Global energy demand could climb 35% by 2030 from 2005 levels according to Exxon, and the International Energy Agency (IEA) foresees a 36% growth in energy demand from 2008 with non-OECD countries accounting for 93% of the projected increase.

Offshore wind has not yet achieved parity with ‘conventional’ energy sources, but its close relative, onshore wind, has demonstrated its ability to improve wind’s cost of energy. By cooperating across the offshore wind value chain, offshore’s cost of energy can also come down.

It is already emerging as an attractive energy option, and unlike onshore wind, offshore does not have the same level of ‘not-in-my-back-yard’ (NIMBYism) opposition. Furthermore, as onshore wind energy reaches maturity in some markets, the prime sites are often already in use. And increasingly, administrations are including offshore wind energy in their energy portfolios and renewable targets.

A Force to Reckon With?

The US presents enormous potential, and visionaries are laying the foundations for offshore wind to become a significant force on its energy landscape.

The Department of Energy’s (DoE) National Renewable Energy Laboratory (NREL) estimates that the US could install as much as 4150 GW offshore wind capacity, representing four times the capabilities of US power plants in 2008. As of the fourth quarter 2010, developers had already proposed at least 20 offshore projects in the US, including the Great Lakes, for a total capacity of 6081 MW, according to Bloomberg New Energy Finance. The Obama Administration’s National Offshore Wind Strategy targets 54 GW of deployed offshore wind energy generating capacity by 2030, producing energy at a cost of US$0.07/kWh.

In some aspects, the interest in promoting offshore wind is transcending state lines and progressing at relevant speed:

• In mid-June 2010, Maine, New Hampshire, Massachusetts, Rhode Island, New York, New Jersey, Delaware, Maryland, Virginia and North Carolina agreed the Atlantic Offshore Wind Energy Consortium with the US Department of Interior to promote offshore wind development on the Outer Continental Shelf;
• In late-June 2010, the US Departments of Interior and Energy signed a Memorandum of Understanding (MoU) to facilitate offshore renewable energy development. By February 2011, they outlined the National Offshore Wind Strategy; and
• US Interior Secretary Ken Salazar and Energy Secretary Steven Chu have announced Wind Energy Areas for offshore wind projects in Federal waters along the coasts of New Jersey, Delaware, Maryland and Virginia. The Interior Department’s Bureau of Ocean Energy Management, Regulation and Enforcement (BOEMRE) is conducting environmental reviews for four areas and, if no significant issues are identified, may issue fast-track leases to energy developers by the end of 2011.

Projects Underway

Cape Wind is reported to have obtained all approvals required at the local, state and Federal levels to start construction. The 468 MW offshore wind project off Massachusetts has already reached a power purchasing agreement (PPA) with the National Grid for 50% of its generated capacity.

Lake Erie Energy Development Corporation (LEEDCO), an Ohio non-profit, has reserved the right to lease a site for a 20 MW offshore wind project near Cleveland it is planning to develop with Freshwater Wind.

Rhode Island and Delaware have both initiated approval processes for offshore wind projects proposed by Deepwater Wind and NRG Bluewater Wind off their coasts. Last month, the New Jersey Board of Public Utilities finalized rules establishing the state’s Offshore Wind Renewable Energy Certificates program.

More recently, lawmakers in Maryland’s House have introduced legislation requiring utilities in the state to purchase electricity from offshore wind farms.

Furthermore, Virginia Legislature adopted a resolution last year promoting the establishment of a National Offshore Wind Technology Center in the state; construction started on a testing facility for large wind turbine drive trains at the Clemson University Restoration Institute, a former US Navy base in South Carolina; and Duke Energy continues to finance offshore wind studies by the University of North Carolina while encouraging the state to create laws enabling large-scale offshore wind development.

Major Players Taking Notice

In October, Gamesa and the Newport News Shipbuilding operations of Northrop Grumman Corporation, an American defense company and America’s largest shipbuilder, announced their agreement to work together on offshore wind technology. The companies are cooperating on the launch of Gamesa’s first G11X 5 MW offshore prototype in the US, combining Gamesa’s multi-megawatt technology and NGSB’s experience in challenging marine environments.

Also in October, Maryland-based Trans-Elect Development Co announced the Atlantic Wind Connection project to build a US$5 billion underwater ‘backbone’ network of transmission lines for 6 GW of offshore wind energy from southern Virginia to northern New Jersey. Investors include Google and Tokyo-based Marubeni Corp.

An Upwind Struggle

However, the outlook for offshore wind in the US is far from crystal-clear. For each visionary, there is at least an equal number of naysayers.

The US is still lacking a renewable portfolio standard as well as CO₂ objectives at the Federal level. And developing offshore wind is an uphill effort at every level.

Cape Wind is reported to have filed initial applications for permits in 2001 – it has taken a decade of PR and legal battle with wealthy vacationers, politicians, environmentalists and First Nation tribes as well as reviews from at least 17 local, state, and Federal agencies for the project to achieve its current status. Deepwater Wind’s project off Rhode Island also faces legal challenges.

Achieving success doesn’t need to be this complex – the pieces are already there. Aside from the framework being pushed by visionaries transcending party and state lines, major players across industries are willing and able to partner to achieve real progress in meeting the operational challenges inherent to the marine environment and driving down offshore wind’s cost of energy.

More than Energy Benefits

Stakeholders see the environmental, social and economic benefits of offshore wind development. NREL, for example, has found that offshore wind will create approximately 20.7 direct jobs per annual megawatt, including jobs in manufacturing, engineering, and skilled labor. The wherewithal to mobilize this potential is already present, leveraging worldwide best practices.

A competitive supply chain serving offshore wind progress will develop in the US if cooperation amongst stakeholders continues. Offshore wind presents the opportunity to sustainably satisfy energy needs while achieving energy security.

All stakeholders – administrations, financial institutions, the supply chain and utilities as well as the communities they serve – must engage to build a sustainable industry, contributing social, environmental and economic benefits.

Offshore wind must be approached as a program, not per project, and each link in the value chain contributes to environmental, social and economic progress. The right partners and the best technology leveraging cross-industry experience to the highest standards of excellence can make it a successful reality.

Simply put, it would be a shame for the US to miss out on the opportunity.

Renewable Energy Focus U.S., March/April 2011