Administration looks offshore for wind energy boom

Source: By Josh Siegel, Washington Examiner • Posted: Wednesday, June 13, 2018

The Trump administration is “bullish” about offshore wind, working with governors in the Northeast to transform what was once a fringe and costly investment into America’s newest energy-producing industry.

“When the president said energy dominance, it was made without reference to a type of energy,” Interior Secretary Ryan Zinke told the Washington Examiner in an interview. “It was making sure as a country we are American energy first and that includes offshore wind. There is enormous opportunity, especially off the East Coast, for wind. I am very bullish.”

On a recent tour of coastal states, Zinke found “magnitudes” more interest in offshore wind than oil and natural gas drilling.

Facing widespread opposition from politicians in states fearful of oil spills along their tourist-drawing coasts, Zinke is likely to scale back a draft plan to open nearly all federal waters for drilling, which he says has attracted “modest interest at best.”

But the Atlantic Ocean is open for business for offshore wind, and developers are paying up, with the support of governors such as Republicans Charlie Baker of Massachusetts and Larry Hogan of Maryland, and Democrats Andrew Cuomo of New York and Gina Raimondo of Rhode Island.

“Market excitement is moving towards offshore wind,” Zinke said. “I haven’t seen this kind of enthusiasm from industry since the Bakken shale boom.”

As the cost of onshore renewables drops, offshore wind, which produces strong gusts for long periods of time, represents perhaps the biggest clean energy opportunity of them all.

“There is enough wind out there to generate all of the electricity needs on the East Coast,” said Stephanie McClellan, director of the special initiative on offshore wind at the University of Delaware. “You have the Saudi Arabia of offshore wind sitting there on the East Coast, waiting to be built and developed.”

Block Island, a small 30-megawatt wind farm off the Rhode Island coast that can power 17,000 homes, is the nation’s only current offshore project, but it is likely to have company soon.

Last month, Massachusetts and Rhode Island awarded a combined 1,200 megawatts of contracts to become the nation’s first commercial scale offshore wind complex, on waters leased by the federal government.

In Massachusetts, a group made up of a Danish investment firm and a Spanish utility plans to build an 800-megawatt wind farm off Martha’s Vineyard, enough to power a half million homes.

The leases come after the Interior Department’s Bureau of Ocean Energy Management (BOEM) in April requested input on which parts of the Atlantic Ocean offer strong opportunity for leasing.

Building on offshore wind auctions that began during the Obama administration, BOEM is engaged in 11 active commercial leases for offshore wind along the Atlantic Coast, from Massachusetts to North Carolina.

“We are seeing a lot of confidence throughout the offshore wind energy sector in the U.S. right now,” Walter Cruickshank, BOEM’s acting director, told the Washington Examiner. “There is a lot out there, but there is more to come.”

Zinke and Cruickshank acknowledge that states are leading on offshore wind, and the federal government is a willing partner.

All of the planned projects are targeted for federal waters, farther away from shores, meaning the federal government is the landowner and developers pay an annual lease to the Treasury Department, as well as an initial auction bid.

“The driver of this has been a lot of state legislatures are greening out their energy portfolios and are looking for the best resource to do that,” Zinke said. “It’s really a partnership between states and the federal government.”

Northeast states like New York and New Jersey, with huge populations along their coasts, are targeting offshore wind as a major component of their efforts to increase their renewable portfolios.

“It’s a large scale source of clean, reliable energy near our largest population centers and cities, and so having that amount of energy closest to load where you won’t lose a lot in transmission is critical to meeting the nation’s domestic energy goals,” said Nancy Sopko, director of offshore wind and federal legislative affairs at the American Wind Energy Association.

New England, which has the country’s highest electricity prices, is particularly suitable for offshore wind. Many of the region’s coal and nuclear plants are retiring, and there is a shortage of pipeline capacity to bring natural gas to the area. There is little land for wind turbines onshore, and the sun doesn’t shine much there to allow for much solar power.

“There is a need for energy in the Northeast that is fundamental to electricity markets today,” Jeff Grybowski, CEO of Deepwater Wind, the developer of the Block Island wind farm. “Offshore wind is more like a baseload power plant than other types of renewables because wind blows stronger and more consistently offshore. It is a more likely power source to replace some of the retiring coal and nuclear plants. We are well positioned to solving that problem.”

Deepwater Wind is developing three other projects in the U.S., including winning a bid in last month’s auction for a 400-megawatt wind farm off Rhode Island’s shore.

A 90-megawatt project in federal water off Long Island is slated to come online in 2022, Grybowski said, with the potential to produce three times as much power as the Block Island wind farm.

Deepwater is planning an an even bigger 120-megawatt project in federal water off the coast of Maryland, which has been approved by the state government and utility commission.

Grybowski said he purposely started small with Block Island, learning the lessons from the notorious failing of Cape Wind, a more than 400-megawatt offshore wind farm near Massachusetts that was never built.

Late last year, the company behind the wind project off Cape Cod gave up on the nearly two-decade fight to bring it to life, stymied by litigation, financial problems, and opposition from waterfront homeowners, fishermen, and others.

Block Island, which started producing wind in 2016, took eight years to develop, as Deepwater had to contend with state and federal regulatory hurdles.

“There were a lot of skeptics before Block Island that we could figure out how to do it in the U.S.,” Grybowski said. “It showed that you can actually get permits, financial entities can support a project like this, the utility can get comfortable buying energy from offshore wind, and stakeholders like fishermen can get to the point where they can live with offshore wind.”

Grybowski says he is now more comfortable pursuing bigger projects, as developers are working closer with the Interior Department and local fishing and shipping interests to minimize impact. Communities have resisted the projects for aesthetic reasons, viewing large turbines as eyesores.

“The most important decision you make on offshore wind is a real estate decision, where are you going to build it,” Grybowski said. “Picking the right location is a thing you can’t fix later. If you mess that up, the project will probably fail. That is the real challenge in our business. It’s not a construction challenge.”

Offshore wind has long struggled to gain traction in the U.S. to keep pace with Europe, especially northern countries such as Britain and Germany, where the energy source is mainstream, cheap and has benefited from subsidies.

Advocates say the U.S. can profit from being behind Europe, copying the technologies that have been successful, learning from mistakes, and entering the market when it’s more mature with lower cost.

“Being a newcomer in an emerging industry can actually work to our advantage,” Zinke said. “We are starting from a blank slate.”