After decades of very little progress on developing American offshore wind, things are finally happening that could see the U.S. catch up with Europe to install clean, renewable power off American shores.

Last week, the Interior Department announced the first federal offshore wind lease sale for an area 9 miles off the coast of Massachusetts and Rhode Island. To select the site, Interior had to dodge shipping lanes and migratory bird patterns, while sticking to areas with excellent wind power potential capacity. If it is developed into an offshore wind farm, the energy produced could generate 3,400 megawatts, enough to power more than 1 million homes.

Secretary Sally Jewell said, “If there is good interest in this one, then I think you will have this happening on a consistent basis.” In November, the Department announced another possible lease off the coast of Virginia, but did not set a date. The success of these auctions depends on interest from the private sector.

There are several reasons the United States has installed exactly zero offshore wind farms, whereas the industry is up and running in Europe.

Cape Wind is a planned wind farm in Massachusetts that advanced as far as any project in the country to actually putting steel in the water. It incurred almost a decade of delay following regulatory confusion over what agencies have jurisdiction, legal challenges from many different groups, and some Cape Cod residents objecting to the project for various parochial reasons.

The wind production tax credit has boosted the onshore wind industry in the U.S., but offshore wind projects are more expensive up-front. This makes a tax incentive for generated electricity less feasible for offshore projects. Investment tax credits (which take total costs into account when calculating the subsidy) could help the offshore industry get off the ground and eventually reduce the cost of an offshore wind farm. Bipartisan legislation would give a 30 percent credit for the first 3,000 megawatts from offshore wind, or about 600 turbines.

The Department of Energy has begun the development of wind energy along the Mid-Atlantic coast using a “Smart for the Start” approach designed to expedite the siting process while incorporating strong environmental protections. Maryland recently passed a bill encouraging development of offshore wind. It’s not just wind — tidal and wave energy present huge opportunities all over the American coastline.

There was, however, a recent development that has allowed the U.S. to say that it truly has “steel in the water.” Off the coast of Maine last weekend, a team led by the University of Maine deployed the nation’s first offshore floating wind turbine connected to the grid.

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The Production Tax Credit — the key federal incentive for wind power — is a success story. Since the PTC was first enacted in 1992, the cost of wind power has fallen 90 percent, 75,000 people now work in the wind industry, and wind power is booming.

Yet, some people still think the PTC should be eliminated. Most interestingly, Exelon — the large Midwestern utility and power plant operator — has made ending the PTC its number one lobbying priority, claiming that the credit distorts markets. This would be scary. Fortunately, it’s not true.

The truth is that Exelon hopes to slow or halt expansion of wind power projects that can affect the bottom line of their nuclear power plants in the Midwest, and to achieve that objective they’re blaming wind and the PTC for market phenomena like negative pricing that are almost always caused by inflexible generation technology and transmission constraints.

This post will summarize Exelon’s position on the PTC, show where it falls short, and then point out that Exelon is more concerned about competition from wind power, in general, than the Production Tax Credit.

Why does Exelon say the PTC is distortionary?

Exelon’s argument hinges on two fundamental ideas. First, that the PTC causes negative prices; and second, that negative prices are bad for wholesale electricity markets.

Digging into this argument requires a little knowledge of how power markets work. In much of the country — including where Exelon’s nuclear plants are located — power is sold in competitive markets, at a “clearing price” set by an auction process. In general, the clearing price is set by the most expensive marginal resource needed to meet demand at a given time. This price is then given to all the generators providing electricity at that time. (For more on this, see Wind Power Helps to Lower Electricity Prices.)

Importantly, all power plants bid prices that reflect not just their fuel expenses and other operating costs, but also forgone revenues. For example, coal plant owners can sell the coal ash for industrial uses, and they take these lost sales into account when deciding how much they should charge for power from the plant. Wind power is exactly the same, only one of its lost benefits is a tax credit.

The Production Tax Credit offers eligible wind generators a tax credit worth $23 per megawatt hour for the electricity they produce. Since the fuel costs for wind power are zero and operational costs are low, wind turbines can theoretically offer to sell their power at a negative price (that is, they can make money even though they’re paying someone to take their power).

Where Exelon goes wrong is when they draw policy conclusions from these facts. Exelon believes that these negative prices are bad for wholesale electricity markets because they discourage investment in new generation. And, because all power plants operating get the same price, a negative price can force nuclear power plant owners to pay someone to take their power.

Where Exelon loses the plot

Exelon’s explanation of negative prices is generally correct, but it’s also incomplete. First, we need to look at how often wind is setting the power price.

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According to Bloomberg, Warren Buffet’s MidAmerican Energy Holdings Co. is gearing up to drop $1.9 billion on new wind farms in Iowa. The investment might build as many as 656 new turbines by 2015, which would add as much as 1,050 megawatts of wind power capacity to the 2,285 megawatts the company already operates in the state.

The project could also herald a revival in American wind power in general. The anticipated expiration of the production tax credit for wind energy drove a spike in installations in 2012, then a lull into 2013, and finally an anticipated ramp up now that the credit was extended for another year by the fiscal cliff deal.

And because the new extension merely requires projects to start construction by the end of the year to qualify — projects previously had to actually come online by the end of the year to benefit from the credit — GE now expects the full force of the revival to hit in 2014:

Wind-farm developers including NextEra Energy Inc. (NEE) and Invenergy LLC may install 3,000 megawatts to 4,000 megawatts of turbines in the U.S. this year and as much as 7,000 megawatts next year, Anne McEntee, GE’s vice president of renewable energy, said today in an interview.

The U.S. added a record 13,124 megawatts of turbines last year, outpacing natural gas installations for the first time, as wind developers raced to complete projects ahead of the Dec. 31 expiration of the production tax credit. Denmark’s Vestas Wind Systems A/S (VWS) andSpain’s Gamesa Corp Tecnologica SA (GAM) also expect new orders to pick up by the third quarter.…

GE has received orders this year for more than 1,000 megawatts of wind turbines, including one from NextEra for 100.3 megawatts announced today for a Michigan wind farm and Invenergy’s 215-megawatt deal announced last week for a project in Texas.

Also coming down the pike for wind power is the new version of GE’s Brilliant — a 2.5 megawatt wind turbine, featuring new smart systems and accompanying storage capacity. With both its own sensors and access to the internet, the Brilliant can take in weather forecast data, grid system information, and supply and demand patterns, and use all that top adjust everything from electronics operations to its blade positions. Combined with a new height and an increase of rotor length to 120 meters, these changes boost the new Brilliant’s efficiency by 25 percent over the last model.

The batteries will boast 50 kilowatt-hours of storage a pop, and be hooked up to the turbines from a nearby ground pad. The batteries will store up excess power generated when the wind is blowing the strongest and the turbines are operating at peak capacity, then distribute the power during off hours. This smooths out the power supply from the wind farms, thus avoiding a lot of the disruptions and reliability issues that came along with the fact that the wind does not always cooperate with the needs of us humans.

All told, this would continue the roll wind power has already been on in the United States: 2012 saw the installation of wind capacity outpace all other forms of energy production, and the U.S. and China led the boom in global installations that same year.

Wind power had a banner year in 2012, accounting for more new generating capacity than any other resource. Despite the boom in cheap natural gas, 42 percent of all new capacity last year was actually from wind, which clocked in at 13,131 MW in new installations for the year.

The economics for wind power have only gotten more compelling, helped in no small part by the Production Tax Credit and the Investment Tax Credit creating strong investment incentives. This boom in wind power has begun to transform electricity markets across the country, creating significant net benefits for consumers and providing low carbon power to homes nationwide.

A new report from the consulting firm Synapse and Americans for a Clean Energy Grid found that increases in wind power in the PJM Interconnection could save consumers $6.9 billion per year out to 2026, along with 14 percent reductions in CO2.

The PJM Interconnection is the world’s largest competitive wholesale electricity market, serving 60 million customers across 13 states and the District of Columbia. Currently, wind provides about 1.5 percent of the electricity to PJM’s customers, and accounts for 3.4 percent of installed capacity. Based just on the Renewable Portfolio Standards in states within the PJM region, renewables must provide 14 percent of all electricity by 2026. It is likely that about 11 percent of this will come from new wind generation.

The report from Synapse uses the projections from meeting Renewable Portfolio Standards as a reference case, and then takes a look at the effects of doubling the amount of wind power required by statute in the PJM region out to 2026. By modeling the production costs and capital investments, the authors can ascertain what the difference is between these two cases for revenue requirements (and therefore, the impact on ratepayers). The big difference between these two cases is that in the reference scenario, natural gas composes the majority of new generation beyond what the state Renewable Portfolio Standard requires—and wind takes that market share in the other. This illustrates the shortsightedness of the “cheap natural gas” narrative that has become conventional wisdom in mainstream reporting. The cheaper bet, actually, is increasing deployment of wind.

The report finds that doubling capacity of installed wind, from 32.1 GW in the base case to 65.4 GW in the wind case, would create net savings of $6.9 billion per year. This is the result of savings from production costs amounting to $14.5 billion, and capital investment requirements of $7.6 billion. Remember that the capital investment numbers here represent the difference between what would be spent in the reference case ($17.4 billion) and what would be spent in the wind case ($25 billion).

The other benefit of more wind in PJM is lower wholesale prices. The report finds that the load-weighted average annual price for power drops from $80.27 per megawatt hour to $78.53 per megawatt hour.

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A common refrain, from skeptics to allies alike, is that renewable energy is a great idea, but not feasible because oil, gas, and coal will always be cheaper. Leaving aside the fact that fossil fuels are a finite resource and are the primary driver behind a warming planet, is it really true that renewable energy is more expensive?

Brian McConnell made a graph that shows what has happened to the price of energy (in gigajoules) since 1980 for solar power, natural gas, crude oil, and then residential electricity.

In his words:

The graph above compares the price history of solar energy to conventional energy sources. This is what a disruptive technology looks like. While conventional energy prices remained pretty flat in inflation adjusted terms, the cost of solar is dropping,fast, and is likely to continue doing so as technology and manufacturing processes improve.

That green line drops steadily. Though it represents a very tiny proportion of the total energy mix, as it gets cheaper and cheaper we can expect that to change. Disruptively. One thing McConnell said he would like to update is prices for coal, which would be interesting.

In an update, he noted that while joules are a good leveling metric, one thing they do not capture is the fact that many of those joules of fossil fuel energy are burned as waste heat, increasing the price. Solar placed in less sunny places than the American South would also increase the price.

His graph is backed up by the pros. In Bloomberg New Energy Finance’s presentation (pdf) to the Clean Energy Ministerial last month, this slide shows that solar panel prices fell 80 percent in the last 5 years:

It’s not just solar. This one shows the steady decline in wind turbine prices – 29 percent since 2008:

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How can we design an energy system that improves the quality of life of those who use it? In an event last Thursday entitled Policy Briefing: The Present and Future of Renewables in the United States and Around the World, Rep. Rush Holt (D-NJ) pointed out that this is the type of question that we should be asking.

While the event highlighted the growth of renewable energy and its future prospects all over the world, Rep. Holt emphasized what he sees as the lack of urgency in deploying the amount of renewables and clean energy needed to really address climate change. He added, “We are losing track in this country [and] we have lost track here in Congress that about now we are barreling past 400 parts per million of CO2 in the atmosphere … and that is not driving our energy policy and it should.”

During her presentation on the forthcoming Renewables 2013 Global Status Report (GSR 2013), Renewable Energy Policy Network of the 21st Century (REN21) Executive Secretary Christine Lins shared some good news on the current status of energy policy globally: the number of countries that have renewable energy targets has doubled since 2005 and now includes 120 countries – more than half of which are developing countries.

The GSR 2013 will be published in June, and Lins presented some of the main insights from it, including:

• Renewable energy makes up 18% of global final energy consumption
• 25% of global power generation capacity comes from renewable energy
• Cumulative installed capacity of solar photovoltaics (PV) has reached 101 gigawatts (GW), including 30 GW added in 2012
• Solar PV module prices fell 40% in 2011 and another 20% in 2012
• Cumulative installed wind capacity reached 282 GW, including 40 GW added in 2012

The event not only reviewed the current status of renewable energy, but also looked to the future with a presentation by Eric Martinot on the Renewables Global Futures Report (RGFR). Martinot, who authored the report, interviewed 170 leading experts and analyzed current renewable energy projections to provide an outlook on the future of renewable energy.

There were three main takeaways from Martinot’s presentation on the RGFR:

1. Most industry experts (interviewed by Martinot) believe that shares of renewable energy could reach at least 30-50% in the long term – showing that conservative projections that predict renewable energy shares of less than 20% out to 2040, like those from ExxonMobil, are no longer credible
2. Renewable energy investment is expected to nearly double by 2020, though many experts agree that higher levels of investment will require new investors and equity sources, such as oil companies, aggregated securities funds, pension funds, insurance funds, etc.
3. In the transition to greater levels of renewable energy, there will be opportunities for companies other than manufacturers and installers of renewable energy products, including electric power utilities, automakers, oil companies, IT companies and building materials manufacturers

Both the GSR 2013 and the RGFR offered insights into the renewable energy sector, showing positive trends in renewable energy deployment and investment. But, as Rep. Holt said, this growth and the policies that are driving it must be coordinated with our overall climate goals to ensure that it’s enough to drastically reduce our emissions.

If we can do this, we will be able to address climate change in a meaningful way while also improving the quality of life for people around the world.

Although yesterday’s hearing of the House Subcommittees on Energy and Oversight was meant to bring scrutiny to federal wind energy incentives, it really brought to light the hypocrisy of calling for an end to subsidies that are necessary to support a growing wind industry while at the same time not addressing the unnecessary incentives still enjoyed by the oil and gas industry.

A March 2013 report by the Government Accountability Office (GAO) seemed to be the starting place for the hearing which centered on the efficiency and effectiveness of wind energy incentives. Solely focused on wind energy, the GAO report really missed the mark in its accounting of programs that the wind industry benefits from — especially since out of the 82 initiatives listed, only two are wind-specific and one of those has expired (Section 1603 Treasury grant program).

This fact has not stopped opponents of wind energy. Concerns about the possibility of duplicative wind energy incentives were echoed throughout the hearing.

In his opening remarks, Oversight Subcommittee Chairman Paul Broun (R-GA) stated, “The wind industry in particular enjoys a wide variety of tax breaks.” He went on to list a handful of incentives available to the wind industry and expressed concern about possible overlapping subsidies, but failed to mention that the vast majority of federal support for wind energy has come from just two incentives: the Production Tax Credit (PTC) and the expired Section 1603 grant program. In fact, the GAO acknowledged in its study that nearly 90 percent of the 82 initiatives (that it reported as supporting wind energy) provided little to no financial support for wind energy.

It’s also important to note that because wind developers had to select either the PTC or the Section 1603 cash grant, the two most important incentives for wind energy have absolutely zero overlap.

One of the more confusing arguments offered during the hearing came from Rep. Cynthia Lummis (R-WY) who asserted, “The wind industry is now successful and mainstream, so the time has come to wean it from taxpayer subsidies.” First off, that argument is counter to what many wind energy opponents have been saying about the industry as they argue to get rid of the subsidies, often citing that the industry has been unsuccessful at becoming cost-competitive.

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Portugal’s electricity network operator announced that renewable energy supplied 70 percent of total consumption in the first quarter of this year. This increase was largely due to favorable weather conditions resulting in increased wind and water flow, as well as lower demand. Portuguese citizens are using less energy and using sources that never run out for the vast majority of what they do use.

• Hydropower supplied most: Hydroelectric power supplied 37 percent of total electricity — a 312 percent increase compared to last year.
• Wind turbines broke a record: Wind energy represented 27 percent of the total share, which is 60 percent higher than last year. This is 37 percent above average and good for the highest amount generated by wind in Portugal, ever.
• 2.3 percent less energy used: Energy consumption has fallen every year since 2010 and is now at 2006 levels. Some of the drop this quarter was due to fewer working days and a warmer winter, but even controlling for those factors, there was still a drop of .4 percent.
• Not so much solar: Solar energy supplies only .7 percent of total energy demand, according to 2012 figures (Q1 2013 figures were not available for solar). This constitutes 225.5 MW in total photovoltaic capacity.
• Dropping the fossil fuel habit: Portugal’s electricity had 29 percent less coal and 44 percent less gas in it from 2012 figures. The country must import the fossil fuels it burns.
• For sale: Portugal exported what would have been 6 percent of total electricity consumption to other countries. It will also be able to sell a chunk of its allotted carbon credits offered by the EU’s carbon trading system.

Actually 70 percent isn’t unheard of for Portugal. For a few hours in 2011, Portugal was entirely run on renewable power. Yet this was the first time so much was sustained for a quarter.

Portugal’s investment in modernizing its electricity grid in 2000 has come in handy. Like in many countries, power companies owned their own transmission lines. What the government did in 2000 was to buy all the lines, creating a publicly owned and traded company to operate them. This was used to create a smart grid that renewable energy producers could connect to (encouraged by government-organized auctions to build new wind and hydro plants). In 2010, the New York Times reported on Portugal’s renewable energy push that started in earnest in 2005:

Five years ago, the leaders of this sun-scorched, wind-swept nation made a bet: To reduce Portugal’s dependence on imported fossil fuels, they embarked on an array of ambitious renewable energy projects — primarily harnessing the country’s wind and hydropower, but also its sunlight and ocean waves…. Nearly 45 percent of the electricity in Portugal’s grid will come from renewable sources this year, up from 17 percent just five years ago.

There was a massive amount of skepticism over the plan at the time. The Prime Minister at the time, José Sócrates, noted that the nation’s network of electric car charging stations elicited ridicule — including former Italian Prime Minister Silvio Burlusconi who jokingly offered to build him an electric Ferrari. While a totally electric version isn’t available, the fastest Ferrari ever was unveiled last month, and it’s a hybrid.

Some locals complained about higher utility bills or the green economy bypassing them, while others were thrilled. The Mayor of Moura explained that the reason his town got the nation’s largest solar plant was because it “gets the most sun of anywhere in Europe and has lots of useless space.”

So now that it demonstrated the ability to generate 70 percent renewable energy for 3 months, where does Portugal go from here? Oddly enough, it does not have much in the way of offshore wind capacity — only 2 MW. The recent economic situation and austerity programs have endangered not only jobs and commerce, but continued investment in renewable energy and electric vehicles. Yet saving on the cost of having to import fossil fuels will be helpful for decades to come, and as its economy improves, it will have a strong renewable electricity grid to rely upon.

Other countries have been making steps of their own on renewable power production. The U.S. had a record-breaking year for wind energy in 2012, growing by 28 percent. Sweden is looking to have no dependence on oil by 2020. Australia could be looking at 100 percent renewable energy by 2030. Global solar power world will soon be a net-positive energy source.

Is there a literary trope that draws more universal ire than the spoiled brat? There can’t be a single person on the face of the planet who empathizes with the likes of Eric Cartman, Wonka golden ticket holder Veruca Salt, or any of the charming young heroines of MTV’s twisted reality show, “My Super Sweet 16.” So it is with the wealthiest and most outspoken opponent of the nation’s first proposed offshore wind farm.

In a lengthy interview in the spring issue of Massachusetts-based CommonWealth magazine, petroleum coke magnate Bill Koch went full on climate-denier and finally came clean about his long-standing opposition to the Cape Wind project. The reason he has spent millions of dollars to block the project comes down to one simple point: he doesn’t want to ruin the view from his Cape Cod waterfront estate.

In the interview, Koch called the project “visual pollution” and explained that he “was buying more property on the Cape for a family compound and the windmills would interfere with the aesthetics.”

Would this be a good point to mention that the symbol of Oyster Harbors, the gated community in which Koch’s Osterville compound is located, is actually a windmill?

While Cape Wind proponents have long assumed NIMBY-ism was at the root of Koch’s position, this is the first time he’s come out and admitted it so publicly, even actually saying the words, “I didn’t want it in my backyard.”

Unfortunately for Koch, he doesn’t have final say over the project, because the wind farm won’t actually be built in the backyard of his compound, though it will be (barely) visible from his veranda. This visual simulation shows what the turbines would look like from Cotuit, the town next to Koch’s.

Clearly Koch believes this is a visual blight worth spending millions to prevent. As of 2006, Koch had donated at least $1.5 million to the Alliance to Protect Nantucket Sound, an organization dedicated to stopping the Cape Wind project. Additionally, as of 2009 his corporation, OxBow Energy, was paying the $150,000 salary of the group’s executive director. And in the most recent interview, Koch said he had been supporting the group “more and more.”

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While the U.S. wind market surged and GE Wind was the top producer last year, nations across the pond are finding success with wind turbines as well.

Over the last 20 years in Ireland:

• More than 2,200 jobs have been created in developing wind power.
• The wind sector has contributed a total €83m to councils, money which has been ploughed into the development of regional economies. Last year alone, up to €11.5m was delivered to local county councils through rates.
• A total of €2.8bn has been invested in wind farms, a staggering sum by any standards. In 2011 alone the investment figure was €372m. A further €4bn is expected over the next eight years to meet domestic targets alone.
• Wind is now no longer a niche product across Europe where wind capacity 23 times the national demand of Ireland has been installed. Last year wind energy accounted for more than 15pc of our electricity demand. Wind energy also has the capability to supply 1.3 million homes in Ireland.

In the UK, wind power has topped 5 gigawatts per day and is sufficient to power 10% of total electricity demand. This rough guide to the geology and geography of offshore wind shows that the British Isles have an enormous amount of potential in the North Sea.

In 2012, Scotland’s wind power generation totals increased 19 percent, to comprise 39 percent of the region’s needs. It will only get stronger as a wind farm offshore from a golf course moves forward despite the tweeted protestations of Donald Trump.

This week, the government of Scotland decided to go ahead with a large scale offshore wind farm. Scotland, which has been reffered to as the ‘Silicon Valley’ for wind energy, makes this move in spite of personal and business motivated pleas from Donald Trump.

Nevertheless, Trump vowed to bring a lawsuit to stop the $349 million (USD) development, which consists of 11 wind turbines planned off the coast near Aberdeen in northeastern Scotland. Trump declared: “We will spend whatever monies are necessary to see to it that these huge and unsightly industrial wind turbines are never constructed”, and frequently refers to wind turbines as ‘monstrosities’.

The wind farm, owned by Swedish energy company Vattenfall and a local business consortium, still needs to obtain a marine license and approval for an onshore substation.

And in this piece, EarthTechling notes that wind power is becoming more and more reliable, even during a cold snap:

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