Offshore wind advocates try to broaden debate beyond straight economics 

Source: By Michael Copley, SNL • Posted: Monday, October 5, 2015

After what one market participant described as a “tortuously” slow start, there are now more than 15,500 MW of offshore wind projects in various stages of development in the U.S., and federal regulators have leased enough ocean acreage to support the construction of projects totaling more than 5,500 MW, the U.S. Department of Energy said Sept. 29.

The data was included in the department’s 2014-2015 Offshore Wind Technologies Market Report, which was released on the first day of the American Wind Energy Association’s annual Offshore WINDPOWER conference in Baltimore. Of the 15,650 MW of projects in development, 3,305 MW have announced commercial operation dates by 2020, the department said.

“We believe that offshore [wind] has a significant role to play” in the country’s energy future, Jose Zayas, director of the DOE’s Wind and Water Power Technologies Office, said at the start of the conference. In March, the department contemplated development of 22,000 MW of offshore wind power capacity by 2030 and 86,000 MW by 2050.

The U.S. is still at the starting line, however, with construction underway on the country’s first commercial project — the 30-MW Block Island facility offshore Rhode Island. After that, the industry’s next best chance to build turbines in the ocean likely will come from a handful of small demonstration-scale projects that the Energy Department is supporting.

But big questions are looming over the industry, including the fate of federal tax incentives and state policies designed to drive demand for offshore wind power and support construction.

Advocates are responding by honing their pitch.

“We believe … that we have primarily been focusing on economics, which, of course, are important, because all of us at the end of the day have to pay our utility bill, … but we haven’t talked about all of the attributes that wind has within its portfolio, and they are significant,” Zayas said. “You’re talking about large savings of greenhouse gas and other particulate. The story of wind is incredibly powerful. I would argue that wind, if not the most, is one of the most powerful options … that the nation has for its [energy] portfolio.”

AWEA CEO Tom Kiernan told conference attendees to talk up the jobs he said wind development delivers; benefits around fuel diversity, particularly in the northeastern U.S.; price suppression in energy markets; the ability of offshore wind power to line up with afternoon spikes in demand, particularly during summer months; and the role he said the technology could play easing congestion on the electric grid.

It is “time to really articulate in a quantitative way the benefits” of wind power in the context of a “comprehensive economic discussion,” Zayas said.

“We have to look at offshore wind as a viable option for that diverse portfolio,” Abigail Ross Hopper, director of the U.S. Bureau of Ocean Energy Management, said at the conference.

Attempts to move energy debates beyond straight economic analyses, which do not necessarily benefit a fledgling industry with high up-front costs like offshore wind, come at a time when some lawmakers, particularly Republicans, are rejecting the idea that the government should consider the social cost of carbon dioxide emissions in environmental reviews. At the same time, Republicans in the House of Representatives so far have resisted efforts to extend renewable energy tax breaks.

“We do have strong bipartisan support in the House and Senate; admittedly, obviously, a little bit less on the House side but such strong leadership on the Senate side,” Kiernan told reporters at the conference, referring to a July vote in the Senate Finance Committee to restore and extend the renewable energy production tax credit as part of a broader tax-extenders package.

“So while there’s obviously administration transition in a year-plus, I think the support that we have on Capitol Hill is significant and enduring,” Kiernan added.

Challenges remain at the state level, as well. The federal government plans to auction off nearly 344,000 acres offshore New Jersey in a competitive lease sale in November, but New Jersey regulators have not yet finalized a financial support mechanism known as Offshore Wind Renewable Energy Certificates, or ORECs, Hopper said. Without final regulations in place, offshore wind developers in 2014 urged the government to delay an auction, saying problems building projects early on could hobble the state’s chances of growing a robust industry.

“Aligning state policy and federal lease timetables is not a new challenge; it’s something that on the state side I was challenged by, and I remain challenged by it,” said Hopper, who previously served as director of the Maryland Energy Administration. “I think showing leadership on the federal side to move forward, I’m hopeful, will encourage regulators to move forward on their side.”