Episode 130: David Hardy, Ørsted
Today's guest is David Hardy, CEO of Offshore NA at Ørsted, a Danish energy company.
As of 2020, the company was the world's largest developer of offshore wind power. Having served as President and COO of Offshore Wind US, David was recently appointed as CEO of Offshore NA, leading it's mission to expanding the offshore wind industry in North America. Before joining Ørsted, David was in the U.S. Navy and worked at General Electric in sales. David started working in wind energy and power in sales at Vestas in the U.S. and then at Senvion in Germany. After a year at Senvion, he was appointed Executive Director. Moving back to the U.S. in 2020, David found his next position at Ørsted where he was President & COO of Offshore Wind U.S. In late October 2020, David assumed the role of CEO of Offshore NA at Ørsted. He has dedicated most of career to wind energy and production in Europe but is eager to create a thriving industry in the U.S.
We talked about a lot in this episode. David walked me through his path to Ørsted and where he sees the company going. We chatted about how the renewables landscape has changed since he first started working in this area, and the path forwards. Then, we had a great discussion about offshore wind, its penetration to date, its future, and how these projects come about and get implemented, at a granular level.
Enjoy the show!
You can find me on Twitter @jjacobs22 (me), @mcjpod (podcast) or @mcjcollective (company). You can reach us via email at info@mcjcollective.com, where we encourage you to share your feedback on episodes and suggestions for future topics or guests.
In today's episode, we cover:
Ørsted's origins
David's background
Past, present, and future of renewables
US v. European wind markets
The U.S. hurdles to developing wind energy in the U.S.
Ørsted's prioritizations of projects
Who is buying the power & how is it being sold
The permitting and regulatory hurdles for offshore wind projects
The role of subsidies and incentives in project development
The request for proposal (RFP) process
Environmental considerations and objections to offshore wind
Links to topics discussed in this episode:
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Today's guest is David Hardy, CEO of Offshore North America at Ørsted. Ørsted's the world's leading offshore wind developer. They were also the first European offshore wind developer to enter the US market back in 2015. Since then, they've become the country's largest and most successful offshore wind developer with six projects representing nearly 3000 megawatts of energy development.
We have a great discussion in this episode about David's career, the 12 years that he spent working in renewables, what led him down that path and how the landscape has changed from when he first entered to today. We talk about offshore wind, why it matters, where it is in the deployment cycle, how that differs in the European market versus here in the US.
And then we get into Ørsted and David's new role, the task in front of them as they gear up to expand their presence in the US market, some of the barriers that are holding them and offshore wind back, and, and also, some of the things that could change to unlock faster progress. I learned a lot in this one and you probably will too. David Hardy, welcome to the show.
David Hardy: Hi, Jason. Thanks.
Jason Jacobs: I'm so excited to have you. This is kind of a weird one since I know you as a dad from school first and as an offshore wind executive second, but I, it's great to have you on the show as an offshore wind executive.
David Hardy: Yeah, thanks, agree. I, I remember when we first met, actually before I even met you and I, people asked me what I did when I first moved back to Boston or meeting friends at the park school. I, I heard people said, "Oh, you have to meet Jason Jacobs. You have to meet Jason Jacobs." So it's been a good couple of conversations with you. I'm glad now that we're doing this podcast.
Jason Jacobs: Yeah. Well, I used to see you more back when we were allowed to see people.
David Hardy: That's true. [Laughs].
Jason Jacobs: Before we get into it, I should say congrats on the recent promotion. I saw the news, was it last week or the week before?
David Hardy: Yeah, October 22nd. So coming on two weeks, but yeah, pretty recently. Thank you.
Jason Jacobs: Uh-huh. And so you were just promoted to be CEO of North America, correct?
David Hardy: CEO Offshore North America, yep, at Ørsted.
Jason Jacobs: Awesome. And maybe that's a good segue. So tell me a bit about Ørsted and then a bit about Offshore North America as well.
David Hardy: Sure. Ørsted, it used to be called Danish Oil and Natural Gas Company, DONG. It's not the most translatable name over in, in the US but it was DONG Energy. It was a big Danish utility basically. And in 2000, and well really in 1997, they started with the very first offshore wind farm. And in the last 10, 15 years, they've transitioned completely to become a green super major. So we're right now the world's largest offshore wind energy producer. We also do onshore wind solar and storage and have big ambitions in both. I'm responsible for the offshore wind business in North America.
Jason Jacobs: Great. And how long have you worked in offshore wind and, and how did that come about?
David Hardy: Yeah, I kind of started my career in the US Navy and then worked more in kind of high-tech industrial part of society. And in, in my mid thirties, I had a little midlife crisis and decided that I wanted to do something a little bit more meaningful and kind of networked into the wind industry at a wind turbine OEM called Vestas which happens to be, also be a Danish company.
So I've been in renewable energy for about 11 years. But my last job before this job, I was running a wind turbine company in Germany and we ended up selling that company to Siemens Gamesa, another large wind turbine manufacturer. And my wife and I wanted to move back to the US and we wanted to put some roots down in, in the Boston area, so we came back here without a job.
But I saw the US offshore wind business emerging and thought it would be an interesting place to come. And thankfully, I was able to secure a role with Ørsted starting in March of this year. And I came in as the president and COO of this business. And then two weeks ago was promoted to be the CEO running the whole show here.
Jason Jacobs: I feel like maybe the kid birthday party that you told me about this role was one of the last places I went before lockdown. And then it still feels like it's that same month of lockdown, but it's been like, I don't know, six or seven months, so...
David Hardy: Yeah, my son's birthday was February. We went in lock down in early March. So I think you're right. I hadn't even probably started the, the role yet. I probably was telling people that-
Jason Jacobs: No, not.
David Hardy: I was going to, but I, I bet I hadn't even started, so...
Jason Jacobs: Yeah. Oh, that's... gosh, that's crazy. And what a time to start a big new job as well.
David Hardy: Yeah. Even the old job was a big job and it's been interesting trying to do it remotely and onboard remotely, learn the business remotely, but it's been a good run, it's been good so far.
Jason Jacobs: And so in the 12 years that you've worked in renewables, I guess talk a bit about what the landscape was like when you entered renewables and maybe how it's evolved and what some of the differences are as we sit here in 2020.
David Hardy: Sure. So I came into onshore wind kind of in the 2000 and late 2009, 2010 time period. It was going already. 2008 had been a dip, still a little immature, I would say, but then 2010 through 16 when I was working in the US or 17, onshore wind really, really picked up and it was growing at a, at a good pace and globally also still growing and has been growing for a long time.
Solar came on during that time, especially commercial solar got much bigger. Solar was a little bit more distributed in the beginning, but now you've got big power plant size solar projects. So onshore wind and solar in the US have been, I would say, are fairly mature and pretty big business already. But offshore wind was started in Europe.
And there's about maybe 22 gigawatts of offshore wind in Europe now, about eight in Asia Pacific, primarily in Taiwan. In North America or in the US we have 42 megawatts. So when I say gigawatt, that's a thousand megawatts. So you have 22,000 megawatts in Europe, 8,000 in Europe and we have 42 here. And four years ago we had-
Jason Jacobs: And that's not 42,000, that's 42.
David Hardy: 42, yeah.
Jason Jacobs: Yeah.
David Hardy: 42 megawatts, yeah. It's a small project off the coast of Block Island called the Block Island Wind Farm, which of course Ørsted owns. And then there's a pilot project off the coast of Virginia that Ørsted built for Dominion Energy, who's the local utility down there. And we did that this year. Four months ago, there were 30 megawatts only. We added 12 this year by finishing that Dominion project. So it's very early stages for offshore wind in the US but at the same time, it's a huge, huge potential and, uh, a really exciting place to be, I think so.
Jason Jacobs: Why do you think the US has been lagging behind so significantly?
David Hardy: I think there's a couple of things. I think in Europe, you have a little bit more land density and you have population density on the land so it's hard to build big solar and wind farms. We've got a lot of big solar and wind farms, you know, out in Texas in the Midwest for wind and Southeast and Southwest for, for solar. And the price of onshore wind and solar has come down massively.
I mean, we're, if you're a Malcolm Gladwell fan, we're well past the tipping point on all renewables cost-effective, and anybody who's talking about coal still is really just, I don't know. I don't have, I don't even want to say, I mean, it's, we're way, way past that point. But offshore wind was still pretty expensive. It started to gain traction in Europe because of the land density issue. And some of the countries were subsidizing and paying a higher price to kind of get the technology going.
But then you start to see the price of offshore wind really coming down in Europe as well, and now offshore wind is at great parity in Europe. So basically the same price they're selling without a subsidy. Sometimes they're selling, you know, a, at a merchant price. When the US saw that, some of the state leadership, they saw the opportunity because where do we have a whole bunch of load along the East Coast, Philly, DC, New York, Boston, et cetera and where do we also have a land density problem in those same places?
So it's hard to get wind energy from Kansas to Boston, right? But if you're going to shut down nuclear power plants, shut down coal plants, it's not easy to get the low cost natural gas here because you have to pipe it. Then offshore wind starts to make sense because you can build big offshore wind farms, you got the space, you don't have the visual impact. And if the price is competitive, then it becomes a, an attractive solution. So you started to see state leaders try to create demand for offshore wind. And that, that's what's been going on in the last three, four years.
Jason Jacobs: And do these offshore wind projects vary greatly in size and scope, or is there kind of a standard package if you will, as it relates to size, components, things like that?
David Hardy: Yeah. So they started out smaller. The first couple projects, obviously the Block Island one was 30 megawatts, the first couple so-called commercial scale ones, we have two of them, one called South Fork Wind, which is off the coast of Martha's Vineyard powering into Long Island, it's about 130 megawatts. And then we have a project down in Maryland called Skipjack Wind that's 120 megawatts. So they're not too big.
But then you saw this big change happened where now the project sizes are really, I would say, 800 to 1200 megawatts each. And the states have created... First off, the federal government went out and did a bunch of serving of the continental shelf on the East Coast and designated some areas to be areas for development of offshore wind. And they auctioned off the leases. So there's now some federal leases that are owned by private companies.
We have the largest lease area, and then the states did the demand for energy. And so that created the mechanism that allowed the process to get going. So we've got a place to build them and we've got demand for the power. Massachusetts, New York, New Jersey, et cetera, ran these power auctions and different companies won. So now we've got off-take contracts, but we've actually, we still got to get through the development cycle, get the projects built and then operate them, et cetera. So that's the phase that we're in right now.
So there's actually been about 6 gigawatts, 6,000 megawatts of power that's been awarded. None of it's built yet, I'll get to why in a second. Ørsted has about half of that power off-take. So we're the world's largest offshore wind energy company, and we're also North America's largest offshore wind energy company, by whatever measure you want to make. We've got the only spinning assets, we've got the largest lease area and we've got the most off-take awarded. So...
Jason Jacobs: I am not a big company person, nor am I an offshore wind person, nor have I ever had a big executive role in a big company like you, but I'm trying to visualize. So if Ørsted is the largest in offshore wind globally and the largest in the US but the US is nascent and just getting going and you're brought in as the head of North America for offshore wind.
So essentially the biggest of what's around, but in this very nascent market that you're now charted with growing, where do you start? How do you think about prioritization in terms of what projects, how many projects, where the projects go, who the partners are? It just seems so such green field, but also just so, so daunting. How do you think about that?
David Hardy: It is a big company, we're probably like 5,000 people, but a, a market cap of €45 billion. We've got about something like 8 gigawatts of offshore wind spinning around the world right now, and a plan to build 15 gigawatts by 2025 and even more by 2030. So we've got the kind of resources and infrastructure and know-how to know how to build an offshore wind farm. I think we've built 29 of them primarily in, in Europe and off the UK, Denmark, Germany, Netherlands, and then, uh, in Taiwan as well.
What we need to figure out is how do we make it work here in the US. And like I said, we've got the demand now from the states. All of these states have created standards for a certain number of megawatts that they want to procure from offshore and they've basically laid out the schedule for the bids. And in some cases they've run those auctions and we've won.
But then you've got this whole development process that you have to do to actually bring this project forward. So you've got your federal permit as the turbines are sitting out in federal water, you've got state permits, you've got onshore substations, you've got, you know, all of your, uh, EPC activities, engineering, procurement construction activities, just making sure the business case works, et cetera, et cetera.
So we're at that stage now where we've got these five projects where we want off-take and we're in the development stage and just trying to make sure that what we bid, we can actually execute on. On top of all that, and I don't need to go on and on, but building offshore wind farm, it's tricky. We haven't done it in the US before, but it, Ørsted knows how to do it.
But what we are also tasked with is bringing this industry to bear here. And these states are paying a premium for offshore wind because they want the economic development that will come and the jobs that will come from this whole new industry. So, and we're not only building offshore wind farms, so we're developing local supply chains, we're training organized labor to participate in this industry, we're building the infrastructure at the peers, ships, you know, all kinds of stuff. So it's a pretty, there's a lot of things on my plate to be honest.
Jason Jacobs: And the, I'm not even sure if I'm gonna use the right lingo here, but the customer for these projects, is it the state, or is it the utilities? Who buys them and how do those mechanics work? And also does that vary widely from project to project, or is it more or less cookie cutter?
David Hardy: Right now the states are procuring the power and then they force the utilities to buy the power or else we get what's called an OREC, an, an offshore renewable energy credit. And then we sell the power in the spot market, but we're trued up kind of by this OREC. So if, if we sell the power for higher, the state keeps the difference, if we sell the power for lower, they pay us the difference.
So it's kind of like a contract for differences OREC concept. But R, OREC is fixed. It's a little more nuanced in certain markets because we've got some basis risks from the spot price that we're selling at to what the, or the OREC reference point is. But in general, it's regulated off-take, I would call it and the states are, are regulating it.
Jason Jacobs: Uh-huh. And when you look at the US landscape, how do you prioritize which states to invest in and spend your time?
David Hardy: Yeah, really good question. I mean, of course we've got our leases where they are, so that drives it a little bit. And then we have relationships with the different states. And some states are valuing some things and some states are, are valuing others. So Massachusetts, for example, has been very clear that they just want the lowest price offshore when they can get.
They don't want the impact to their rate payers. They don't want to pay a big premium for offshore wind. So when they run their auctions, it's very clear that they want a lean, mean set up. Some other states have seen it as a little bit of a combination of kind of green clean energy, but willing to pay maybe a little bit more of a premium for other benefits.
So if we're gonna bring local supply chains and jobs, I think they'll pay a little bit more for that. And so we're looking at what are our strengths, what's our competition, where are our leases and kind of what makes sense for us. And we're constantly reviewing the opportunities that we have to see where we should go.
Jason Jacobs: And when you think about the process as it stands today, I mean, obviously as a company of your scale, you've probably gotten sophisticated at navigating the process. But stepping outside of yourselves, is the process efficient as it stands, or is there a lot of artery clogging and unnecessary hoops to jump through for you guys or for any company to try to do business in this area?
David Hardy: Yeah, that's, [laughs] that's a real, really good question. I mean, we're really long on offshore wind in the US in the long-term and even in the medium term. But in the short term, it's pretty clunky right now because the federal permitting process has been really not efficient. So no large scale offshore wind farms have achieved their federal permit yet.
One of our competitors Vineyard Wind, as the name of the project, it's owned by, uh, CIP, Copenhagen Infrastructure Partners, and Avangrid, which is a division of Iberdrola, a big Spanish green energy company. They have the first project and they expect to get their federal permit later this year. That permit's been delayed about 18 months from when they expected to get it. And that's created a log jam for all the rest of us.
So we have permits that there's a two year NEPA process that you have to go through to get your federal permit. There's a process where the, you submit your application, which takes a couple of years to develop. You have to do all the surveys and it's called a COP application, construction and operation plan that goes through.
It's a stack of paper like three, four inches thick of how you're going to construct and how you're going to operate it, how it all works, the imp, environmental impacts, everything. And you submit that package and then they usually are supposed to take about six months to review the package for completeness.
And then they issue something called a notice of intent that they're going to start the process, the NEPA process. And then hopefully two years later, you come out of that process with your permit. And we've been waiting now for again, about 18 months from when we submitted our application on a few of our early projects to even get the NOI.
And we don't know when the NOI will be led, it's been delayed in part for maybe some good reason. The offshore wind industry really picked up at a pace faster than maybe the federal government anticipated and they wanted to pause these one-off permitting processes and do a cumulative impact study to see what the cumulative impact of a whole bunch of offshore wind would be.
And, you know, that was frustrating for us at first, but we got our head around that and thought that that probably did make sense, and it would maybe pave the road for smoother per project permit in the future. But now that cumulative impact study results basically came out in June of this year and we still haven't seen the federal permitting process restart for our projects or our competitor's projects. So the whole federal permitting process is not efficient.
And then it's natural that when you're starting up a new industry, you know, we're trying to figure out what we can do locally and what we can do nationally. You know, do we have local supply chain? What's the price premium, local labor, et cetera. And so there's a lot of work to be done there.
And then there's a whole bunch of other just logistical things like how do we get the power onshore? How do we get it integrated into the grid? All that's new, right? And these are big projects now where, like I said, we have 3000 megawatts of off-take that we need to get onshore and get integrated. So it's a lot of work to do on that side.
Jason Jacobs: And as you think about that permitting and policy landscape, how much are you thinking about in the context of a specific project and permitting versus actually broader government policy around whether it's mandates or subsidies or incentives or that kind of thing? Do those matter for a company like yours? And if so, how active are you and is Ørsted in helping to drive some of that stuff?
David Hardy: No, I think it's a great question. And we don't want to just come in and build a project and, and leave, right? I mean, this is our core business and we want to build sustainably and we want to leave behind a sustainable industry and grow it. And right now it's kind of Mid-Atlantic up to Northeast, but you could conceive of a lot more there, but also go into further South, the Gulf, West Coast, et cetera. So it could be a lot more to come.
So we're advocating both at the federal level for streamlining this federal permitting process, for example, also for some other, I don't want to say incentives, but in some cases, incentives, there's some tax incentives. There's also some things that would be helpful if we had great infrastructure or labor agreements at kind of a national level. So we're working through stuff like that.
And then at the state level, there's well, a lot of local discussions on policy. And then, you know, even at the local level we have to integrate our projects. We have to land cables, we have to build substations, et cetera. So we're looking at it in regards both on a bespoke project basis, but also on the broader, bigger landscape to enable the industry. And as the market leader, we kind of see that as one of our roles.
Jason Jacobs: And I have a similar question around the RFPs because when the states put out RFPs, then if the ones that you guys think are well aligned, that are worth going after, you go and respond, but is it mostly responsive to requests or is their time spent educating the states on why they should be putting forth more RFPs in this area? And if so, what are some of the ways that you and, or Ørsted go about raising that visibility and awareness for offshore wind and the benefits?
David Hardy: Yeah, again, and probably both, right? I mean, of course when a RFP is le... We're in the process of, we just responded to a big RFP in New York two weeks ago, and we've got one that we're going to respond to in early December for New Jersey. So we're all hands on. These are big complex RFP responses that require a lot of work. And we were talking about, Jason, like a 1000 megawatt project is like 5 billion in capital, right?
So it's when you put your bid in, you got to make sure the math is gonna of work when it's all said and done. And so, you know, it's quite a bit of work to respond to the RFPs, but at the same time we see it as a partnership. So we're spending a lot of time with NYSERDA in New York to help educate them on what the industry needs and, and how their RFP should be structured, et cetera, and the same with the other states.
And quite frankly, even, you know, at the federal level as well. And depending on this election outcome that we, we still don't know here on November 4th at almost 5:00 PM, obviously we're influencing both Congress, the administration, the presidential staff, et cetera, BOEM, the department of interior. So we're, we're active in all those spaces. It's quite a heavy stakeholder management role and company to be honest. So...
Jason Jacobs: And do these projects tend to be controversial when they come up? And if so, what are some examples of themes or hot buttons that people or entities or governments tend to push on?
David Hardy: Yeah, they're generally further offshore. So there's not a huge visual impact, but there still can be some. So we face some challenge down in Delaware and Maryland for visual impact. One of our projects down there, I think it's 17, 19 miles offshore or something like that. So it's, we're talking about a couple inches on the horizon. It's not a big, giant turbine, like a, a hundred yards off shore or something, but still people have some aversion.
So there's a little bit of that. There's some ENGOs that really want to make sure that we're not harming the environment in other ways with mammals, fish, et cetera. So, we, we try to take a lot of responsibility on that. Commercial fishermen are a vocal opponent, both the fishermen out in the area where they were their first kind of, and, you know, we're trying to be equal stewards of the sea and create solutions for them.
I can talk about some of the things that we've done with, for commercial fishermen, but also shell fishermen and certain markets where that's big, we could be impacting their livelihoods so they object. And then I would say a little bit on the onshore side with the cable landing sometimes there's some people who are opposed to it in, in the cable route and this onshore substation.
We try to do generally underground cabling, but it's a big cable, right? You're bringing a lot of power. So we do a horizontal drilling underground, bring the cable in and then come up and go to our substation. And we've had, you know, some, our very first project we're building right now, the South Fork project that's coming into East Hampton, the Hamptons, part of New York. It's not an industrial area, right? This is a people's resort, second homes. And so we've had quite a bit of work there to find the best solution for bringing the cable on and putting the substation somewhere, so.
Jason Jacobs: And so it, it sounds like maybe tangentially the general public, but the general public does not tend to be a core stakeholder. Is that a fair statement?
David Hardy: I think the general public is a, a core stakeholder. I mean, and in general, when we do a survey of Long Island people and say, do you support offshore wind? And we get an overwhelmingly high response or same thing with Delmarva Peninsula and Maryland and, and Delaware. But and then there'll be like these subgroups that are maybe a little more effected by the solution and the project.
And so we try to work with them as well. So we create community benefits agreements, and, you know, do other things to try to, to compensate people for the inconvenience or whatever. So same thing with the fishermen. You know, we proactively as an industry change the layout to be more spread out. So we have a one nautical mile by one nautical mile layout out at sea for the turbines up in the grid so that the fishermen can go through the wind farms and fish in the wind farms and they can navigate through there.
And compared to the rest of the world, that's much wider. So we're giving up the benefit of the lease area where we if could put the turbines in more densely, we could theoretically develop more and make more money out of that. But we're trying to find that balance. And we also do other things for fishermen, fishermen compensation, and other research grants, and a lot of other things that we do, so...
Jason Jacobs: And given that you're fairly new to the role and, and offshore wind is fairly new to the US or at least, or North America, or, or at least early on as we've been discussing, if you look out say one years and five years and 10 years, where do you hope that Ørsted is at those milestones in offshore wind in North America?
David Hardy: Yeah. One year, I mean, we're still continuing to build our team here. We're still hopefully working through these, with these so-called boundary conditions, we call it, which is these development stage stuff, getting our permits, getting our interconnect agreements, getting our real estate leases, et cetera, but having, you know, hopefully the federal permitting process is kick-started or having more confidence that that sustainable process maybe in one year we've won a few more bids, so we are, our pipeline's even bigger, which gives us more leverage and confidence to continue to make investments in the supply chain or convince our suppliers to come over and set up shop in the US.
Five years, we hopefully have three plus gigawatts built out there and we're developing and constructing more and, but we're at, we enter a stage of operating these, these wind farms. And 10 years out, I would hope that the industry by 2030, I hope that there's 20 gigawatts of, of offshore wind spinning in the US and the markets have expanded beyond just this Mid-Atlantic, Northeast. We've got other lease areas and we're looking at, at other options for offshore wind at either on the West Coast or South or wherever, so...
Jason Jacobs: And for any entrepreneurs out there that are thinking about building things from zero, are there innovations that would be helpful to enabling this offshore wind deployment to accelerate that don't exist today that you think outside companies might be able to help with?
David Hardy: We've actually got a, an innovation hub down in our Rhode Island office. We've got offices kind of spread throughout the markets that we work in. But we've created an innovation office where we're actually, you know, looking for entrepreneurial opportunities and helping enable them as well, either through applications or even in some cases, co-investing to try to bring some things to bear.
And so there's a lot of things out there around maybe some of the ways to do the, the site investigations. Right now we have vessels going out, mapping the ground, floor of the ocean. And we're talking about literally hundreds of square miles of ocean floor. There's things that can be done for mammal monitoring, bird monitoring, there's things that can be done for, on the O&M side, operation and maintenance side.
It's not like an onshore solar or wind farm where if something breaks you just hop in the truck and drive out there and you got your technician fixing it. It's a big event to put people on a ship, go out to the wind farm and fix the wind farm. So anything you can do, you know, there's a lot of stuff already, but anything you can do with drones for monitoring and things like that, there's a lot of people looking at things like that. So remote monitoring, intelligence around the turbines, again, a lot of stuff being done on the digitization side by the OEMs themselves, but there's plenty of opportunities still, I would say.
Jason Jacobs: And then same question on the policy side, whether it'd be at the federal level or at the state level, if you had a magic wand and you could make one change, or I guess a handful if you had more than one, do you, I mean, do you have anything top of mind that you know that you would do if given the power?
David Hardy: Yeah. I'm kind of a simple guy. Like I think the NEPA processes, it's a good process, right? We want to build sustainably. So we want to make sure that we've thought about things and that we were taking care of the environment, et cetera. So I'd like to just see that process work and have some confidence around that. Likewise, probably some continued investment in jobs training.
A big part of this is the jobs potential, the economic benefit of bringing this industry. It's obviously a, a green kind of left agenda, right? Climate change is real. We can produce clean power. We can produce it in big amounts. Offshore wind has a higher capacity factor than onshore wind or solar so it's a bit more of a base load like product can replace coal and nuclear.
But it's also like it's infrastructure. So it's big metal monopiles and big towers and blades and it, ships and ports, and... and so there's a whole huge green collar kind of agenda here. And to the extent that the federal government sees the benefit of, of investing in that workforce and investing in that supply chain, there really is a lot of potential economic benefit from offshore wind for both construction and manufacturing and operation and maintenance phases of the project.
Jason Jacobs: So at the government level, when there are different proposals, whether it's the Green New Deal or Biden's climate plan or things like that, does the government reach out to companies like Ørsted for input? How much open dialogue and collaboration is there and, and would we all benefit from more?
David Hardy: Yeah, I mean, you can always do more. We've got a pretty large external affairs and government affairs organization. You can imagine it is at this stage in its maturity, very much a public private kind of partnership. More of the states are investing, the federal government's investing and we're investing. You know, last week I had two conversations with two different congressmen.
I have a meeting on Friday with the senator. I've spent time with different governors already in my short time, state leaders, you know, state senators and house members. So we're definitely at the table, we've got pretty good access to those folks that are creating those policies. So both administrations and in Congress.
And again, we're, kind of goes without saying that we're leaning one way on kind of the election outcome, but we really don't think that offshore wind is a partisan industry. Like we really think that it should appeal to the Republicans and the Trump administration as well, if for nothing else, the economic benefits of the industry, so...
Jason Jacobs: And if there are hearts and minds to be one as it relates to offshore wind versus some of the other choices that might be available, whether it's onshore wind or solar or nuclear, or, I mean, I guess even, you know, coal or natural gas, whatever, does that lie at the state level or does that lie with the utilities? You know, is it kind of across the board? And I guess kind of a, a related question is just how would you describe the atmosphere in some of these adjacent areas? Is it cutthroat and competitive or people more are trying to pick each other up across the industry?
David Hardy: It's a good question. I think people are kind of looking out for their own. I mean, we don't really see ourselves competing so much with onshore wind and solar because you can't build onshore wind and solar in a big way in Massachusetts, Rhode Island, New Jersey. You can do a little, but you can't do a lot.
Of course, the entrenched guys are trying to hold onto their livelihood, which makes sense. But in general, these states that where offshore wind is going are, lean a little blue anyway. So I think in general, the, the hearts and minds are there. What's interesting is that what we're trying to explain to everyone is that the oil and gas companies on the Gulf states, you know, they're a natural partner for offshore wind.
And you see, I don't know if you saw this, but shells in offshore wind, BP just made over a billion dollar investment in US offshore wind, and one of our competitor's sub portfolio. So you see the oil and gas majors coming in, but also the oil and gas suppliers, you know, the people who build offshore drilling rigs, the same type of people that could build offshore substation or wind farms.
And likewise, the vessels, those are being made. We have like specialized vessels for turbine erection, for example, and you have the Jones Act compliance rule, which means that you can't move anything from one US port to another US port, unless it's a US flag vessel. And we have no Jones Act compliant vessels for turbine installation right now.
And so, you know, as this industry gets going, you need to build one or two of those vessels. There are half a billion dollars each to build. So there's a whole bunch of jobs down in Mississippi and Florida, red states for, in Texas, for Louisiana, for, for ship builders, for example. You have steel coming from the Midwest, you have engines for the boats coming from Illinois, you have a cable supplier down in South Carolina. So this could translate back into a whole bunch of economic development, not just for the folks, you know, off the coast of X building this wind farm, but for the supply chain it can go deep into the whole US, uh, ecosystems.
Jason Jacobs: Great. Yeah. I don't know if I have too many other questions, I guess the one last one is just, can you describe one of these offshore wind farms, if that's the right word? I, I mean, are these actually tethered to the ocean floor? Or, I mean, I know you said that there's, you know, kind of a mile and, and that there's a bunch of space in between for the fishermen to navigate, but what do they look like and where are they?
David Hardy: Yeah, we should hop on a boat and go out to Block Island, Jason, and check out our little project out there. Those are six megawatt turbines, which is pretty big, bigger than any onshore turbine that you would find in Texas or anywhere. But the projects that we're talking about now, we're talking about building kind of 12, 14 megawatt individual turbine sizes, that size.
The hub height is 200 meters in the air, the rotor diameter's greater than 200 meters wide. So these are big machines sitting off the coast. Right now all the ones that we're talking about are, we call them, fixed bottom. So they have a, a monopile, so a big kind of, uh, foundation that you pile drive into the seabed, and then they have a transition piece and then a tower that goes up to then the cell and then the big blades.
And then, like I said, they're spread out pretty widely in, in the Northeast and even down the Mid-Atlantic it's 0.8 by 1. So it's still spread out. We have projects, there's a whole bunch of leases off the coast of Martha's Vineyard. So on the other side of Martha's Vineyard, kind of in between Long Island and Martha's Vineyard, but out to sea. So there'll be a, a quite a bit of big build-out out there.
Then there's a small lease area, it's not ours, in the kind of the mouth of New York. And then there's some lease areas going down the coast, of the coast of New Jersey, off the coast of Delaware, Maryland, et cetera, and then down into Virginia, North Carolina as well. Dominion Energy is building a big, huge project, 2.6 gigawatt project off the coast of Virginia. And then we expect projects to be built in North Carolina as well, so...
And again, they're all kind of sitting in that range of between 15 and 30 miles offshore, I would say, out in federal water. But, you know, right now there's not much out there. There's our five turbines in Block Island. Those are really close to the island sitting kind of in the bay. And then the two turbine project out in Virginia, it is out in federal water. So it's pretty far out, but it's a pilot ahead of their big project that they're going to build kind of in the 25, 26 time period, so...
Jason Jacobs: Amazing. Yeah. I would love to take you up on that at some point.
David Hardy: Yeah, yeah. We've still got some work to do to bring the cost down. I mean, I'll admit that right now, you, we still pay a little premium, but it'll come. My, I have a pretty conservative father-in-law who has a place on Cape Cod and he's like, "I love them. I just don't want to pay anything more for my electricity." But the prices will come down and you got a natural hedge. You know, we lock in the price basically for the whole period. So we're not dependent on any fuel source and this is going to happen. It's going to be huge.
Jason Jacobs: What do you think the biggest drivers are of that cost and any potential reduction in that cost looking forwards?
David Hardy: It's a combination of two things. It's technology advances, which you know is what drove the cost down in Europe and, and Asia, and it's supply chain advancements. So right now we're for sure paying a premium here because we don't have the supply chain developed and we're either having to ship stuff over or we're doing it at a premium because there's a setup cost over here to get things going.
But the technology is going to keep moving and it's, it's already moving at pace and then we just got to get the supply chain going. But the supply chain will come when we have market certainty. You know, it's just like everything else. So you're not going to convince a lot of people to build big factories over here unless they know that the federal permitting process is going to work and that there's going to be demand, you know, from the states or from whomever.
And over time, you know, we've done these corporate PPAs in other parts of the world. In Taiwan we're selling to a big semiconductor manufacturer, in Europe we've got some other off-take agreements in Germany and elsewhere with corporates that are bypassing the utilities. And we expect that to come here as well a, as the price gets a little more competitive with the market price, so...
Jason Jacobs: Huh. Yeah. And one of the things that I've found interesting is that there are corollaries. Like if you look at a negative emissions project that's doing one thing, well, you might then look at six other negative emissions projects that are doing wildly different things from each other, but there's a bunch of commonalities in the process, the certification, the transparency, the reporting, the, the offset mechanic, the price, like, and then same thing as it relates to the energy mix or PPAs or... So for me, who's kinda looking across these sayings, it's, it's fun to start to pick out some of those trends and then apply the learnings from one area as I evaluate others.
David Hardy: The other stacking for you, because you're, you know, I'm kind of a wind energy guy and in my silo, although I'm not, but you're looking at the broader climate. I mean, stuff starts to stack, right? So if you want electric vehicles or an electric heating, you need the electricity to be clean. But then when you go to, to different transport modes, shipping heavy trucking, planes, et cetera, you want green hydrogen. Again, you need the electrons that are doing the hydrolysis to create the green hydrogen to be green.
And so we start to think about, okay, how do we, we're producing a lot of green electrons, then what can we do with those? Well, we can sell them into the grid and get paid for them, or we can use them to do something else to make hydrogen, for example. We have pilot programs in, in Europe with green hydrogen, but we also have pilot programs with green ammonia.
Ammonia is used heavily for food production and as a fertilizer, but it's basically a by-product of fossil fuels. But you can create green ammonia with electricity and air and water and have green ammonia, for example. So there's a lot of places we can go when we get a lot of green electrons at a low price, right? It, it can really start to make a difference.
Jason Jacobs: Yeah. That's one of the most gratifying pieces of what I've been doing, is that my focus is 100% climate, but because we need to decarbonize every sector of our global economy in every region across the globe, i, it gives you a license to think about anything and go anywhere, which is daunting, but it's also really intellectually stimulating.
And then because you're doing that, you can find these hidden connections and these parallels and connect the dots and like put people together that should be talking or could learn things from each other or technologies that could assist each other or other things that normally wouldn't be made because that connective tissue doesn't typically go in those directions.
David Hardy: Yeah.
Jason Jacobs: Yeah.
David Hardy: Yeah. I appreciate your background, your entrepreneur background, tech background, and a lot of folks that I've listened to these podcasts come from that background. But you know, some of us big business guys, we can use your help too. We can use the ingenuity and creativity. You know, in our team, we're going to continue to be building out our team here. We've got a kind of a business development group that's looking at just next gen stuff and what do we need to do? And so as folks get excited about this opportunity to be a part of this big green offshore wind industry, um, open, doors open, so...
Jason Jacobs: Well, one final question is just for anyone listening to the show, who do you want to hear from? How can we help you?
David Hardy: I still think it's, and something I always say when I try to talk to people in a, with a broad background is that, you know, the consumer still matter. People still can drive behaviors of companies. And so if we decide that we are only going to buy shoes that are made sustainably, then we can put a lot of pressure on Nike. And then, you know, Nike then needs to react to maybe buy some offshore wind or, or whatever.
And, and that's maybe a super simple example, but we need that demand. We need those people that recognize that climate change is real to speak up about it and do something about it. But I'm also always looking for talent in kind of the commercial area. We've got a lot of complexity in setting up a supply chain and dealing with all the different stakeholders that we have.
So I think there's a lot of, uh, opportunity there on the project development side. And of course, with, with innovation and, and engineering that we're a developer, so a lot of that innovation and engineering is happening within our supply chain, I would say, but we do a lot ourselves as well. And the integration of all the different pieces and parts, there's opportunity, so... Though I don't know, maybe that's not a direct enough answer, but anybody who's got a good idea wants to pitch me something I'm, I'm open, so...
Jason Jacobs: Great. And anything I didn't ask that you wish I did, or any parting words for listeners?
David Hardy: No. I just appreciate the opportunity to join you, Jason. And I hope people see that this is coming. It's long cycle, it's big infrastructure, so it's not going to be tomorrow, but we're expecting within a year, 18 months, we're starting the construction of it and, and by 23, 24 have quite a bit of spinning assets out, out at sea. So it's going to be pretty fun time to look back and see how much progress we make, so...
Jason Jacobs: I'm really looking forward to watching it evolve. And I can't thank you enough for making the time to come on the show. And it was a lot of fun. I learned a lot as well. Thank you.
David Hardy: All right. Great. Thanks Jason.
Jason Jacobs: Hey everyone, Jason here. Thanks again for joining me on My Climate Journey. If you'd like to learn more about the journey, you can visit us at myclimatejourney.co. Note that is .co, not .com. Someday we'll get the.com, but right now, .co. You can also find me on Twitter at Jjacobs22, where I would encourage you to share your feedback on the episode or suggestions for future guests you'd like to hear. And before I let you go, if you enjoyed the show, please share an episode with a friend or consider leaving a review on iTunes. The lawyers made me say that. Thank you.
