Fifteen years ago, developers of Cape Wind sought to jump-start the U.S. offshore-wind industry with an ambitious $2.6-billion plan for a 130-turbine farm, off the lower Cape Cod, Mass., coast, to generate 468 megawatts of new clean power. High-level opposition, on issues from blocked views to Indian burial grounds, stretched out its approvals, mired it in lawsuits and cost it key utility customers that made the project a distant bad memory.
But Cape Wind may turn out to be a blessing in disguise, setting the foundation to complete a smaller-scale operating farm, America’s first, and spurring coastal states to boost offshore wind as a power-supply and economic driver.
This comes despite uncertain support from the current U.S. administration and critiques from President Donald Trump—in court and on Twitter—against a planned Scotland-sited project whose “really ugly turbines” would block his golf-course views.
Even so, the U.S. is set to add 86,000 MW of offshore wind power by 2050, which the U.S. Energy Dept. (DOE) says would cut greenhouse-gas emissions by 1.8% and support 160,000 U.S. jobs. Learning lessons from the Cape Wind saga, projects will be farther out to sea, particularly in the population-dense and land-constrained Northeast, where politicians see offshore wind’s huge energy and economic benefits.
Massachusetts and New York, among others, have set ambitious wind goals. A governors’ coalition also is pushing to extend the 30% renewable-energy investment tax credit and continue federal R&D support, or “we will cede leadership in these critical technologies to other nations,” they said in a February letter to Trump.
Meanwhile, DOE units such as the National Renewable Energy Laboratory (NREL), which pushes research, and the Bureau of Ocean Energy Management (BOEM), which manages ocean site leasing, are going gangbusters. “The offshore wind industry is about to take off,” says a bureau spokesman. “There is a lot of competitive interest out there.”
Off the coast of southern Long Island, N.Y., a 79,000-acre ocean site leased for $42 million in December after 33 rounds of bidding. “Leases were going for a couple of hundred thousand dollars a few years ago,” says Bill White, an offshore-wind official with the Massachusetts Clean Energy Center who also notes a rise in unsolicited lease offers for potential wind farms.
Competitors Cross the Pond
The burgeoning market is drawing European energy giants now seeking to diversify from the sagging oil-and-gas sector, as well as private investors eyeing reliable returns in a regulated power marketplace. Offshore wind “is now not just green power but a new industry for infrastructure and jobs, made in America,” says Jim Lanard, co-founder and CEO of Magellan Wind.
In the wake of the New York lease frenzy, Interior Secretary Ryan Zinke offered some optimism about federal support to market participants, saying, “Offshore wind is one tool in the all-of-the-above energy toolbox.”
“Offshore wind has an economical right of existence,” says Chris van Beek, a Dutch-born marine construction veteran and president of Deepwater Wind, which last year completed the five-turbine Block Island wind farm, off Rhode Island’s coast. “The next development wave of projects should be based on that.”
The $300-million project, which will supply islanders now using expensive diesel energy and feed excess power into the mainland grid via a new undersea cable, generated its first power on March 22 and is set to operate fully on May 1. Block Island’s power is not price-competitive on the mainland, but market participants see its completion as key.
Investors agree. “The first project was great to show it could be done,” says Jérôme Guillet, managing director of Green Giraffe B.V., a leading project investment adviser. “Hopefully, the next projects will be larger and have the scale to show attractive economics.”
Deepwater Wind aims to make that happen, with work set to start by 2019 on a $740-million, 90-MW farm off Long Island, N.Y., that could include up to 200 turbines. The local power authority in January approved a 20-year power-purchase agreement, allowing it to pay for delivered energy without taking on construction or operating risk.
The power price is confidential, but the agency says it is competitive with other clean-energy sources without being as land-intensive. Van Beek says the deal for his firm, owned mainly by hedge fund D.E. Shaw, will have “all signatures” this month. “We are in full project mode,” he says.
“There is very significant offshore-wind potential in the New York area—39 gigawatts in water depth for foundations fixed to the bottom. We have the benefit of shallow water,” says Doreen Harris, program manager for the New York State Energy Research and Development Authority. Pushed by Gov. Andrew Cuomo (D), New York has a newly-set 2.4-GW offshore-wind goal by 2030 and expects to complete a master plan late this year to cover grid interconnections, environmental issues and a competitive power-purchase mechanism.
Lars T. Pedersen, COO of Copenhagen Infrastructure Partners and co-CEO of lease competitor Vineyard Wind, says, “Improved technology allows turbines in deeper and deeper water, capturing more energy from each.” He says Cape Wind’s 130 proposed turbines now could generate more than 1 GW of energy.
Efficiencies that longer-operating European wind farms now generate are key.
Habib Dagher, a leading University of Maine researcher who is developing an innovative floating offshore-wind turbine prototype that will go into full-scale construction possibly this year, notes three European projects with 2016 power prices of 5.6 to 7.27 euro cents per kWh, not including transmission to shore. “This technology can now start to compete on a cost basis, at least in Europe, so it is less dependent on government support,” he says, contenting that over 60% of the U.S. offshore wind resources can be harnessed.
Lorry Wagner—president of Lake Erie Energy Development Co., which seeks to build what would be the first U.S. freshwater wind farm on that lake—points to cost efficiency as “the perfect engineering challenge. How do [we] reach a price point?”
Maryland on May 17 will choose between proposals from Deepwater Wind and U.S. Wind, a unit of Italy's Totto Holdings, to build, beginning in 2020, turbines about 17 miles offshore.
Deepwater’s van Beek notes the state’s supply-chain challenges could include meeting disadvantaged-firm set-aside goals.
As part of a 2016-enacted law in Massachusetts requiring state utilities to sign long-term contracts for at least 1,600 MW of offshore-wind power from suppliers with leases at least 10 miles offshore, that state will issue an RFP on June 30 for what is expected to be between 400 MW and 800 MW of offshore wind.
Three firms with federal leases are set to bid. White expects a selection in early 2018. “We hope to have the first commercial-scale farm built in the U.S.,” he says. “We have an extraordinary wind resource—an average of 21.4 mph, on par with the North Sea.” Offshore proponents note that ocean wind is more sustained.
Southern coastal states have weaker wind strengths and lower power demand, so sector observers were pleasantly surprised that the latest federal lease for an offshore North Carolina tract was won last month by a unit of Spanish giant Iberdrola, which posted a $9-million bid. “North Carolina is one more example of how this industry is active and forward-leaning,” says Paul Rich, U.S. Wind’s director of project development.
Industry observers expect a more aggressive push in New Jersey in January, when Gov. Chris Christie (R) leaves office.
Building A Supply Chain
Developers hope an explosion of offshore-wind projects will entice the supply chain, based in Europe and the Gulf of Mexico, to set up closer to the action.
Louisiana-based Keystone Engineering adapted an oil-platform design for the Rhode Island project’s turbine structures, says the firm’s project manager, Zach Finucane. A newer Keystone design, tested on a European project, could save 20% on foundation costs since it uses less steel and fewer components, says Finucane. Gulf Island Fabrication Inc. made the Block Island jackets in Houma, La., transporting them by barge. “We pursued the project for six years,” says Roy Francis, the firm’s vice president.
Pointing to the oil-sector downturn, “we’re all struggling to stay solvent and functional,” adds Joe Orgeron, chief technology officer of Montco Offshore, which, along with Weeks Marine, mobilized installation equipment for the 110-ft-tall turbines at Block Island. “We’re putting eggs in a different basket.”
Higher labor costs along the Atlantic coast and logistics impacts from federal laws governing non-U.S. vessels in U.S. waters remain challenges, says Benjamin Foley, a Keystone Engineering vice president. “Each state wants the supply chain established there. They will have to get around that and share,” he says.
Adds U.S. Wind’s Rich, “We need to get traction for a sustained industrial base to bring prices down. The first movers will win the day.” He notes that, if the firm wins the Maryland project, it would invest $190 million in port upgrades. Organizers of a major offshore-wind conference, taking place late this month in Annapolis, are arranging tours of a 3,100-acre former steelmaking complex in Baltimore that is being touted for offshore-wind logistics.
Massachusetts also hopes its New Bedford offshore-wind hub, originally developed to service Cape Wind, is also a move in that direction. It includes a wind technology technical center to test the strength of huge blades. Denmark-based local leaseholder Dong Energy and other participants have agreed to use the site for manufacture and staging, said Alicia Barton, former Clean Energy director, in a video interview last month.
General Electric supplied turbines for the Block Island project, but Deepwater Wind’s van Beek won’t say whether the firm will use GE for its larger projects. “We have a turbine RFQ out,” he say, referring to the Long Island project. In June, the U.S. manufacturer is set to close a $1.65-billion purchase of LM Wind Power, a Danish blade manufacturer that GE says would “in-source” production for its renewable-energy business.
Acquisition also could boost the Lake Erie wind farm’s possibilities, says developer Wagner. Sale of assets for the 20.7-MW, six-turbine demonstration project to Norway’s Fred Olson Renewables will close in the next few months. Wagner touts the lake’s wind resources, expected to generate several thousand megawatts, and strong local manufacturing support. Cleveland’s municipal power utility has agreed to buy power from the $125-million demonstration project, he adds.
Looking West, and Beyond
The West Coast offers additional potential, although its deeper water—up to 1,000 m—presents longer-term challenges and awaits still-developing technology.
Based on 2014 statistics, areas off California could generate about 392 terawatt-hours of power from offshore wind per year, about 1.5 times the total state consumption, says Joan Barminski, BOEM regional director. The agency is collecting data on potential wind-power sites closest to the state’s load centers.
Douglas Boren, BOEM regional supervisor, says Norwegian utility Statoil is testing five turbines on floating platforms off the coast of Scotland and hopes to have its technology proven and financed by 2025. It is eyeing a California test project at a depth of 500 m or less.
Karen Douglas, the state energy commissioner, says offshore wind “was not on our radar,” but an unsolicited proposal to lease a 70,000-acre offshore Morro Bay site for a 765-MW wind project pushed BOEM to seek additional competitors.
Finding users for all the potential power will be a key future challenge, says Craig MacKay, senior vice president of engineer Tetra Tech.
Along the Atlantic coast, “power from projects will probably be bid into multiple states,” he says. MacKay also sees demand from single buyers, such as high-tech companies that want 100% renewable power and will buy all the output.
Tetra Tech’s move in 2005 into offshore-wind engineering was prescient as the sector now gears up. Jennifer Daniels—director of offshore energy for the firm, which has handled environmental assessments, permitting and construction support for most U.S. offshore projects to date—says, “the next five to six years will be extremely busy.”