Vestas’ Reality Check: Will States Heed “This is Not a Wind Farm”?

We discuss the new document from Vestas titled "This is Not a Wind
Farm", which criticizes the U.S. approach to offshore wind
development and proposes solutions. Allen, Joel and Phil analyze
Vestas' suggestions and debate whether states will implement any of
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Hall: Welcome to the special edition of the Uptime Wind Energy
Podcast. I'm your host, Allen Hall. I'm here with Joel Saxum and
Phil Totaro, and we are discussing the new document from Vestas
called This is Not a Wind Farm. And if you've gone to Vestas
website and looked at the U. S. offshore wind tab, you can find
this document. And you may want to follow along during this podcast
because we want to dive into the details here. And remember that
Vestas released this document during IPF. Basically the offshore
wind energy symposium conference that happens in the United States
this year down in New Orleans. And we felt like this document
summarized some of the things that we have been feeling and seeing,
but this is as proposed solutions. Now we may not agree on all
those proposed solutions as we're going to discuss. But, at least
they're putting out, they're putting their stake in the ground.
They're saying these are the things that need to be done to move
the U. S. into offshore wind quickly. Let me give a little bit of
background here, and I'll list the items that Vestas has a problem
with, or where the issues are. The key problem areas are, and
remember that there's almost up to 50 gigawatts of offshore leases
that are going to be proposed in the next couple of years. So in,
from Vestas point of view, there's a lot of real estate for, and
for turbines to be put into the water. So this is the perfect time
to get these US projects moving. Now they list four to five. I
broke them into five. Problem areas, and I want to go through the
real quickly here. Number one, offshore bidders proposing projects
are based on immature technology. So what Vestas is saying is that
the turbines that are still on paper are being proposed for
projects. Two there's a lack of focus on the supply chain readiness
to ensure the timely project delivery. And generally what Vestas is
talking about here is that if they choose a 20 megawatt turbine,
all the supply chain has to be able to deliver a 20 megawatt
turbine versus a 15 megawatt turbine in their case. State and local
content mandates are leading to recent project cancellations along
the East Coast. Four, long lead times between offtake awards and
project execution. Is leading to speculative bidding behavior,
which increases cost uncertainty in the supply chain. And number
five, as I've outlined it, there's limited or no indexation
adjustments within PPA. So once you lock in a PPA, you're stuck
with it forever, regardless of interest rates, so there's no
interest rate adjustment if interest rates goes up or down for that
matter now. All right, guys. So here we go. This is where I think
it's going to get a little contentious. There are four Vestas
solutions here. Number one, prioritize the award of off take
contracts to bidders that have selected turbine technology that is
mature, tested, and commercially available to ensure on time
project delivery and industry scalability. Now, Phil, this is
oriented towards turbines that do not have type certification yet.
I assume we would have been talking about the GE 18 megawatt, which
does not have type certification because they're not going to build
it. What are the turbines as Vestas implying shouldn't be
considered in these offshore contracts? Philip Totaro: Turbines
that already weren't going to be considered, predominantly anything
from China or whatever else, the Siemens, 14 platforms are all
either already type certified or getting type certified, and so is
the GE 15 and a half megawatt platform already or in process for
type certification, so look at the end of the day what Vestas has
put out is their little wishlist here of the way they want the
world to work. And it's lovely and everything, but the reality is
it's a little bit self serving on their part. Some of the things
that they're suggesting would be helpful in general to the
industry, but most of it's just, Hey, if you did things our way,
then we'd be winning a lot more business. And. Sure. That's true.
Vestas. Thanks. Joel Saxum: I think that the, when you talk about
the, machines that aren't ready of course it goes GE 18 megawatts.
So now, if I think about that in my head, we're looking forward 24,
28, I think the plan that the that Boehm put out at IPF is auctions
all the way. They planned out auctions all the way through 20, 28,
20, 2030, even. So we're talking about for the next six years,
right? Now the next six years, of course, there's going to be
someone at maybe even Vestas that goes, Hey, we're going to make
this, or, GE or whoever, we're gonna make that, we're gonna make
this. What they're saying here in my thought process is, Let's,
those are no longer cool for bidding. Maybe there's, you could put
a change order in, if that, type of turbine is readily available,
commercially available, mature at the time you build your wind
farm, but you shouldn't be able to bid on the idea that something
else is going to be in place that works for it. I agree with Vestas
on this one. Philip Totaro: Yes and no. See, here's the thing, when
they do one of these tenders in Europe, they bid an envelope. They
say, we're going to, we're going to do something up to a 20
megawatt wind turbine. They don't specify what the turbine is. I,
and I, that's why I don't, Recall offhand, particularly in New
York, if they were mandating a specific turbine be selected for the
project permitting the OREC all the other submittals, I don't know
if they were mandating that a specific turbine model be specified
as the preferred vendor, even if they didn't have an agreement in
place yet. That's one thing that potentially led to some of these
consternations between NYSERDA as a procurement agent, on behalf of
utilities and others and the developers and the rest of the supply
chain. But again, look the market's the market. And the reality is
a developer is going to submit a proposal with whatever They're
going to submit a proposal with for financial or other reasons that
they have. And at the end of the day, it should be down to, if
NYSERDA is the one issuing the OREC then it should be down to them
to have sufficient technical expertise to be able to say, you know
what, yeah, this is the best, tech, most technologically feasible,
bid that, that we've received. But that's not even what's
happening. They're getting bids from the projects that happen to be
like the most mature in terms of shovel readiness in the, there's
not even enough projects that have been leased yet. You have a
finite number of projects. You have a finite amount of offtake that
you want to be able to procure. Those are the, these are the
projects. Like, why do we have to keep going back into this, all
this rebidding and all this other malaise? When, okay, we know what
the technology is today, or, a year and a half from now when they
could, hope to be able to start, the offshore portion of the
construction.  You want it, if you want to get projects done
now, here's what the state of technology is. Who's serving as a
technical advisor to NYSERDA? Nobody. Joel Saxum: Yeah, that's what
I was going to hit on, Phil. I think you hit a big nail on the head
there is, you've got all this, these things happen with Offshore
Wind, NYSERDA, all these different agencies. Who are their
technical experts? Who are the people there that are reviewing the
bids going, this is feasible for Offshore Wind or this isn't?
Because, And to my knowledge, I don't know. I don't want to point
at that person on, maybe I'll get some LinkedIn hate mail from
someone at NYSERDA. That's me. You're talking about, I don't know.
I don't know who that person is, but as far as I know, do they have
a team like an of Orsted type back office, people that know all
kinds of things about offshore wind energy. I don't think so
because that doesn't, that hasn't existed in the United States. So
unless those people are Danish or British or Belgian Philip Totaro:
I'm sorry, Joel, that does exist in the United States. They just
don't use us. I've been doing offshore wind since frigging 2010,
and I have not once been called by NYSERDA or any other state or
local agency to provide expertise whatsoever. Joel Saxum: So the
resources are available and it's not just me. There are others that
have experience dating back to, decades and decades over in Europe,
over in Asia. And we are not utilized. And that's part of the other
part of the problem is the people doing the procurement frankly
don't know what the hell they're doing. And I don't care if I get
hate mail I'm putting that out there. They just don't know what
they're doing. Allen Hall: Vesta said the same thing, Phil. Vesta
said and solution number two is regularly evaluate supply chain
infrastructure and interconnection readiness in state RFPs and
prioritize the award of Octave contracts for projects that
demonstrate maturity. Okay, great. That sounds wonderful, but you
were, who's People or who are the people at the state level that
have the skill sets to do that?