Filling The Sails Of Offshore Wind Energy

As America has stood on the sidelines, other countries such as Denmark, the United Kingdom, Germany, and even China have leapt ahead of us in developing offshore wind.  Here a speed boat passes by Danish offshore windmills in the North Sea. SOURCE: AP.

By Michael Conathan

Since 1896, when Californians sunk the first oil well into the seabed from a wharf jutting 300 feet into the Pacific Ocean, the American offshore energy industry has been all about fossil fuels.

But our potential is so much greater. “Drill now, drill everywhere” is a closed-minded strategy of the past. And with every day that goes by as we continue to focus on fossil fuels for energy, we fall further behind the rest of the world in the quest to diversify our offshore energy portfolio.

By continuing to prioritize yesterday’s technologies, we are locking ourselves into an energy future that dooms our climate, harms our environment, and sacrifices human health. The costs of coal, oil, and natural gas have all been kept artificially cheap by government subsidies and by our failure to make polluters pay for the negative effects of their emissions. Artificially lowering the price of these commodities slants the playing field, making it harder for new clean energy sources to compete in the marketplace.

As America has stood on the sidelines, other countries such as Denmark, the United Kingdom, Germany, and even China have leapt ahead of us in developing one particularly strong—and commercially viable—renewable resource, which the United States also happens to have in abundance: offshore wind. As of June 2012 the rest of the world boasted 4,619 megawatts of total installed offshore wind energy capacity. Meanwhile, we have not even begun construction of our first offshore turbine. Lack of a clear regulatory structure, inconsistent messages from other ocean stakeholders, congressional budget battles, opposition to specific project siting, and instability in financial markets have all played a role in preventing domestic offshore wind from becoming a reality.

Much of this has changed under President Barack Obama’s leadership. In February 2011 the Departments of Energy and the Interior announced the intention to develop 54 gigawatts of offshore wind capacity by 2030, and the United States is closing the gap between our domestic offshore wind industry and those of the rest of the world. In 2012 alone the administration and Congress made major strides toward encouraging renewable energy development on the outer continental shelf:

  • In November 2012 the Department of the Interior announced the first-ever competitive sales on the outer continental shelf for offshore wind energy. This allows potential developers to bid on 277,550 acres in two wind energy areas—one off the coast of Virginia and another off the coasts of Massachusetts and Rhode Island. These areas are expected to be able to support more than 4,000 megawatts of wind generation—enough electricity to power an estimated 1.4 million homes.
  • In October 2012 the Bureau of Ocean Energy Management signed its first lease under the “Smart from the Start” program with developer NRG Bluewater Wind, giving them rights to build a wind farm off the coast of Delaware. In May and August the bureau issued Determinations of No Competitive Interest for two cable routes to transmit power—one for the Atlantic Wind Connection off the mid-Atlantic seaboard and another for the Deepwater Wind Block Island project off Rhode Island. And in December 2012, the bureau began leasing and approving site assessment/characterization environmental assessments off the coast of Georgia and North Carolina.
  • In December 2012 the Department of Energy announced that it will fund seven offshore wind technology demonstration projects, including Fishermen’s Atlantic City Windfarm in New Jersey; technology projects in California, the Great Lakes, Connecticut, and Maine; and two turbines off the coast of Virginia. The recipients are eligible for up to $4 million each in project-development grants.

The U.S. offshore wind industry is beginning to emerge from the political doldrums that clouded its early days, and it is finding champions in Congress, as well as in the Obama administration.

Sen. Tom Carper (D-DE) led legislation to ensure that offshore wind is covered by key tax provisions that had previously only applied to onshore wind. Sen. Susan Collins (R-ME) championed funding for offshore wind development, including a deepwater pilot project in her home state of Maine.

Governors such as Martin O’Malley (D-MD) and Deval Patrick (D-MA) have prioritized offshore wind development as well. They view it as a political victory on multiple fronts—creating sorely needed jobs in construction, operation, and maintenance, and contributing to a diverse energy portfolio while moving us closer to renewable energy targets and away from polluting fossil fuels.

As political opposition falls away from offshore wind projects, opponents are turning more toward economic arguments against further development of this technology, suggesting it will increase electricity rates and ultimately cost jobs.

As with any new product or technology, the first U.S. offshore wind farm will undoubtedly face steeper costs of construction and development than its successors. But as the industry grows, experience, technological developments, and economies of scale will cause those costs to decline. Multiple studies of the offshore wind industry in Europe have shown that the “learning rate”—the rate at which the overall cost of offshore wind energy development declines over time—can be as high as 10 percent per year.

The question is not, therefore, whether the cost of offshore wind energy will come down, but rather how quickly. Cost-reduction rates will depend heavily on the amount of upfront investment the industry receives, including investment from the federal government. Thebillions of dollars in subsidies spent on mature industries such as oil and gas would go further in growing the nascent renewable energy technologies, which can in turn keep us competitive in the global market and create high-quality green jobs that reduce our dependence on foreign oil and help forge a new energy future.

Finally, and perhaps most importantly, to truly level the playing field for offshore wind or any renewable energy technology, we must incorporate the cost externalities currently being ignored for oil, gas, and coal-fired power generation—most prominently the societal cost of pollution it generates, including the greenhouse gas emissions.

Those who suggest Americans can’t afford to spend more for energy in the middle of an economic recovery are ignoring the fact that we are already spending more for our energy than the amount we see on our monthly utility bills or at the gas pump. We’re paying through Congress when we subsidize Big Oil. We’re paying at grocery stores when food prices increase as a result of an epic Midwestern drought. And we’re paying at hospitals as more of our children suffer from asthma and other maladies caused by unclean air.

One of the catchphrases tossed around cavalierly in Washington by both parties is the need for an “all of the above” energy strategy. Conservatives say the president is failing to achieve this when he makes any decision not endorsed by the American Petroleum Institute. But the reality is no true “all of the above” strategy can be complete if it leaves out a commercially viable, renewable, and domestic resource that has the potential to make major contributions to our country’s energy needs and our economy without perpetuating the negative and uncounted effects of our fossil-fuel dependence.

While no single energy source can turn back the tide of climate change that is already raising sea levels, acidifying our oceans, and contributing to extreme weather events, as President Obama said in his second Inaugural Address, a failure to respond to climate change “would betray our children and future generations.” Affordable domestic offshore wind can and must be a part of the response.

Michael Conathan is the Director of Ocean Policy at the Center for American Progress. Reprinted from the Center for American Progress website.


9 Responses to Filling The Sails Of Offshore Wind Energy

  1. Dave Bradley says:

    Nice article!

    In reality, offshore wind is all about the Power Purchase Agreement, the deal where the electricity to be generated over a 25 year stint is sold at a price that justifies this investment. And just for added measure, these capital intensive investments need long term, low cost loans, the kind only possible by municipal or federal ownership of these projects to produce elecicity at the lowest price possible for offshore wind. Sure, private ownership is possible, but IT WILL BE MORE COSTLY!

    That does not conform with the established religion, but then just because facts have a liberal basis does not mean that we should avoid using them. Private investors will want at least a 15% return on that investment; these days the New York Power Authority can float 20 year bonds for around 3%. the differences mean that the exact same wind farm would have a production cost of 11 c/kw-hr for state ownership or 18 c/kw-hr for private ownership. But, if the price of electricity is no constraint, go with the pricey route. Just do it, as the saying from the advertising slogan goes….

    The EASY part of offshore is building, installing and fixing these systems. The hard part is lining up the financing and getting the political permission to do this. In other words, overcoming opposition from pollution sourced electricity generation owners -especially nukes and nat gas users – to install offshore wind farms to provide significant generation to pricey coastal urban heavily populated “load zones”. Or from the rich people who own a lot of coastal property and thus think they own the view….

    And believe it or not, there are roughly 280 GW of offshore wind proposals world wide, roughly a $1.2 trillion potential investment, with multiplier effects many times that. The money (or potential to borrow it) is not an issue – it’s mostly about that PPA. It’s also about sidestepping the “casino pricing” of electricity for short terms for a steady pricing for a long time period, for pollution free electricity at a production cost well less than the real (subsidy-free basis) of PV, and which tends to work at night. Oh, it also creates lots of high skilled decent paying jobs that can be difficult to outsource and lots or real wealth creation. That sort of thing is a problem for a lot of our “powers that be”, and especially the current batch of Republican idealouges but there have been lots of Democrats (like Ted and Robert Kennedy) that let family wealth get in the way of doing the right thing. Oh well, that’s just life – obstacles to be overcome. That stuff makes this kind of think look easy……

  2. Tom R says:

    You will have a while to go before you catch up on Europe’s offshore wind capacity…

  3. Michael R Ponicki says:

    If man is contributing to climate change in a way material enough that we need to spur market adjustments more quickly than would ordinarily happen, I think there are obvious wrong and right ways to go about it.

    The wrong way is to have bureaucrats take taxed/borrowed/inflated money and try to play investor by offering tax breaks and subsidies. The probability that the politician will simply use the funds to repay campaign favors is off the charts. And even if the politician is acting honestly, the odds of him/her being able to out-invest actual investors is nearly nonexistent– all it does is distort capital investment. As we saw with Solyndra, the odds of this type of approach working are slim-to-none.

    The right way is to just raise the gasoline tax. It’s simple, transparent, elegant, and leaves normal market forces at play. All it does is accelerate the normal market curves, which will result in reducing our dependency on oil prematurely.

  4. Gillian says:

    Can somebody help? Offshore wind is more expensive than onshore wind, but countries without enough windy land for sufficient onshore wind generation – Denmark, UK, Germany – are willing to pay the higher cost.

    But surely more expensive offshore wind doesn’t make sense for countries, like the US, that have lots of resources for onshore wind. With plenty of space for land-based wind generators why would the US invest in more expensive offshore wind?

    The only factor I can see is the distance to market. Does it really cost that much to transport electricity from mid-West wind farms to the densely populated East coast? Are the transmission costs equivalent to the higher cost of building wind turbines and transmission cables in the ocean?

    Just wondering.

  5. Merrelyn Emery says:

    Ah, a true believer to the end. Just let those market forces rule until all your cities look like wastelands where the homeless, hungry and mad wander through the ruins, ME

  6. Mulga Mumblebrain says:

    As ME observes, no amount of reality will ever make the market fundamentalist see reason. This is religious faith in action, the inerrant dogma that private greed is always, without exception, best. The ludicrous dogma, as Keynes said, thus, ‘Capitalism is the astounding belief that the most wickedest of men will do the most wickedest of things for the greatest good of everyone’. The forty year nightmare of market fundamentalism has brought unprecedented inequality, mass poverty and misery and accelerating ecological destruction, but the blind fanatics, having no capacity to absorb information and arrive at rational conclusions, being only capable of regurgitating the Rightwing propaganda with which they have been brainwashed, simply demand more of the same.

  7. Gillian says:

    Mulga, re the capacity to absorb new information, you’ll find this article interesting…

    It quotes the ever-reliable Hans Rosling, and a 2012 study by Shtulman and Vancarel that found:

    “When students learn scientific theories that conflict with earlier, naïve theories, what happens to the earlier theories? Our findings suggest that naïve theories are suppressed by scientific theories but not supplanted by them.”

  8. Merrelyn Emery says:

    Suppression would be an excellent step forward, ME

  9. Dr.A.Jagadeesh says:

    There is tremendous scope to harness Wind Energy through offshore installations in US. It is a known fact that winds on the sea are much higher than on land because of zero roughness factor on the former.

    Offshore wind turbines are being used by a number of countries to harness the energy of strong, consistent winds that are found over the oceans. In the United States, 53% of the nation’s population lives in coastal areas, where energy costs and demands are high and land-based renewable energy resources are often limited. Abundant offshore wind resources have the potential to supply immense quantities of renewable energy to major U.S. coastal cities, such as New York City and Boston.

    Offshore winds tend to blow harder and more uniformly than on land. The potential energy produced from wind is directly proportional to the cube of the wind speed. As a result, increased wind speeds of only a few miles per hour can produce a significantly larger amount of electricity. For instance, a turbine at a site with an average wind speed of 16 mph would produce 50% more electricity than at a site with the same turbine and average wind speeds of 14 mph. This is one reason that developers are interested in pursuing offshore wind energy resources. The U.S. Department of Energy (DOE) provides a number of maps showing average wind speed data through its Resource Assessment & Characterization page and through National Renewable Energy Laboratory’s (NREL)

    Wind resource potential is typically given in gigawatts (GW), and1 GW of wind power will supply between 225,000 to 300,000 average U.S. homes with power annually. In a July 2012 Technical Report, NREL estimates a gross wind power resource of 4,223 GW off the coast of the United States. That is roughly four times the generating capacity of the current U.S. electric grid. Even if only a fraction of that potential is developed, clearly there is enough offshore wind resource to power a substantial portion of our nation’s energy needs.

    Dr.A.Jagadeesh Nellore(AP),India
    Wind Energy Expert