The globally dominant European supplier of offshore wind turbines, Siemens Gamesa, recently suspended construction plans for its anticipated turbine blade factory at Virginia’s Portsmouth Marine Terminal. Citing complications in achieving “development milestones”, the company put its $200 million proposal on hold.
This latest turn of events paints a somewhat uncertain future for US offshore wind endeavors and political aspirations to grow the sector’s supply chain domestically.
Struggles Amid Changing Times
The Portsmouth factory was initially proposed in 2021 and touted as the first major turbine manufacturing investment in the US. It was a development many saw as monumental, with then-governor Ralph Northam stating, “No question about it, Virginia is building a new industry in renewable energy…”.
However, today’s market offers challenging conditions for suppliers like Siemens Gamesa. Turbulent circumstances have led to the cancellation of Orsted’s Ocean Wind Project off New Jersey, while other developers jostle to renegotiate power-purchase agreements. Increased costs and supply chain issues have made sales contracts signed a few years ago unviable.
Unanticipated Consequences for Current Projects
The Portsmouth factory was projected to manufacture blades for the mammoth Coastal Virginia Offshore Wind project. These will now be sourced from the company’s European factories, with no significant effect anticipated for Dominion Energy, the project’s developer.
Siemens Gamesa was also contracted to supply turbines for the Revolution Wind, South Fork Wind, and Sunrise Wind projects in the U.S. but these plans may now be jeopardized.
Looking Ahead: Persistent Uncertainties and Ongoing Plans
The disruption in the U.S. market not only breeds short-term uncertainties for suppliers but also poses individual hurdles for Siemens Gamesa. Recurring quality issues with its legacy onshore wind turbines and offshore wind project manufacturing delays are expected to take a $2.4 billion hit.
However, the Portsmouth plant wasn’t the company’s sole focus in the U.S. They had also announced plans earlier this February, for the construction of a $500 million nacelle plant in Upstate New York.
Although the future might seem foggy, Siemens Gamesa continues to harbor high hopes for potentially leading the massive offshore wind market in the U.S. Further investments to develop the manufacturing footprint in New York remain, with no changes announced to this plan as of now.
