Governors' Wind Energy Coalition

Seeing a sharp decline in the cost of building wind turbines on land and growing comfort with the technology, the Department of Energy is shifting its money toward offshore wind farms.

DOE said in a funding announcement yesterday that it intends to give out $180 million over the next six years, including $20 million this year, to as many as four offshore wind projects that could help drive down the cost of offshore wind farms and reassure financiers about their value.

It is part of a strategy to shift research money away from a technology that is now the second-least expensive source of new energy, after natural gas. In its request to Congress for fiscal 2013, the agency says it wants to start “de-emphasizing” onshore wind, along with distributed fuel cells and conventional hydropower.

“We think that on-land wind has been established, and we’re concentrating on those technologies that can work in a marine environment,” Energy Secretary Steven Chu said yesterday on Capitol Hill, during a hearing on his agency’s budget. “It’s the research that we’re really pushing.”

Onshore wind development has boomed in recent years, thanks to falling prices and state laws that require utilities to get some of their electricity from renewable sources. Wind developers installed 6,810 megawatts of electric generating capacity in 2011, according to the American Wind Energy Association, and there are now more than 100 projects under construction to bring another 8,300 MW to the U.S. electric grid.

But all these turbines were built on solid ground.

Using current technology, electricity from a new offshore wind farm would cost 19 cents per kilowatt-hour, according to DOE. That’s about triple the cost of electricity from new natural gas plants and double the cost of power from onshore wind turbines.

And because an offshore wind farm has never been built in the United States, doubts about their real-world performance make capital for the projects more expensive, driving their total price of electricity above 25 cents per kilowatt-hour. DOE said its projects will try to clear up concerns about the ease of getting permits, installing the turbines and linking them to the power grid.

The goal is to bring the unsubsidized cost of offshore wind plants below 10 cents per kilowatt-hour by 2020, more closely rivaling the price of fossil fuels and onshore wind

DOE says the $180 million in funding is meant to help “install innovative offshore wind systems in U.S. waters in the most rapid and responsible manner possible,” as well as “expedite the development and deployment of innovative offshore wind energy systems.”

Some projects are already moving forward without federal funds, though their future remains uncertain.

Cape Wind, a planned project off the coast of Massachusetts that received the first federal permit for an offshore wind project, inked a deal last month in which the utility NStar agreed to buy a quarter of the wind farm’s electricity. The developers are looking for financing and say they want to begin construction next year (ClimateWire, Feb. 16).

To qualify for the first round of funding from DOE, developers will need a plan to complete their projects and begin sending electricity onto the power grid by the end of 2014. A second round of grants will go to projects that are on track for completion between 2015 and 2017.

Click here to read the funding announcement.