Will Offshore Wind be a US Energy Industry Game Changer?

On Oct. 7, the Department of Energy released "Large-Scale Offshore Wind Power in the United States: Assessment of Opportunities and Barriers."  A couple highlights from this 240-page document authored by the National Renewable Energy Laboratory (NREL):

  • Wind could provide 20% of the nation's electricity by 2030
  • 54 GW of offshore wind facilities equals approximately $200 billion in new economic activity and 43,000 jobs, and this is an estimated 20 jobs per MW

Today's offshore wind project pipeline is about 20 installations long representing over 2 GW of capacity. Offshore wind has incredible capacity to create jobs, stimulate the economy, and generate clean electricity, but will it change the face of electricity in the US?  

NREL's report goes into great detail in an analysis of both the challenges and opportunities for offshore wind in the US.   For one, there are some technological barriers regionally mostly due to deep west coast shorelines. There are also some significant regulatory barriers, such as the fact that permitting requirements in Federal waters - all wind farms beyond three-nautical miles from the coast - were completely a mystery until recently.  We may finally be on the path to large-scale deployment of offshore wind.

On October 6th, the Department of Interior signed the first commercial lease for Cape Wind, an installation in Federal waters that sat in the permitting process for 9 years.  This is one significant milestone, and is an important step in promoting development of offshore wind; however, we don't believe this will lead to exponential growth in the supply in the short term.

We know that despite the jobs, power capacity, and economic stimulus offshore wind can offer there are significant roadblocks to widespread deployment.  For one, the economics are still a huge challenge.  NREL points out large-scale deployment of offshore wind would demand new infrastructure for building the installations including huge vessels, upgrades to shoreline ports, new plants, and factory worker training.  NREL estimates capital costs off offshore wind to be about two times greater than onshore wind today.

The challenge is to balance the higher costs of offshore wind by installing these wind farms close to population centers along the coast in order to leverage existing areas of adequate transmission capacity, and there by avoid integration costs some onshore wind farms face today (see our recent report on technologies for optimizing transmission for wind integration).

There is hope for offshore wind, but it seems to parallel the hope for other renewable integration ... time will tell. Crucial financing incentives from the ARRA are drying up, and an aggressive Federal climate or energy program still eludes us, so it seems that even this huge opportunity to expand the contribution of clean energy may only be accepted in slow motion.

It will be interesting to watch the changes in policy, incentives, and regulations that have the power to change the face of the electricity market following the November election. Climate and energy programs are on the line, especially in the market leading state of California, so time will tell what the future holds for large-scale offshore wind development. Your thoughts?

 

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Tags U.S. Department of EnergyPolicy/RegulationNorth Americaenergyindustry verticalsrenewable energy

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