With the launch of the 30MW Block Island Wind Farm off Rhode Island, the establishment of America’s offshore wind industry is now a reality. But the question remains can offshore wind generate the amount of electricity at costs to commercially compete?
In December, America’s offshore wind industry was officially born, when the 30MW Block Island Wind Farm began commercial operations off the coast of Rhode Island. Now comes a bigger test: Can offshore wind generate large, commercial amounts of electricity in the United States?
“It will need a clear commitment and strong support from both the federal and state governments to have a real offshore industry,” said Feng Zhou, a senior director at FTI Consulting. “It takes time, but we believe the US will be there toward the end of this decade.”
Providence-based Deepwater Wind, which owns the Block Island Wind Farm, received approval early this year from New York State to construct a 90MW wind farm off the coast of Long Island. Denmark’s Deng Energy and a subsidiary of Norwegian oil giant Statoil are both trawling for projects.
Another key player in this push is a Baltimore-based company called US Wind. It’s a subsidiary of the Italian construction conglomerate Toto Holdings. It has development holdings in three sites off the East Coast – in Maryland, New Jersey and South Carolina. The Maryland site is furthest along, with the possibility – admittedly aggressive – of production by 2020. US Wind has initial plans for 250MW, with another 500MW on the drawing board. The cost of the 750MW project is $1.6 billion.
Block Island Breakthrough
The US may be a leader in onshore wind energy, but has lagged way behind Europe and China when it comes to offshore wind. Now that Block Island has broken through, the industry appears poised for large-scale development, although it won’t happen tomorrow, or even the day after. In its latest global wind market update, FTI forecasts that while less than 100MW of offshore wind energy will come online before 2020, a total of 5.5GW could be installed between 2020 and 2026. That averages out to about 800MW annually.
“All the planets are aligning,” said Paul Rich, US Wind’s director of project development. “The conditions have been nuanced and developed over the past several years to lay the foundations to be successful,” Rich said. “It’s the convergence of many things – political, technological and now the opportunity for utilizing scale.” Plus, he said, offshore wind can now generate at a cost that’s competitive with other energy sources.
Add to that the growth in the size of offshore turbines themselves. (See box on page 8.) That means a wind farm will be able to generate far more electricity in the future than it can now.
America’s offshore wind potential is enormous. According to a study released a year back by the Department of Energy’s Office of Energy Efficiency and Renewable Energy, the United States has the “technical resource potential” of generating 2,000GW of electricity through offshore wind. That’s about double the country’s current electricity usage.
Of course, getting there is fraught. A large project in Delaware collapsed after failing to secure funding, a victim of the 2008-09 financial crisis. Another project in Massachusetts couldn’t overcome local, well-heeled and well-connected opposition. NIMBY is far more pronounced in coastal mansions than among rural farmers who have turned onshore wind into a major revenue source.
States are getting onboard, albeit slowly. The Massachusetts legislature, for example, enacted a law last year that requires the Commonwealth produce at least 1.6GW worth of electricity from offshore wind by 2027.
And US Wind isn’t alone in its quest. Deepwater wind also has proposed a 144MW wind farm off the coast of Massachusetts. And, it also owns Skipjack Offshore Energy, another Maryland project.
In Hawaii, the federal government’s Bureau of Ocean Energy Management is now assessing interest in developing up to 800MW off the shores of Oahu. A subsidiary of Portland-based Progression Energy and an offshore wind subsidiary of Statoil have both expressed interest, and other entities could pursue a stake in the patch of water. Statoil also is investigating development of a site off the coast of New York.
US Wind, which is also eyeing Hawaii, received approval from Maryland’s Public Service Commission for its Maryland project in May. The company plans to submit a detailed construction and operations plan for the Maryland project during the first quarter of 2018, according to Rich. This will include the water siting of each turbine. It will also include job-creation and onshore fabrication plans, areas which governments see as critical to the approval process.
For its manufacturing and fabrication, US Wind hopes to utilize Tradepoint Atlantic, the 3,100-acres brownfield site of the former Bethlehem Steel plant in the Port of Baltimore. The raised site has a shortline rail, a 1,000-feet-long pier and channel depths ranging from 36 to 42 feet.
Rich said it’s too early to say definitively just what can be made on site. “The amount of steel fabrication, coating, electrical, handling of cables is substantial,” he said, adding that whichever company lands the turbine manufacturing contract might be willing to assemble on the Baltimore site as well.
The New Jersey and South Carolina projects are further down the road. New Jersey, for its part, needs regulations that will insure a payment scheme for energy produced. These come in the form of offshore renewable energy certificates, or ORECs. The state’s public utilities bureau, largely stacked with appointees of Governor Chris Christie, has for several years pondered a scheme, but has failed to act. Jeff Grybowski, Deepwater’s CEO, told the New Jersey newspaper The Record two years back: “The industry is very frustrated with the status of the OREC program.” Nothing has changed since, and the public utilities board also blocked a pilot wind farm. However, the highly unpopular Christie is serving out the last of his term. Elections for a new governor will take place in November. According to polls, Democrat hopeful Phil Murphy has a huge lead over his Republican opponent, Christie’s lieutenant governor, Kim Guadagno. Murphy would be far more inclined to push renewable energy.
Dong Energy, a leader in European offshore wind development, is also investigating a large offshore wind farm in New Jersey and has the rights to develop a patch of water south of Atlantic City.
Conservative South Carolina could prove an even tougher road. “It’s a market that still needs to be developed,” said Rich. He pointed out that the state is still hugely dependent on coal. “We have to find a way to thread the needle,” he said.
But there are some hopeful signs. Some of the coastal communities, highly dependent on tourism, are supportive of offshore wind as opposed to offshore oil exploration. And, the state could find itself in a long-term energy bind. The construction of two nuclear power plants was suspended in July, amidst huge delays and cost overruns. In a statement, Lonnie Carter, the president and CEO of the utility Santee Cooper, which owns a stake in the project, said, “We simply cannot ask our customers to pay for a project that has become uneconomical.”