U.S. offshore wind industry feels momentum building as steel hits the water
Backers of the U.S. offshore wind industry are hoping to build on recent momentum to crack the major financial and regulatory roadblocks that still remain before they can catch up with their thriving European counterparts.
The image of a steel foundation being lowered into the ocean off the coast of Rhode Island this summer has become a sign of hope for the industry. Due next year, the small offshore wind farm developed by Deepwater Wind will generate 30 megawatts — peanuts compared with the more than 10 gigawatts already installed in Europe (ClimateWire, Aug. 11). The Block Island Wind Farm will be the first in the United States.
“I think having something to show policymakers, turbines spinning, even foundations in the water, has really helped change the conversation,” said Jeff Grybowski, the CEO of Deepwater Wind. “With other states, when they see pictures of an actual vessel putting it in the water in the U.S., the light goes off — we can do this, it is possible.”
He received a hero’s welcome at trade group American Wind Energy Association’s (AWEA) offshore wind conference in Baltimore held earlier this week.
Several other offshore wind projects have faced major legal setbacks (Greenwire, Jan. 26). But there have also been signs of the industry moving forward.
The federal government recently launched new collaborative efforts at the agency, state and international level (ClimateWire, Sept. 29). The Bureau of Ocean Energy Management continues to auction off new leases.
Thirteen projects, including one by Blackstone Group-funded newcomer OffshoreMW, now have control over sites at least, according to a report by the National Renewable Energy Laboratory for the Department of Energy released earlier this week. Companies have announced plans for around 3 GW of commercial operations by 2020, which is in line with DOE’s Wind Vision targets.
Jose Zayas, director of wind and water power technologies at DOE, called it an “incredibly interesting year.”
‘Wild West of development’
Europeans are intrigued. Many were scouting the infant U.S. industry at the conference this week to see whether to take a resurgence seriously.
One company is. DONG Energy Wind Power, a major energy player based in Denmark, took over a lease off the coast of Massachusetts this spring and is planning a 1 GW project.
“We had been sitting there waiting for the market to take off, and then realizing that we as the global leader in offshore wind, we have to come over and start actively participating,” said Thomas Brostrøm, who manages North American operations for the firm. “I’m not leaving this country until I have a project in the water.”
The momentum, though, is fragile. Most U.S. companies are startups, and they face major financial and regulatory hurdles largely smoothed over by now in Europe.
“It’s the Wild West of development,” said Paul Rich, who manages a Maryland project for U.S. Wind Inc. “There are opportunities we are willing to take a chance on, but it takes a bit of bravery, a bit of risk tolerance, and you need help from congressional and state legislators.”
His project off the coast of Ocean City, Md., still in the early development phases, could generate 500 MW or more. What allowed him to move forward in the state was not the promise of jobs, specific European expertise or particularly robust manufacturing, but the state’s favorable policies.
Maryland has required that a certain percentage of its energy come from offshore wind and has established a system of financial incentives to help that happen. Utilities are required to pay for offshore renewable energy credits, which go to offshore wind projects that bring benefits to the state, like jobs and electricity, at a reasonable price. Rich is planning to apply for the program by the end of this month.
No other state has implemented such a system, though New Jersey is working on it. Developers hope the promise of clean energy when it’s needed, thanks to the afternoon sea breeze, and where it’s needed, the crowded Northeastern region, will convince investors and politicians. But they have struggled to find financing for their expensive projects in the past.
In Congress, Sens. Tom Carper (D-Del.) and Susan Collins (R-Maine) are pushing to renew an expired tax credit for early offshore wind projects with the “Incentivizing Offshore Wind Power Act.”
“We can’t build offshore wind without a tax policy that helps to enable it,” Carper said earlier this week. “With it, I think we will. And we can learn from that.”
Tom Kiernan, the CEO of AWEA, urged the extension of the renewable energy production tax credit and investment tax credit, saying that with them, offshore wind could follow the path of onshore wind, which has become increasingly cost-competitive in recent years.
Putting the ‘Made in America’ label on a European technology
Europe beat the United States to offshore wind technology. Researchers from the University of Delaware called offshore wind in the United States a “missed opportunity” in a paper in the Proceedings of the National Academy of Sciencesthis week. Now, the United States must import the lessons learned and build everything from scratch.
Building and installing turbines, foundations, vessels and ports is difficult and expensive, however (Greenwire, Jan. 30). For example, high costs have ensnared developer Fishermen’s Energy in an ongoing legal battle with the New Jersey Board of Public Utilities, which has repeatedly rejected its project off the coast of Atlantic City (ClimateWire, June 1).
Establishing a specialized supply chain for offshore wind in the United States was a major focus at the conference earlier this week. Cheaper components and thousands of jobs could come with it.
So far, Americans have very little experience with offshore wind, but they do know offshore oil and gas. Deepwater Wind partnered with several companies from the U.S. Gulf of Mexico to build the foundations for its turbines in the Block Island Wind Farm. There’s potential for more collaboration between the two regions, the Northeast-based developers suggested.
And the political support of Southern coastal states, added Deepwater Wind CEO Grybowski, could be the “missing piece” in offshore wind’s comeback.