Eneti Shelves Plans for Jones Act-Compliant Offshore Wind Turbine Installation Vessel

Offshore wind turbine installation vessel (WTIV) company Eneti Inc. says it has “discontinued discussions” with a U.S. shipyard for the construction of a Jones Act-compliant WTIV.

Eneti currently has orders for two WTIVs with South Korea’s Daewoo Shipbuilding and Marine Engineering (DSME) and, since last year, has been in planning stages, including advanced discussions with an undisclosed U.S. shipyard, for the construction of a Jones Act-compliant offshore wind vessel as the Biden Administration looks to rapidly expand the United States’ offshore wind energy capacity to 30GW by 2030.

Led by Chairman and CEO Emanuele A Lauro, Eneti transitioned to the renewables sector last year after winding down its dry bulk business, under its former name Scorpio Bulkers, beginning in 2020. In addition to the two newbuilds, the company in August 2021 acquired UK-based Seajacks and its fleet of five WTIVs, instantly making it a leading owner and operator in the WTIV sector.

Although plans for a Jones Act compliant WTIV appear to be shelved for now, Eneti still has its sights set on the nascent U.S. wind market as more projects are finalized.

“We believe the US Market for offshore wind will offer significant opportunities for the company in the future, but right now we are focused on delivering on our existing commitments and deriving value from our existing fleet,” said Lauro.

Although recent Customs and Border Protection rulings have been in favor of upholding the Jones Act’s role in the development of domestic offshore wind projects, the rulings do not prohibit all foreign-flagged vessels from participating in renewable energy activities on the U.S. outer continental shelf. According to a 2020 U.S. Government Accountability Office (GAO) study, offshore wind developers in the U.S. have a second option for complying with the Jones Act, which includes using a foreign-flag WTIV and Jones Act-compliant feeder vessels, which would carry wind components from U.S. ports to the WTIV for installation in compliance with the maritime law.

Currently there is only one Jones Act WTIV in the pipeline, which is under construction for Dominion Energy with delivery planned in late 2023 from the Keppel AmFELS shipyard in Brownsville, Texas.

Due to the lack of capacity, the foreign-flag option has emerged as the preferred option by some developers. Vineyard Wind, for example, has opted to use a foreign-flagged WTIV from Belgium’s DEME Offshore and Jones Act-compliant Foss Maritime feeder vessels in the construction of the Vineyard Wind farm off the coast of Martha’s Vineyard.

Jones Act WTIVs also come with additional costs. Eneti’s said its second WTIV on order at DSME is priced at $326 million, while Dominion’s Jones Act WTIV has been estimated to be about $500 million, if not more.

Separately, Eneti has also announced the signing of four contracts with customers in northwest Europe, for between 189 to 240 days of employment for its NG2500-class vessels, that will generate between approximately $11.6 million to $14.3 million of revenue in 2022.

As announced in December, the Seajacks vessel Seajacks Scylla has also signed a contract with Van Oord for employment in Europe in 2023. The firm charter duration of the contract will generate approximately $60.0 million of revenue from the first quarter through the fourth quarter of 2023.

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