Unraveling the US offshore wind vessel financing puzzle

TLDR: The US offshore wind industry is facing financing challenges for vessel construction due to the discontinuity between short-term employment contracts and long-term financing arrangements. While the industry had hoped to bring online 30 GW of power by 2030, recent cancellations of high-profile projects have brought a sense of realism to the sector. Although some projects are still underway and new projects have been approved, vessel financing remains a major hurdle. Vessels need to be built on balance sheet financing, meaning that financing does not depend on full payout from a lengthy charter. Access to financing is limited, and lenders are nervous due to uncertainty in the market. Bank lenders and private equity financiers are looking at the offshore wind sector, but federal government backing is necessary for financing Jones Act compliant vessels. The US legislative branch is currently focused on other issues, which makes securing funding for offshore wind projects challenging. Increased funding for loan guarantee programs could help support the industry.