The Washington Post recently noted the complicating role played by the Jones Act in the development of offshore wind energy, using the example of two wind turbines constructed off the coast of Virginia Beach last year. Because the vessel used for the installation of the turbines was not Jones Act-compliant—no such vessels that meet the law’s restrictions currently exist—it was forced to operate out of Halifax, Canada rather than a closer U.S. port. From the article:

A century-old law made the situation even tougher. The Jones Act says only U.S.-built-and-operated ships can move goods between U.S. ports. To install the Virginia turbines, supplies shipped from Europe were first staged in Canada before being ferried on repeated trips to the construction site. The snags prompted Dominion to invest in the ship now being built in Brownsville, Tex. A jack-up vessel, it will be able to put down legs on the seafloor and then use hydraulic power to lift itself above the waves and create a secure working platform. It is expected to be ready in 2024 for Dominion’s wind farm expansion.

As I wrote in a letter to the editor, however, the construction of the $500 million jack-up installation vessel in Texas—as well as other vessels needed to maintain offshore wind farms after they are complete—is going to add significant costs that undermine the industry’s competitiveness:

The May 10 news article “Choppy seas ahead for Biden’s vision of offshore energy” correctly pointed out that the 101-year-old Jones Act has produced complications in the development of offshore wind in the United States. But this protectionist law also raises costs and undermines the sector in more direct ways.

The lone Jones Act-compliant wind turbine installation vessel currently under construction, for example, has a price tag of at least $200 million higher than if it were built abroad. Vessels used to service offshore wind farms after construction is complete, meanwhile, will similarly cost dramatically more owing to the Jones Act’s requirement that — unlike for any other form of domestic transportation — they be U.S.-built. That means reduced competitiveness of this nascent energy source.

If the Biden administration truly regards offshore wind as a centerpiece of its strategy to address climate change, its support of this outdated law must be urgently reconsidered.

The Jones Act’s harm to this sector has also been recently highlighted by energy industry observers. Rystad Energy, for example, last month cited the Jones Act as a key reason why the United States is falling behind other regions of the world in the development of offshore wind while a new report from IHS Markit says the Jones Act must be relaxed if the United States is to meet its offshore wind targets.

But beyond added complications and costs, the Jones Act also adds operational risks to the construction of offshore wind turbines. In addition to operating out of a foreign port, there is one other permissible means of using a foreign installation vessel. Under this option, the installation vessel remains stationary offshore while Jones Act-compliant barges “feeder” or transport the needed components to the waiting vessel from a nearby U.S. port. Transferring components via crane from one vessel to another in the bobbing seas, however, entails considerable hazards as was recently pointed out by one company active in the offshore wind industry:

Safety was confirmed as a factor by Eneti chief operating officer Cameron Mackey in a conference call with equity analysts on Thursday as the Scorpio Group-backed company discussed its approach to the US market.

Mackey noted that it is legally possible under Jones Act provisions to use a foreign-built wind turbine installation vessel (WTIV) for such contracts if turbine components are ferried to it aboard Jones Act barges, but he said operational realities are different.

“It doesn’t take an expert to see that the large, delicate and heavy [turbine] components can only be transported in the Atlantic Ocean and lifted off [vessels] by a crane at some heightened risk,” Mackey said.

Indeed, such added risks likely help explain why European firms constructing offshore wind farms in the North Sea do not use the feeder barge approach, as one Jones Act company official admitted last month:

Currently in the North Sea, components are typically transported to the field by the installation vessels themselves. We do not see the use of tugs and barges as prevalent in European offshore wind farms installations. This, however, is not a workable model for the U.S. market, particularly due Jones Act restrictions as there are currently no Jones Act qualified installation vessels.

Thus, Americans are left with the unappetizing choice of using the feeder barge approach at heightened risk or paying vast sums to construct a Jones Act-compliant installation vessel—a process that takes years to complete assuming an available shipyard can even be found. It’s just another one of the many ways the law places Americans at a competitive disadvantage. 

For more about the added hassles, risks, and costs imposed by the Jones Act on the offshore wind sector, please see this November 2020 blog post.