Offshore wind Jones Act study releasedNews // November 6, 2017
Charlie Papavizas, a partner at Winston Strawn in the US, reports that on 2 November 2017, a study entitled 'US Jones Act Compliant Offshore Wind Turbine Installation Vessel Study'was released. The study was prepared for state government energy authorities in Massachusetts, New York, and Rhode Island.
The Jones Act restricts the transportation of merchandise between 'points in the United States' to US-flag vessels built in the US. Related laws restrict the transportation of passengers between US points and towing and dredging in US waters.
Mr Papavizas said the Jones Act has been interpreted to extend to offshore installations, such as oil and gas drilling rigs, provided that they are permanently or temporarily attached to the US outer continental shelf. The study assumes that offshore renewable energy installations, such as an offshore wind tower, would also be covered by the Jones Act. The law that has been interpreted to extend the Jones Act offshore to oil and gas activity - the Outer Continental Shelf Lands Act as amended - does not clearly apply to any activity other than the extraction of natural resources.
The study notes that a vessel that installs tower and turbine components offshore that plays no part in the transportation of those components from the US can be a foreign-flag vessel. The picture on the cover of the study of a foreign-flag jack up installation vessel installing tower components off the coast of Block Island, Rhode Island is a good example of this principle in action.
"Should, however, there be sufficient offshore wind farm installation volume in the US to support a Jones Act qualified purpose built installation vessel, the study estimates a cost of US$222 million with a construction time of approximately 34 months," Mr Papavizas said of the study.
The study finds that to a achieve a reasonable combination of day rates and an internal rate of return of 10 per cent, at least 10 years of US offshore windfarm installation work would be needed installing approximately 3,500 to 4,000 MW of offshore wind capacity.
The study admits that this would require “a group of states and developers [to] coordinate on an identified pipeline of projects.”
A different approach would be to build purpose-built Jones Act qualified jack up feeder vessels. If offshore windfarm installations are considered 'points in the United States' under the Jones Act, any transportation of windfarm components from the US to those points would have to be in US-built Jones Act-qualified vessels.
Mr Papavizas said the study estimates the cost of a purpose-built feeder vessel to be US$87 million with a construction time of 25 months, and notes that, “for maximum efficiency, two or more feeder barges could be employed depending on project requirements.”