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The following commentary was written by Rebecca Karp. Karp is CEO of Karp Strategies, an NYC-based WBE urban planning firm whose renewable energy and offshore wind practice is dedicated to helping clean energy grow to scale on the East Coast and across the nation. See our commentary guidelines for more information.
The U.S. offshore wind industry has reached an inflection point. States up and down the East Coast are advancing transformative projects that will lay the foundation for a sustainable, 21st century energy system — one that ultimately extends across the Gulf Coast and West Coast. And a proactive federal administration, which just opened up large swaths of ocean space for more offshore wind leasing, is contributing to the acceleration of the industry’s growth.
Experts and industry insiders are rightfully hailing this critical mass of activity as a wellspring of economic development. But at this juncture we must talk about one of the least sexy yet most critical parts of the development process: procurement, and its ability to either continue a paradigm of exclusion, or to be an agent of change.
In any sector, we know that only a sliver of government contracts traditionally goes to minority- and women-owned businesses, or MWBEs. A recent study by the city of Boston found that these businesses received only 11% of relevant contract and procurement dollars. In New York, we saw evidence of similar disparities when 90% of the city’s post-COVID emergency contracts went to non-MWBEs.
At the dawn of a period of significant growth for offshore wind, we must ensure an industry-wide commitment to equitable procurement practices, diversity and MWBE hiring — to rebuilding our economy stronger with justice at the forefront.
We have seen glimpses of both the public and private sector taking steps in the right direction.
Maryland’s Offshore Wind Energy and Clean Energy Jobs acts both mandate a significant level of MWBE involvement from developers. New York requires at least 30% MWBE participation for projects, a standard the state’s Energy Research and Development Authority will meet as it advances a statewide program for the industry. Atlantic Shores Offshore Wind has committed to prioritizing local suppliers with a focus on MWBEs.
At the federal level, the White House has announced that economic development will be a key focus of its Environmental Justice Advisory Council — an encouraging step that hopefully portends a stronger national commitment to equitable procurement in clean energy.
Nonetheless, MWBEs are disproportionately excluded from the growing prosperity of the industry, for a variety of reasons.
For one thing, the bureaucracy of engaging in offshore wind is prohibitively intensive for many smaller MWBEs. These firms are getting boxed out of opportunities due to a litany of headaches — including an onerous local MWBE certification process, a procurement paradigm with European developers that often entails long payment lags, and an information gap resulting from homogeneous industry networks that systematically exclude MWBE business leaders.
On top of all that, MWBEs face greater difficulty getting financing. So while the offshore wind boom erupts, MWBEs are stuck focusing on staying afloat in a recession economy.
There are concrete policy actions we can take to mitigate these challenges. As a start, here’s what we need from government agencies and developers:
First, developers need to reform project procurement regulations to level the playing field for MWBEs. That means adapting the current one-size-fits-all framework to local regulations and operating norms in states like Massachusetts, New York and New Jersey, so developers are carrying the costs of the enormous legal fees involved with the typical documentation and procurement process. This helps developers too, as contract reviews will move faster with their vendors, and they will have a deeper bench of vendors to work with.
Similarly, both agencies and developers need to do their part in streamlining the overly bureaucratic certification process for MWBE firms. Application forms can be automated and moved online, and recognized state to state or granted from an industry association that all developers would recognize.
Second, we need both public and private players to do their part in engaging smaller firms to raise awareness around the opportunities for MWBEs. Our team at Karp Strategies is actively meeting with other MWBEs in the field to provide information about the opportunities available and to subcontract on our own projects. We are also meeting with prime firms to educate them on offshore wind opportunities and connect them with MWBEs.
Finally, we need to address broader systemic issues that hamper the success of MWBEs within the offshore wind industry just as they do across other sectors. We need financing solutions to ensure that these firms have access to credit and loans from banks or other financial institutions so that MWBEs can grow and thrive.
While the challenges are significant, there are many solutions at our disposal to build a more inclusive and equitable industry. With offshore wind primed for rapid growth, we have a unique opportunity at this pivotal moment to do just that.
Let’s be sure we hold the industry accountable.