U.S. to Add 6GW of Offshore Wind by 2029: Stocks in Focus
Per the U.S. Energy Information Administration’s (EIA) latest Preliminary Monthly Electric Generator Inventory report, power plant developers and operators have revealed their plan to install more than 6 gigawatts (GW) of offshore wind capacity, at sites mostly along the U.S. eastern seaboard through 2029.
This projection comes in line with the further forward-looking expectation of reaching 30 GW of U.S. offshore wind capacity by 2030, as predicted by the American Clean Power (ACP) group. No doubt such solid projections should benefit stocks like AVANGRID AGR, Equinor EQNR and General Electric GE, which are expanding their offshore wind energy portfolio.
What’s Driving Offshore Wind Energy Demand?
Offshore wind speed is generally much stronger and more consistent when compared with onshore wind speed, a primary reason for the rising popularity of offshore wind installations across the globe. Strong winds are essential for efficiently operating the large wind blades that support the wind turbines.
In addition, offshore wind can provide power to populated areas in coastal regions where electricity demand is high.
While these have been major growth catalysts for offshore wind installation, a major drawback so far has been the relatively higher cost of installation for offshore wind energy plants when compared to onshore wind.
Per comprehensive analyses conducted by National Renewable Energy Laboratory (NREL) research, it was found that large wind power plants along with bigger turbine sizes can reduce a plant’s average total cost per megawatt-hour over its lifetime by more than 23% relative to the average fixed-bottom offshore wind power plant installed in 2019.
Thus, by adopting the aforementioned measure, one can do away with the cost headwind associated with offshore wind energy installation, thereby offering further impetus to its growing demand.
Stocks in Focus
Considering the above-mentioned developments, it is evident that stocks that are engaged in the development of offshore wind energy projects should benefit abundantly in the coming days. These stocks are:
AVANGRID: The company’s subsidiary, Avangrid Renewables, entered into a host community agreement with the Town of Barnstable for advancing its Park City Wind project, an 800-megawatt (MW) offshore wind project, in May 2022. The project will provide Avangrid Renewables with enough clean energy to provide clean electricity to nearly 400,000 homes per year and cut greenhouse gas emissions by nearly 1.1 million tons annually along with taking more than 200,000 cars off the road.
AVANGRID boasts a solid long-term earnings growth rate of 5.9%. The Zacks Consensus Estimate for AGR’s 2022 sales implies an improvement of 4.9% from the 2021 reported figure.
Equinor ASA: In March 2022, the company announced an agreement with BP plc to convert the South Brooklyn Marine Terminal complex in New York into a regional hub for offshore wind. The new facility will support the growing offshore wind projects on the U.S. East Coast, which include the Empire Wind and Beacon Wind projects. The projects are expected to generate a combined 3.3 gigawatts (GW) of energy.
Equinor boasts a solid long-term earnings growth rate of 5.7%. The Zacks Consensus Estimate for EQNR’s 2022 sales implies an improvement of 124% from the 2021 reported figure.
General Electric: The company successfully installed and commissioned the turbines for the first offshore wind farm in the United States, located off Block Island, just south of mainland Rhode Island. Its Haliade-X 12 MW wind turbines will be deployed on another two offshore wind farms in Maryland and New Jersey, with expected commission dates for these projects being 2022 and 2024.
General Electric boasts a solid long-term earnings growth rate of 7%. The Zacks Consensus Estimate for GE’s 2022 sales implies an improvement of 3.4% from the 2021 reported figure.
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