In today’s construction news, learn about how the Biden administration has set an ambitious goal to build new offshore wind farms, but the process is being slowed down and installation prices are rising due to a 100-year-old rule. On the other hand, the bad weather in January likely contributed to a decline in single-family home construction in the United States, but a rise in permits for new construction suggested that the sector might be about to rebound. Finally, due to winter storms and increased mortgage rates, US homebuilding fell precipitously in January, impeding efforts to address the housing shortfall.
Ways US Protectionism is Impeding the Nation’s Aspirations for Offshore Wind Farms
Original Source: How US protectionism is holding back the country’s offshore wind plans
In September 2023, turbine blades for the US’s first offshore wind farm left port aboard a barge for the Vineyard Wind 1 project off Massachusetts. These purpose-built vessels are widespread abroad and make the job much easier.
WTIVs are transport and construction rigs. WTIVs can install multiple massive turbines every trip with their large cranes, deployable legs, and dynamic positioning systems. Dozens of WTIVs sail the world. Why did Vineyard Wind 1 blades arrive via barge? This costly, wasteful workaround was required by the century-old Jones Act.
The Jones Act, also known as Section 27 of the Merchant Marine Act of 1920, requires American ships for commodities shipping. A new interpretation of the old legislation counts offshore turbines as US points. Unfortunately, the US has no WTIVs. The country could utilize a foreign WTIV to install and barges to deliver materials from shore to the work site, but that misses out on the primary benefit of using a multipurpose vessel.
Without proper equipment, frequent smaller-capacity barge excursions have added costs to the country’s offshore wind projects, which are already struggling financially. Ørsted, a Danish energy provider, canceled Ocean Wind 1 and 2 off the New Jersey coast due to shipping delays.
The Charybdis, the first Jones Act-compliant WTIV, is being built in Texas. Dominion Energy, the Charybdis’ owner, says labor restrictions have delayed its launch over a year, possibly into 2025.
In 2030, the Biden administration wants to build offshore wind turbines that can generate 30 gigawatts. More than 2,000 turbines. The National Renewable Energy Laboratory (NREL) of the U.S. Department of Energy recommends four to six WTIVs to reach this goal. As 2030 approaches, just the unfinished Charybdis remains.
The Jones Act is complicated. A vessel must be built in the US, flagged in the US, and owned and crewed by Americans to be compliant. U.S. shipyards have a monopoly, therefore they may charge exorbitant costs.
After completion, the 144-meter-long Charybdis will have approximately 5,000 square meters of main deck space and accommodate up to 119 people with cabins, mess halls, stores, a theater, gym, and medical. But WTIV costs have risen from $500 million to $625 million. Major South Korean shipyards could have built a similar vessel faster, cheaper, and with a stronger crane.
Colin Grabow, a research scholar at the libertarian Cato Institute, argues the Jones Act’s longevity is due to the fact that while it benefits just a few people and firms, many payers share its increased expenses, making it go unnoticed.
Since the Tariff Act of 1789, protectionist legislation have supported U.S. marine businesses, including the Jones Act. For wartime, the Jones Act ensured a supply of ships and mariners. Protecting against foreign competition would help, they said.
“Your average American has no idea that the Jones Act even exists,” Grabow argues. “It’s not life-changing for many people,” he says. “All Americans are hurt by the Jones Act.” Here, that means slowing the US’ wind power targets.
Grabow believes those most vociferous about the law—those who build, operate, or serve aboard compliance ships—want to maintain it.
A century-old shipping legislation isn’t the only reason offshore wind power is being slowly implemented. Abraham Silverman, a Columbia University renewable energy expert, believes many reasons sank New Jersey’s proposed Ocean Wind facilities.
Silverman claims that rising interest rates, inflation, and other macroeconomic factors exacerbated the vulnerability of New Jersey projects, increasing building costs after Ørsted secured financing.
Despite setbacks, US offshore wind power generation has huge promise. Fixed-bottom offshore wind farms may create 1,500 gigawatts, more than the US electric grid can currently generate, according to NREL.
The US can improve its offshore wind expansion. Matthew Shields, an NREL wind energy economics and technology expert, believes that’s where the focus should be right now.
“Whether we build 15 or 20 or 25 gigawatts of offshore wind by 2030, that probably doesn’t move the climate needle,” adds Shields. He argues it matters whether establishing those first few turbines sets the country poised to generate 100 or 200 gigawatts of offshore wind capacity by 2050. “I consider it a win if we resolve all issues and feel confident about our sustainable development moving forward.”
Unfortunately, the Jones Act causes certain offshore wind sector challenges today. Inefficiencies cost money and time, which is especially crucial in the push to carbon-neutrality.
US Single-family Home Sales Decline in January as More Permits are Issued
Original Source: US single-family housing starts fall in January; permits rise
In January, U.S. single-family homebuilding decreased due to inclement weather, but future construction permits rose, suggesting a rebound.
On Friday, the Commerce Department’s Census Bureau reported a 4.7% reduction in single-family housing starts to 1.004 million units. Single-family starts fell to 1.054 million units in December, up from 1.027 million.
In the month, extreme cold weather across the country made it hard to start new projects. Retail and manufacturing sales fell in January due to below-normal weather.
A severe lack of pre-owned homes supports homebuilding.
Midwest, heavily populated South, and West single-family homebuilding declined. It rose Northeast.
As February temperatures rose and the Federal Reserve is set to decrease interest rates in the first half of the year, a rebound is likely. A Thursday National Association of Home Builders survey found single-family builders’ confidence at an 18-month high in February.
The poll found fewer builders reducing home prices and using sales incentives to attract customers.
Last month, single-family home construction permits rose 1.6% to 1.015 million units.
Housing project starts with five or more units fell 35.8% to 314,000 in January.
Total housing starts fell 14.8% to 1.331 million in January. Reuters economists expected 1.460 million starts to remain unchanged. Last month, multi-family development permits fell 9.0% to 405,000 units. Last month, building permits fell 1.5% to 1.470 million units.
The Largest Decline in US Homebuilding since April 2020
Original Source: US homebuilding sees biggest drop since April 2020
Cold weather and increased mortgage rates slowed US homebuilding in January, worsening the housing shortfall.
On Friday, the Census Bureau reported a 14.8% drop in housing starts from the previous month. The monthly decline was largest since April 2020.
Last month’s seasonally adjusted annual rate of 1.331 million starts was below projections of 1.46 million and the smallest since August.
Building permits fell 1.5% from December’s revised number to 1.470 million seasonally adjusted annually in January.
Permits were 8.6% higher over last year.
National Association of Realtors chief economist Lawrence Yun said, “Housing starts collapsed in January.” Although more snow fell than expected in some areas, seasonally adjusted data suggests a continued housing deficit.
Summary of today’s construction news
To sum it up, the US has a variety of options for improving the efficiency of its offshore wind expansion. According to Matthew Shields, an engineer at NREL who specialises in the economics and technology of wind energy, that is also where the focus needs to be at this time. Unavoidably, the Jones Act has contributed to some of the problems facing the offshore wind sector. These inefficiencies cost money and, perhaps more crucially, time in the haste to achieve carbon neutrality. The United States has enormous potential for offshore wind power generation, notwithstanding the obstacles. According to NREL, the nation’s fixed-bottom offshore wind farms might potentially produce 1,500 gigawatts of electricity, which is more than the current capacity of the US electrical grid.
On the other hand, according to the poll, fewer builders were reporting lowering the price of their homes, and fewer were using sales incentives to entice customers. Last month, the number of permits issued for the future construction of single-family homes rose by 1.6% to 1.015 million units. In January, the number of housing projects starting with five units or more fell by 35.8%, amounting to 314,000 units.
Finally, as compared to the prior month, housing starts—a gauge of new home construction—dropped by 14.8%, according to Census Bureau statistics released on Friday. Since April 2020, this has been the largest monthly decline. Last month, starts decreased to a seasonally adjusted annual rate of 1.331 million, well below the 1.46 million forecast and the slowest rate since August.
