Offshore Wind Energy — Rich With Opportunity, For Oil Giants And Utilities Alike

Source: By Ken Silverstein, Forbes • Posted: Monday, January 24, 2022


Offshore wind energy is an untapped resource in the United States. But it is now being uplifted — the product of favorable policies by the Biden Administration and the desire by some producers to start building projects. To that end, the U.S. Department of Interior has Okayed New York’s first offshore wind farm — a project by Ørsted Offshore North America and Eversource Energy.

The two enterprises are entering the construction phase for South Fork Wind now that they have received the proper permits — a deal that will begin operations in 2023 and that could be a harbinger of things to come. Indeed, the federal government will auction such offshore wind leases in the “New York Bight” area, which is off the coasts of New York and New Jersey. Producers would have the right to generate 7,000 megawatts of electricity that would require as many as 700 turbines and provide power to 2 million residents.

“As New York’s first offshore wind farm, South Fork Wind is already contributing to a new statewide and U.S. manufacturing era and maritime industry, including good-paying union jobs …,” says David Hardy, chief executive of Ørsted — a view echoed by its partner Eversource Energy, which says the project will serve to “fight climate change.” The wind farm will supply power to 70,000 homes.

President Biden has previously announced plans to provide 30,000 megawatts of offshore wind energy by 2030. And that would create 77,000 jobs. While high winds guarantee a constant power source, the electricity still needs to get from the ocean’s deep waters to shore before connecting with land-based transmission networks. It’s expensive. But the bipartisan infrastructure bill that just passed establishes a Build a Better Grid Initiative that would oversee such development.

The just-announced auction will happen on February 23. In a press call last week, Interior Secretary Deb Haaland said that her agency expects to have six more leases by 2025. Those sales would occur off the coasts of Maine and New York and North and South Carolina. California, Oregon, and the Gulf States are also in the mix. Beyond offshore wind, Haaland said her office is working on expanding renewable energy projects on other public lands. The goal is to add 25,000 megawatts of wind and solar power by 2025 to meet the White House’s climate goal: carbon neutrality by 2050.

Rough Waters

The American Clean Power Association expects offshore leases to support 23,000 to 40,000 megawatts of wind development. That would create 128,000 jobs. Wood MacKenzie says that offshore wind energy’s global prospects are also bright and will attract $211 billion by 2025.

The United States may be on the cusp of something big. In 2016, a 30-megawatt wind farm with just seven turbines started up off the shores of Rhode Island. New Jersey and Massachusetts are planning for more.

“Harnessing America’s offshore wind resources will create tens of thousands of highly-skilled jobs, revitalize coastal communities, and deliver vast amounts of reliable clean energy to our biggest population centers,” says Heather Zichal, chief executive of the clean power group.

To be sure, offshore wind energy has stumbled out of the gate in this country: Cape Wind, which would have been built off the Massachusetts coast, pulled the plug after years of regulatory hassles. NRG Energy, meantime, has indefinitely delayed its wind deal off the Delaware coast. And Spanish wind developer Siemens Gamesa has also suspended its plans to build off the Virginia coastline.

The big thing is the expense: land-based wind facilities cost at least 50% less to build than offshore wind units. That is because developers must build under-seas cables before hooking those up with land-based transmission wires. Concerns also abound over the impact such development would have on marine life and the migratory patterns of whales.

But it is working in Europe. Scotland, for example, just received 74 applications from wind developers to potentially build wind farms off its coast. Seventeen of those made the first cut. As much as 25,000 megawatts could get built. Some winning applicants are BP Alternative Energy Investments, SSE Renewables, ScottishPower Renewables, and Shell New Energies, and Vattenfall.

“Just a couple of months after hosting COP26, we’ve now taken a major step towards powering our future economy with renewable electricity,” says Simon Hodge, chief executive of Crown Estate Scotland. “The variety and scale of the projects that will progress onto the next stages shows both the remarkable progress of the offshore wind sector, and a clear sign that Scotland is set to be a major hub for the further development of this technology in the years to come.”

Europe has a total of 25,000 megawatts of offshore wind energy. That equates to 5,400 grid-connected turbines.

The big question is whether the United States can have similar success. If it can solve the transmission roadblock, the answer is a “yes” — something to which the Biden Administration is committed. Moreover, the oil industry has expertise operating in oceans, and it could team up with willing utilities and wind developers. Therefore, it could be a win-win proposition, especially because areas off New England and the mid-Atlantic are rich with opportunity.