Offshore wind: Industry bullish, despite political turbulence

Source: Phil Taylor, E&E reporter • Posted: Thursday, October 11, 2012

VIRGINIA BEACH, Va. — Industry and state officials yesterday said they remain optimistic about the future of offshore wind in the United States, despite uncertainty surrounding the extension of key tax incentives and a lack of markets for developers to sell their power.

Jim Lanard, president of the Washington, D.C.-based Offshore Wind Development Coalition, told a gathering here of government, industry and environmental officials that he expects significant announcements soon in the windy mid-Atlantic, though he acknowledged progress has been slow.

“We’d all like to be further along, but I think we’re also very, very close,” Lanard told a room of several hundred at the Virginia Beach Convention Center, less than a mile from the beach. “I think we’re close to breaking out from talking and planning to building and operating, and I think we’ll see that in the near future.”

But Lanard acknowledged that pending leases and grants from the Interior and Energy departments have taken longer than expected and that attendance at this week’s conference is lower than at last year’s event in Baltimore.

Other attendees at the American Wind Energy Association’s annual offshore-wind conference said they fear that Congress’ inability to extend the investment tax credit for offshore wind has sent a chilling effect throughout the industry, threatening tens of thousands of potential jobs.

“We can’t keep pumping money into this industry if they’re just going to pull the plug on us any day,” said David Roncinske, an organizer for the United Brotherhood of Carpenters in Philadelphia, which represents dock workers, divers and pile drivers who stand to benefit from offshore wind. The conference’s exhibition floor appeared emptier than at previous events in Baltimore and Atlantic City, N.J., he said, noting the absence of wind manufacturing giant Siemens.

In addition, last night’s scheduled speech by Bureau of Ocean Energy Management Director Tommy Beaudreau was canceled late last week for what his agency said was a scheduling conflict. John Conger, assistant deputy undersecretary of defense, installations and environment, also canceled his scheduled speech.

Their absence contrasts with the relative star power of last year’s conference in Baltimore, which included keynote addresses from Interior Secretary Ken Salazar and Maryland Gov. Martin O’Malley (D).

Event organizers declined to comment on the absence here of Obama administration officials.

Some speculated that the administration is exercising caution in an election season in which federal support for renewable energy has become a political liability.

But Virginia is also a swing state whose coastline could benefit greatly from development of wind farms in federal waters. The Interior Department has exercised no such caution in dedicating new national monuments last month at Colorado’s Chimney Rock and this week in California in honor of labor leader Cesar Chavez, a move that drew Republican scorn but is sure to play favorably among Hispanic voters (Greenwire, Oct. 9).

Lanard said he expects Interior in the coming months to announce the first of multiple offshore lease sales in the mid-Atlantic off the shores of New Jersey, Maryland or Virginia. DOE is expected to soon announce the winner of up to $20 million to support the first of four innovative offshore wind installations, he said.

“The government cycle and our conferences are about three or four months off,” he said, brushing aside the notion that federal support for the industry is waning. “This is a lull right now. We always expected this to be a lull.”

He credited BOEM with revising the format for offshore auctions after his coalition warned initial proposals could be too complicated and costly for developers. Interior in August said it expects its first sale to occur this year, though it declined to say where.

“Once those lease notices are out there, you’re going to see developers really starting to compete, which is the first step in driving the price down of our products,” he said.

Lanard also lauded the Senate Finance Committee’s August passage on a 19-5 vote of legislation to extend and broaden the investment tax credit for offshore wind, a move that brightens prospects that the measure will pass the Senate when it returns from the campaign recess. He said he has a “fair degree of confidence” that if any significant pieces of legislation pass in the lame-duck session — either to extend expiring tax measures or avert spending sequestration — the ITC will pass with it.

Under the Senate bill, the credit would be extended one year from its current expiration in December. But projects would also qualify as long as they have started construction, a significant break from current rules that require projects to be placed into service to qualify (E&E Daily, Aug. 3).

Virginia Lt. Gov. Bill Bolling (R) said that the Port of Virginia offers a prime staging area for wind turbine assembly, installation and maintenance and that the Class 6 winds off its shores are second to none.

“We have tremendous infrastructure already in place,” he said, noting the port’s 50-foot channel, direct access to railroads and nearby high-voltage transmission.

“We want this to be the epicenter of this new and growing industry.”

While no offshore wind farms have been built in the United States, DOE estimates the Atlantic offers roughly 1 million megawatts of offshore wind power — about as much electricity as the entire country consumes. Offshore wind investments could reach 54,000 MW by 2030, the agency said.

According to the Offshore Wind Development Coalition, roughly 1,400 turbines and 53 offshore wind farms have been built in Europe. Spanish wind firm Iberdrola made waves this week by announcing plans to build a gargantuan 7,200 MW wind farm off the coast of England.

The long-delayed Cape Wind project off Massachusetts’ Cape Cod was long expected to become the first operating offshore project in the United States, though Deepwater Wind LLC said it hopes to start building a smaller offshore wind farm off Rhode Island by early 2014 (Greenwire, Oct. 4).

170K jobs possible in mid-Atlantic — study

Developing 7,000 MW of wind in the mid-Atlantic could create more than 170,000 jobs from New York to Virginia while spurring $19 billion in economic activity over the next decade, according to an industry-backed study released today from IHS Inc.

The study, conducted for transmission developer Atlantic Wind Connection, said such development could also increase federal, state and local revenues by $4.6 billion while powering 2 million homes.

AWC is proposing building a 300-mile high-voltage transmission line about a dozen miles off the Atlantic coast from New York to Virginia to connect several wind farms and reduce congestion.

“These findings highlight the unique opportunity our nation has for stimulating a brand new industry by developing this limitless, yet untapped, resource,” said Bob Mitchell, CEO of AWC, in a statement. “A viable offshore wind industry and the AWC backbone transmission line will provide the long-term energy solution to the region that not only delivers offshore wind energy efficiently, but will reduce the grid congestion that increases consumer electricity prices every year.”

The study found that new wind farms in the Atlantic would support 77,000 direct manufacturing jobs to support wind turbine foundations, hubs, blades and other parts. An additional 43,000 jobs would be created in the offshore wind supply chain, such as in the manufacturing of bolts. About 50,000 more jobs would be incidental to offshore wind development, such as in services like groceries and retail, the report says.

Mitchell also cited a University of Delaware study that found wind from Cape Cod, Mass., to Cape Hatteras, N.C., could generate an average of 330,000 MW of electricity, far above what is currently consumed in the region.