industry, and

• Work with stakeholders such as the Navy and Department of Defense on ways to complement Navy activities and flatten the workforce fluctuations driven by Navy contracting.

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Virginia’s East Coast advantage

This report further evaluates Virginia’s position in key areas that include business climate, workforce, infrastructure and location. Virginia recognizes that it has a number of key competitive advantages specific to the offshore wind supply chain that include:

• Pro-business climate

• Strategic geographic location

• Unmatched port infrastructure

• Congestion-free navigation

• Progressive energy policy stance

• Unrestricted air draft waterways

• High-quality maritime workforce

• Abundant waterfront land and infrastructure, and

• America’s largest shipbuilding industry.

The objective to capture first-mover, as well as long-term supply chain business relies on the ability to overcome the near-term lack of an early commercial scale offshore wind development in the region.

The Virginia advantage is a combination of a diverse regional supply chain network, incentive/workforce packaging and established timelines to build out regional coastal projects to include Virginia and North Carolina will be key in securing the sustainable economic benefits, investments and jobs that a developed regional supply chain cluster will deliver.

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