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GROTON – It’s almost unfair to frame an interview of the just launched Connecticut Wind Collaborative in a litany of bad news – some might call it a reality check. Not an hour after I began writing this story, the news broke that Ørsted was pulling out of offshore wind markets in Norway, Spain and Portugal – what the Financial Times is calling a “retreat after several years of aggressive expansion.”
That’s quite a change from five years ago, when Ørsted made a splash across the Eastern Seaboard and in New London by venturing into what was then valued conservatively as a 20GW, $70B offshore wind market. Since then, Ørsted share prices have dropped by a quarter, and are off 70% from highs three years ago.
Ørsted which began as a state-owned producer of oil and natural gas, is still the world’s largest developer of offshore wind and controls about a quarter of the world market. Ørsted also remains a big player in Connecticut, where it is doubling down with buyouts of partnering Eversource, and pushing ahead with projects out of State Pier even as it cancels planned wind farms off New Jersey.
Analysts say the company “now needs to execute on various components of its plan,” which for southern New England means completing Revolution Wind, a 704 MW offshore wind farm being staged out of State Pier in New London, and contracted to provide power to Connecticut and Rhode Island.
In an uncertain world these contracts – what the industry calls power purchase agreements or PPAs – provide revenue certainty, a guaranteed price to reassure developers like Ørsted to invest billions of dollars in ports and vessels and turbines before seeing a dime of profits.
But PPAs have lately been a sticking point for the completion of Sunrise Wind, a 924 MW project scheduled for staging out of State Pier, and Ørsted has threatened to pull out of the project without a higher guaranteed price than its original bid.
Avangrid, a subsidiary of the Spanish multinational Iberdrola, has already pulled the plug on the Park City Wind project out of Bridgeport – a result that frankly surprised no one, given what looks now like a highly speculative low bid in 2019 for the energy.
Exiting that contract cost Avangrid a mere $16 million, a tiny fraction of the project cost, a result that State Sen. Ryan Fazio, R-Greenwich, the ranking Senate Republican on the Energy Committee, compared to a “heads, I win, tails, you lose,” scenario for consumers.
New bids for offshore projects, including Sunrise Wind, once scheduled for Jan. 31 have been delayed in part to give time for the IRS to clarify the availability of substantial federal tax credits, and are expected to come in at a significant premium.
High interest rates, a balky supply chain, the halting availability of tax credits and subsidies – nearly everything that could go wrong for wind energy has gone wrong. And the partisan divide that has overtaken the sprint toward an electrified economy in the United States surely adds a risk premium.
Not backing away
All that said, Gov. Ned Lamont and the State of Connecticut aren’t backing away from the goal of a 100% zero-carbon electricity supply by 2040.
Instead in October, just as the first wave of really bad industry news hit, the administration was announcing an ambitious 24-page road map for a multi-state cooperative effort to build an offshore wind industry, and the launch of a 501 (c) (3) nonprofit, the Connecticut Wind Collaborative, to help coordinate and implement it.
I met with members of the collaborative earlier this month.
The board chair, Paul Lavoie, is the state’s Chief Manufacturing Officer.
Leaving his job at the Connecticut Port Authority, Andrew Lavigne, the co-vice chair for the collaborative, was named last March, manager of the Clean Economy Program at the Department of Economic and Community Development.
Paul Whitescarver, the former Commanding Officer of the Naval Submarine Base New London, is the secretary and incorporator. Whitescarver is the executive director of the nonprofit Southeastern Connecticut Enterprise Region, or seCTer, where the nonprofit collaborative is being incubated.
The Connecticut Wind Collaborative launches with $577,500 of seed funding from the Ørsted and Eversource joint venture in part to fulfill contractual commitments to support supply chain and workforce development tied to Revolution Wind. With this funding in place, the collaborative is expecting to hire a full-time executive director as soon as April, with a longer-term goal of organizational budgets in the low millions of dollars.
Getting serious about offshore wind
Dial it back a year to April 2023.
Lavoie, who had been tapped in late 2022 to lead the state’s efforts on offshore wind, had just hired Lavigne. Not much was happening offshore. Lavoie had been sending reports upstairs through Nick Simmons, Lamont’s newly appointed Deputy Chief of Staff, when by Lavoie’s account, word came down from the Governor that he wanted a strategic plan for offshore wind by August.
Here Paul Lavoie narrates how it happened…
PL: We were really just kind of maintaining what we were doing in the offshore wind industry — They’re still working on the pier. Nothing was being marshaled yet. They were talking about some Southfork coming here. Revolution was still not financed yet.
So, you know, it was up in the air.
And then we brought Andrew on board. And right around that time, there was a deputy chief of staff in the Governor’s Office that had a keen interest in offshore wind, that really came through the governor and through him. And I started giving him updates on the offshore wind industry and what was going on.
Andrew was “born” in April and he came to me in late May. Actually, I called Andrew into my office and I said, “I just got a call from the Governor’s Office. He wants a strategic plan on offshore wind, and he wants it by August.”
June, July, August… we had, like, three months. So, Andrew’s comment was, “You mean all the justification that I did, that we should put together a strategic plan?”
So you can throw it away. It’s the Governor. The Governor wants it. Now we’re going to do it.
So you can really look at that as being the date that Connecticut got very serious about offshore wind and the offshore wind industry, when the Governor asked us to do that, under Nick Simmons’ direction, who was the Deputy Chief of Staff at the time.
The roadmap that came together over those three months was based around four pillars: maximizing ports and infrastructure, building the necessary workforce, building a supply chain, and maximizing the state’s research and development capabilities around offshore wind and the “blue economy.”
PL: Building the strategic roadmap was basically putting our stamp saying, “Connecticut is in the offshore wind industry, we’re very, very serious about it, and we’re going to resource it to be able to make sure that we can do four things right.”
State officials launch a privately-funded nonprofit
With $577,500 of private seed money, a number of state officials, including Lavoie and Lavigne, worked with Whitescarver to incorporate the Connecticut Wind Collaborative as a 501 (c)(3) nonprofit.
By all accounts it was an unusual, perhaps unprecedented solution.
PL: We finished it in August and then the Governor didn’t roll out till October. So you can look at October as when Connecticut said, “Okay, you know, here we go.” And part of that plan is the creation of the Connecticut Wind Collaborative, which is a nonprofit organization that will support the offshore wind industry.
We did that intentionally, setting it up as a nonprofit organization. Right now it’s funded with money from Revolution Wind, money that was set aside for economic development that was being unused. So, we repurposed that money to go into the wind collaborative. And we’re going to look at the industry to be able to say, “Listen, we want you to support the wind collaborative as well.”
We’re going to look at this as really being privately funded. And then we’ll look at the public part of it once we get it up and running, because we’re going to need some kind of incentives to be able to grow the industry.
I don’t think anyone ever said, “Connecticut needs another quasi-public,” like the often beleaguered Connecticut Port Authority, but the nonprofit arrangement raises a variety of ethical and legal questions of its own.
Boil it down and we have government officials setting up a nonprofit entity and accepting private money as a vehicle to perform the very same public duties they are paid for by the taxpayers — all outside of the bounds of ethics rules, public meetings law, and Freedom of Information requests.
GS: So, from a cynical press perspective, so we have a lot of public officials sitting around in a nonprofit, and I can’t FOIA them, or have any access to these conversations?
PL: I think the whole idea of a nonprofit is about speed, right? It really is about speed and how quickly we can move, and how we can bring other entities together to look and say, “Hey, listen, we want to do this from a win-win perspective.”
You know, what’s interesting is that we’re looking at, you know, we’re trying to orchestrate a brand new industry.
You’re talking about where’s the tipping point, right? Where’s the point where we’re, all of a sudden, we’re gonna get to a critical mass of installations where it’s no longer economically going to make sense to bring stuff over.
But how do we manage up to that, so that when we hit that tipping point we can capitalize it right away?
I’ll tell you my fear. My biggest fear when I stepped into this role was that we were behind. We were way behind. And we’ve caught up.
GS: Or everything has slowed down.
PL: Well both, right?
Yeah, but it has slowed down a little bit, and we’re playing catch up, but I think we’re at the point right now that we’re going to step ahead of where industry is and be able to look at that strategically and say, “Okay, where are the areas that make sense in Connecticut?”
And, again, regionally too. Where does that all make sense?
So, the idea of the plan is that when we get to that point, we’ve got workforce training in place, we’ve got suppliers ready to take on the work we have. And it really is going to them and saying, “Listen, you know, there’s no work today, but here’s what the work is going to be like. So start planning your organization to take the work.”
And there’ll be some that will, and some that won’t, and we want to be able to, to capitalize on that.
But we want to build out the supply chain here first, and then we can fill the gaps in.
There’s gonna be direct foreign investment. There’s going to be European companies that are out there saying, “Hey, we want to put a plant Connecticut,” because rather than having Connecticut people make it, we want our people to make it and we want to make it Connecticut.
Well, that’s going to be Connecticut jobs, right? Those are going to be Connecticut jobs, Connecticut capital equipment, Connecticut real estate. All of that.
So we’re looking at how we balance all of that. We’re trying to get an entire ecosystem ready for an industry. And the collaborative will be at the center of this.
GS: I think there are two things when the public hears about something like this. One, is they worry that when the government gets involved in these sorts of these things, that they’re picking winners. But it doesn’t really seem like that’s what you guys are are doing, it’s more of a clearing house than picking.
PL: That’s a fair statement.
GS: The other, again, that point of transparency. You know, I’d be more worried about transparency, if you were picking winners, but still, why not a quasi-public? Why not give us that extra measure where we can sit in on your board meeting, where we can potentially do a Freedom of Information request?
Not to use the Port Authority as a model. But, thank God, in that sense, I think the public has benefited from the fact that the Port Authority is a quasi-public. That transparency, ultimately, was a winner. So why a nonprofit? Are there a lot of other nonprofits like this that the state sets up?
PL: You know, I don’t know that I’m aware of any of them. Again, this was really all designed around, “how do we engage with private industry, and how do we get this running as quickly as we possibly can.
It’s easier from a funding perspective. It’s easier standing it up and getting things done. We’re doing an RFP for branding. And we put the job out there already. We’re already getting applicants. About three weeks from now we’re gonna start interviewing candidates.
It doesn’t happen that way. If it was a quasi-public it wouldn’t move that way. So, it gives us that flexibility to do it. And listen, I know, quite frankly, I’m serving as the board chair because, with Andrew, we’re the most knowledgeable people. I serve a year or two, and somebody from private industry is interested in being the board chair, that’s great.
But, yeah, I think that’s an issue of consideration for us to take as the board to say, “How do we become more transparent? How do we make sure that we’re guaranteeing transparency?”
You know, and I don’t have I don’t have any problem with that.
The tipping point
In October, at the initial rollout of the state’s offshore wind roadmap, I was struck by the extraordinarily modest the number of skilled jobs and manufacturing opportunities I was being pitched by state officials — dozens of jobs, screws and fasteners.
By that measure, in the fall, offshore wind was all about low-carbon energy generation.
In contrast on Wednesday, the conversation centered much more on business, supply chains and manufacturing, particularly the idea that the logistical challenge of foreign companies installing thousands of wind turbines off the coast of New England was monumental enough to drive the developers like Ørsted to look to the domestic American market for components, repairs and replacements.
By Whitescarver’s back of a napkin estimation, we’re talking 2,500 wind turbines out of a just a handful of ports on the east coast.
PL: Connecticut has the only pier with unrestricted access to open water to offshore wind farms. New Bedford has the hurricane barriers. But those are the only two ports right now that are that are marshalling offshore wind projects in the country. New York’s building them. New Jersey’s building them. Everybody’s trying to build up for that, but we have the head start.
And you’re right, I mean, all of the the work is coming from overseas, but I’ve had conversations with purchasing folks at Ørsted. Now, they’ve opened up a container, looked at the container, and said, “Every part that’s in that container can be made here.”
So, there’s going to be an economic decision that developers are going to make that says, it’s no longer economically viable to make this stuff in Europe and then to ship it in a container over here, when it can be made here. And so we’ll we’ll be ready to help build out that supply chain.
We’re looking at it not on a state-by-state basis, we’re looking at a regional basis. How do we build a regional economy?
So far it appears that the idea of collaboration appeals most to neighboring Rhode Island. Already a member of Rhode Island Commerce has joined the board, and the collaborative is engaging with the North Kingstown Chamber of Commerce to bring its WindWinRI educational pipeline program to Connecticut high schools and colleges.
PW: Paul [Lavoie] and I were at the same conference, and we listen to this guy talk about the U.K. and their development of offshore wind, and how the developers when you work with the U.K., you don’t have to go to eight or nine different states to figure out how to do things. So this collaborative that the state has started is really an answer to that.
And all the developers when you go to the conferences have complained about the requirements for local content and how going across state lines makes it very difficult. Because Connecticut maybe only has a small power purchase agreement compared to say New York, and you have a New York that’s got a local content requirement compared to a little bitty old Connecticut.
So with the collaborative, when we can unify ourselves with Rhode Island and Massachusetts, you get rid of that local content — it can’t go across state lines, but regionally it makes sense. That is where the collaborative and our association with the other states will make a difference.
What Connecticut does best
But if Lavoie and Whitescarver offered scant evidence, yet, of any significant out-of-state buy-in, or any collaborative counterbalance to the shear weight of neighboring New York, they made a more convincing case that Connecticut’s manufacturing niche — aircraft, engines and submarines — is an especially good fit for offshore wind.
GS: I mean, part of the reason to collaborate is right now we’re talking dozens of jobs, right? We’re not talking hundreds of jobs, or several hundreds of jobs. Part of that is that we’re starting small, right? There’s a little bit of hurry up and wait here.
PW: So, you know, when seCTer did their offshore wind industry cluster development for the [Economic Development Administration] for the Build Back Better regional challenge, we did a REMI study.
And through a course of a decade, if you were to bring the supply chain to Connecticut or Rhode Island, if we could have gotten $60 million, whether for UConn, for workforce investment, for finding pieces of property, you could have an apex of jobs created of about 9,000 over a decade with an equilibrium of about 6000 jobs created. And that was just looking at southeastern Connecticut. So the jobs will come. There are plenty of studies that corroborate that.
GS: So we have a collaboration between the states. Besides a port, what specifically does Connecticut bring to the table? And what should we bring to the table better? Like, when they say, “Okay, you do this, we do that.” What do we do? What do we want to do?
PL: We have one of the most sophisticated supply chains around three areas, right?
Helicopters, jet engines, and submarines.
So when you really look at, “what is a windmill?” It’s a propeller that’s powered by an engine that’s on a really long round thing, right? What we are really looking at is the components piece of that.
Are we going to make the stanchions here? We have the capability to do it, but that’s being done in Europe.
But when you start to take a look at the engine and the components in the engine, and you start to look at wear and tear and breakdown — all of those component parts can be made here and the supply chain is ready to do it. Because they’re making parts right now for F135 engines and commercial engines. And Connecticut is number one in the country in aircraft engine and airplane parts manufacturing. 25% of all aircraft engines and airplane parts are made here in Connecticut.
So you look at that. That infrastructure exists. It literally is a bolt on to that infrastructure. It really is the understanding and the capability to do that.
And then you look at at maintenance and repair organizations. There are maintenance and repair organizations across the state for propeller blades, and for engines, and all of that. So, as we look at the supply chain, right now, we really need to get companies to understand what that’s going to be. And that requires somebody to work with the developers and to work with the tier-one suppliers like Siemens Gamesa. We’re working to get them to understand what they’re going to need for components and connecting them to Connecticut companies. So, that’s Connecticut’s strategic advantage.
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This interview was edited for length and clarity.