The Biden Administration has big plans for offshore wind. These names could benefit

Published Fri, Oct 15 202112:36 PM EDT

The Biden Administration announced steps this week toward the buildout of 30 gigawatts of offshore wind capacity by 2030, which could boost operations for companies ranging from blade manufacturers to utilities. Secretary of the Interior Deb Haaland said Wednesday that the Bureau of Ocean Energy Management will potentially hold up to seven new offshore lease sales by 2025 , targeting the Atlantic and Pacific Coastline, as well as the Gulf of Mexico. This is part of President Joe Biden's push to have a pollution-free power sector by 2035. The U.S. lags Europe and Asia in terms of offshore wind generation, and at present there's just 42 megawatts of operating capacity, according to the American Clean Power Association. This is spread over two sites — 30 megawatts come from the Block Island Wind Farm, with another 12 megawatts from the Coastal Virginia Offshore Wind. Heather Zichal, CEO at American Clean Power, said the 30 gigawatt goal is "ambitious but achievable." Regulatory hurdles remain, and there will be lengthy review processes once the federal waters have been identified to ensure they don't endanger wildlife or interfere with military operations. Ultimately, there's no guarantee that these wind farms will be built. Still, the goal represents the White House's commitment to developing renewable energy. For investors who can stomach the volatility of smaller areas of the market, there are many ways to play the trend. Broad wind exposure For broad exposure to wind development — both onshore and offshore — there's the Global X Wind Energy ETF and the First Trust Global Wind Energy ETF . The Global X fund has just $2.39 million in assets under management after launching on Sept. 8. The top holdings are Northland Power , Vestas Wind Systems , Orsted and China Longyuan . The First Trust fund launched in 2008 and has about $370 million in assets under management. The fund's prospectus states that 60% of its portfolio is devoted to pure-play wind companies, while the remaining 40% invests in companies that might also have other operations. The top holdings are the same as those in the Global X fund, although the weighting of each name differs between the two ETFs. Notable stock plays Two names involved in the manufacturing of parts for the turbines are Vestas and General Electric , both of which Citi rates at buy given exposure to the growing market. "With GE highlighting 50%+ market share in U.S. onshore wind, we think the company's strong market position and customer relationships should result in solid growth runway as domestic wind capacity additions build over the coming decade and beyond," the firm wrote in a recent note to clients. General Electric also makes offshore blades, including the Haliade-X, which is the most powerful offshore turbine currently on the market. Overall, the company intends to develop a roughly $3 billion offshore wind business by 2024, according to Citi. There's also Arizona-based TPI Composites , which manufactures wind blades. "Turbine blades are a key input within the wind industry's value chain, and TPI is a top player in the blade outsourcing trend," Raymond James said in a recent note to clients, although warned the company could face margin pressures. Then there's Arcosa , which manufactures wind towers, while Italy-based Prysmian makes cables that transport high-voltage electricity from the wind turbine and into the inland grid. France-based Eiffage is among the companies that manufactures foundations. Bernstein believes that the total addressable market for offshore wind could reach 4.7 terawatts by 2050. "Offshore wind prices have decreased significantly due to the move to competitive auctions, improving turbine technology and falling cost of capital," the firm said in a note to clients. "Valuations have dropped in 2021 across the board for renewable developers, wind OEMs and green hydrogen players. We believe that the valuation dip offers an excellent entry point into a sector with long-term structural growth," the firm added. Project developers include Orsted and Iberdrola . There are also utilities building out offshore wind capacity, including Dominion Energy , which developed the Coastal Virginia Offshore Wind project. Other utilities in the space include Eversource Energy and Avangrid . - CNBC's Michael Bloom contributed reporting.

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Secretary of the Interior Deb Haaland said Wednesday that the Bureau of Ocean Energy Management will potentially hold up to seven new offshore lease sales by 2025, targeting the Atlantic and Pacific Coastline, as well as the Gulf of Mexico. This is part of President Joe Biden's push to have a pollution-free power sector by 2035.