Cost-cutting is focus of latest DOE offshore wind power grant

Source: Nathanael Massey, E&E reporter • Posted: Tuesday, December 18, 2012

The wind blowing off the coasts and lakeshores of the United States could power the country four times over, according to the Department of Energy. Yet to date, not a single offshore wind turbine has been built.

The problem, in a word, is cost — technology and installation costs remain prohibitively high, and the bar is set to rise further with the expiration of the production tax credit for wind energy at the end of this year.

A new funding package DOE announced last week will provide up to $168 million over the next four years to projects aimed at cutting those costs. The seven projects selected promise a range of strategies for bringing down the offshore wind bill, many of them centered on new or improved foundational designs.

“We all understand that generating electricity for wind offshore remains an extremely expensive proposition,” said Jim Norvelle, spokesman for Dominion Virginia Power. His company, which received one of the DOE grants, is “looking for a least-cost model to meet that problem,” he said.

“[Dominion] likes offshore wind, we believe it has a role to play in the future, but it has to be less expensive than it is today to be viable,” he added. “Structure, interconnection — all of that has to play into the finished product.”

Dominion plans to install two grid-connected 6-megawatt direct-drive turbines about 22 miles off the coast of Virginia Beach. Once operational, the pilot project will provide enough electricity to power 3,000 homes at peak demand.

The company believes it can save money through its “twisted jacket” foundations, which use less steel than conventional turbine towers, and by locating substations out near the turbines rather than on land.

Onshore wind takes a note from the oil patch

Rather than reinvent the wheel, many of the pilot projects seek to marry onshore turbine designs with technologies already proved in offshore oil extraction. Among them are floating buoy structures proposed by two of the seven projects.

“The floating buoy structure has been used for years by oil companies, and we have a prototype [floating wind farm] that’s been operating off the coast of Portugal for more than a year,” said Kevin Bannister, vice president of Principle Power Inc., a Seattle-based renewable energy firm that also received one of the DOE grants.

The floating buoy model offers some distinct advantages and opportunities for cost reduction, he said. Turbines can be deployed where the wind blows the hardest, regardless of the topography or depth of the seabed below them, he said.

“You get a better wind resource out over deep water than you do near the shore,” he said.

Offshore wind turbines can also be larger than their onshore counterparts, he added, generating greater return on investment.

Giving progress a push from behind

While progress in offshore wind has been gradually advancing, both in the United States and abroad, the DOE grant helps accelerate the timeline, said Lorry Wagner, president of Lake Erie Energy Development Corp.

“There’s no question that the grant is enabling,” he said. “Prior to receiving the grant, we were going along at one speed; after funding, we’ll be moving 10 times faster.”

Part of that acceleration comes from the funding itself, and part is a result of the grant’s narrow time frame, he said.

Recipients have been awarded an initial $4 million, with additional funding contingent on progress and congressional allocations.

With an eye to the midterm future, the projects are designed to lower costs to grid parity even without the PTC or another similar tax incentive, Wagner said. “If we’re building turbines now that are going to come online in 2016 and 2017, we can’t count on a policy that’s not permanent,” he said. “Of course, if there was some kind of tax credit available, we’d use it.”

Lowering the cost of both onshore and offshore wind has gained new urgency as the PTC for wind energy will expire Jan. 1 without congressional action. Another recent recipient of DOE offshore wind funding, Siemens Energy, announced that it would cut 37 percent of its wind energy workforce earlier this year due to the PTC’s expiration.