It’s a good time to enter the offshore wind supply chain.
State demand for offshore wind energy has never been higher, the federal government continues to identify and auction new sites, and projects are being installed and producing power off the East Coast.
The offshore wind industry has arrived in the U.S., and the opportunity is ripe to be part of the supply chain today, tomorrow, and into the future. But even with ample opportunities, getting involved in offshore wind — and especially securing contracts — can be a long and arduous process. And many companies may not be aware they already have the skills and tools to engage in this growing opportunity.
As Jonathan Salzman, Supply Chain Manager for Ocean Winds, says: The supply chain already exists. It’s just a matter of getting companies ready.
“There is already a supply chain for offshore wind in the U.S.,” noted Salzman. “There are suppliers across the country providing technical services and precision goods that have applications in offshore wind — they just aren’t working in the industry yet!”
Salzman is one of the speakers who will participate in What’s New & Spinning, a series of interviews with developers taking place at the 2024 International Partnering Forum (IPF), on April 22-25 in New Orleans. Global offshore wind developers will share project updates and offer insights into the supply chain and how suppliers can enter, engage, and participate in the offshore wind and ocean renewables industry.
Ocean Winds (OW), a leading international offshore wind company that develops, finances, builds, and operates offshore wind farms around the world, has a secured portfolio of approximately 16.6 GW of offshore wind gross capacity across seven countries in Europe, North America, and Asia. In the U.S., OW has three projects under development that could deliver roughly 6.1 GW of renewable energy.
To keep up with project requirements, OW relies on a deep and robust supply chain. Developers such as OW contract directly with a handful of large Tier 1 suppliers, who are then responsible for hiring local and regional suppliers to help fulfill project requirements.
We sat down with Mr. Salzman to help demystify for suppliers how they can enter the market, and how OW uses the local supply chain to support economic development in communities. Join us at IPF for more What’s New & Spinning insights to help your business better understand the offshore wind supply chain and procurement processes.
Oceantic Network: Describe your processes for identifying suppliers for your projects.
Jonathan Salzman: Ocean Winds phases solicitations for major package suppliers. These typically begin with a market “depth-check,” otherwise known as a Request for Information (RFI) in which we engage our Tier 1 suppliers to understand capabilities, approach to program delivery, and how they will engage local suppliers.
The RFI is followed by a more in-depth Request for Proposals (RFP) process, where we gather specific information on delivery, risk, and price from a shortened list of Tier 1s. This process includes iteration and technical and commercial clarification to reach the Best and Final Offer (BAFO) and finalize the agreement. These agreements then help establish a robust supply chain that supports investment decisions and project financing.
We encourage our Tiel 1 partners to think creatively about ways we can collaborate on solutions to identify, scale, and contract with local suppliers. Together, we develop local supply chain capacity over the longer-term because a rising tide floats all boats.
RFIs are managed by an OW technical lead who deeply understands the scope of work and operating environment. They are supported by a procurement team that gathers details about how Tier 1 suppliers will identify and engage subcontracted suppliers, track and report spend with local suppliers, and provide guidance to enhance long term relationships and delivery by local suppliers
RFI versus RFP: Request for Information (RFI) is an informal process for gathering preliminary information and exploring offerings about potential suppliers that typically happens prior to the start of the procurement process. Whereas a Request for Proposal (RFP) is a more formal process that solicits bids, requirements, solutions and costs from suppliers for a specific project. An RFP typically follows an RFI.
Oceantic: What are common errors you see companies make when seeking to work with a developer or get involved in a project?
Salzman: The biggest challenge I see is local suppliers trying to get in touch with us directly as your buyer. For most suppliers, we are your buyer’s buyer.
Offshore wind supply chains are complicated to disambiguate — especially who buys what, when, and for what reasons. Most suppliers will find better traction building relationships with Tier 1 suppliers. Deveoplers can also play a role as a facilitator between the local suppliers and those Tier 1 suppliers. The tough truth is that for most developers, those Tier 1 partners and local suppliers are still being evaluated and selected. With only a few major Tier 1 players, suppliers can concentrate their business development efforts on those that are most closely aligned with their strengths.
The good news for suppliers wanting to be in this industry is that there is ample opportunity for suppliers to build relationships with Tier 1 companies and get sharper on industry needs.
Oceantic: What advice would you give smaller companies as a first step when trying to work with a developer or one of their suppliers?
Salzman: My advice falls into 4 categories:
- Take the chance to get sharp: Familiarize yourself with project development timelines and be aware that these timelines do not always line up with news about big industry advancements. Big industry news breaks more often than big contracts are awarded, especially as the industry comes out of two plus years of stiff headwinds. A lot of exciting news for the industry is on the horizon, but most projects are still several years away from construction.
- Have patience: Most developers are still evaluating big Tier 1 suppliers and finalizing project designs. There is ample opportunity for suppliers to build relationships with Tier 1s and get sharper on industry needs. Offshore wind is here to stay in the U.S., and it will take some time to mature.
- Know what you don’t know: I encourage suppliers to spend time understanding project timelines. Don’t be afraid to ask developers and industry experts questions about it. We love to talk about more than just “When are you buying?” The best way to demonstrate you know offshore wind is to be curious and ask specific questions. Offshore wind is new to most of us in the U.S. Yet we are passionate about building this industry and love talking about it, especially with like-minded people at IPF.
- Ask “why local”?: Consider what work on developments will (or should!) be done locally, and if there is an opportunity to plug in. There’s a competitive advantage to being local especially since that is where a lot of the work will be performed most competitively, particularly for port construction or onshore work like transmission or grid interconnection. Similarly, there are key opportunities for local businesses that might not be obvious such as over-the-road logistics, personnel transport, quayside fuel deliveries, and more.
Interested companies should join the Network’s Supply Chain Connect. A resource that allows companies to publicly indicate their intensions and abilities to supply components and services for U.S. offshore wind projects. It also serves as a resource for companies looking to buy from and partner with other offshore wind firms.
Oceantic: How is risk evaluated and factored throughout a project’s procurement process?
Salzman: Risk is perceived differently by each player in our supply chain. Suppliers should ‘tune’ their pitch based on the perceptions of risk for those they are engaging with. For example, developers care about safety, quality, and deliverability and these are baseline requirements for project participation. Suppliers should consider the incremental value (and therefore risk reduction) they offer their buyer.
Oceantic: How do you engage with stakeholders throughout the supply chain?
Salzman: Supply chain stakeholders are a diverse group, spanning from local community organizations and business owners, all the way through organized labor, state leadership, some of the largest maritime operators in the world, and more.
We engage directly with many organizations operating at the community level who help us identify and engage with local suppliers. We also engage with our Tier 1 partners to support them to utilize local businesses and the resources made available by states to support them. Our team conducts outreach events and meet-the-buyer sessions, in which our technical teams meet one-on-one with local suppliers, giving feedback on capabilities and advice on where to go next. We understand that we may not be the direct buyer for many local suppliers, and therefore we can bring to bear to provide actionable feedback and connections for suppliers to break into the industry, rising the tide for all.
As a developer, we have the benefit of seeing across the field, and have a mandate to connect dots and facilitate the maturation of the American offshore wind supply chain. We are also able to apply the knowledge and lessons learned from OW’s international network of projects and supply chain experience to our work here in the emerging American offshore wind market.
Oceantic: Why is it beneficial for individuals and organizations across the offshore wind supply chain to attend the What’s New & Spinning (WN&S) sessions at IPF?
Salzman: IPF is the national conference for the offshore wind supply chain — and the expanding blue economy around it. WN&S is a unique and powerful opportunity for leaders from across the offshore wind industry to gather in one place to share insights, hear directly from developers, get a broad stroke understanding of their priorities, and catch-up face-to-face with folks from the industry. While our projects are huge, the offshore wind community is small and IPF creates the best forum to meet industry colleagues and make new connections.
Ocean Winds is excited to share our national and international expertise, discuss our projects, and engage with members of the offshore wind supply chain through the WN&S session. We look forward to continuing to build meaningful and productive connections across this growing industry.
About Ocean Winds
Ocean Winds is an international offshore wind company that is a 50/50 joint venture of EDP Renewables and ENGIE. OW develops, finances, builds, and operates offshore wind farms all around the world driven by its belief that offshore wind energy is an essential part of the global energy transition. OW currently has a secured portfolio of approximately16.6 GW of offshore wind gross capacity in various stages of operation (1.5 GW), construction (1.9 GW), or advanced development (13.2 GW) across seven countries in Europe, North America, and Asia. In the U.S., OW currently has three projects under development:
SouthCoast Wind is a fixed-bottom project that will be located off the New England coast and has the potential to generate about 2.4 GW of renewable energy.
Bluepoint Wind is a fixed-bottom project that will be located off the New Jersey and New York coasts and has the potential to generate about 1.7 GW of renewable energy.
Golden State Wind is a floating project that will be located off the central California coast and has the potential to generate about 2 GW of renewable energy.
