U.S. OFFSHORE WIND, ONE STEP CLOSER

Guess what country is “the Saudi Arabia of wind.”

Hint: It’s a country with two long coastlines (the eastern of which has a broad and shallow outer continental shelf, a hurricane-filled gulf, some ferociously windy great lakes and nary a wind turbine in the water anywhere.

That last item – no turbines in the water – is finally about to change.

While T.Boone Pickens is leading the charge on the plains to develop onshore wind, the federal government is finishing its preparations for the leasing of portions of the outer continental shelf for offshore wind projects.

For the last 3 years, the U.S. onshore wind energy industry has experienced unprecedented growth and, in 2007, was the 2nd-biggest source of new electricity generation in the country. Its potential for growth remains enormous on the plains but it will need a $60 billion investment in new transmission infrastructure if it is to keep growing.

Offshore wind provides a potentially even greater wellspring of New Energy than wind onshore and it is immediately adjacent to major, energy-hungry coastal cities so it requires far less new infrastructure for delivery to big markets. And those markets already have the kind of high retail power prices that justify the investment needed to develop offshore installations.

Offshore wind technology has been proven in Europe, where there are now more than 20 producing offshore installations and many more in planning stages.

Off the northeastern U.S. seaboard winds are strong. Shallow depths extend far out onto the continental shelf, making practical installations beyond shore view and therefore beyond NIMBY (Not In My BackYard) objections of residents and beachgoers.

The regulatory preliminaries for offshore wind development, as overseen by the U.S. Department of the Interior, are near completion. At least one wind developer is ready to go.

Bluewater Wind has a power purchase agreement with a utility in place and financial backing from Babcock & Brown, its deep-pocketed parent company. It needs only Department of Interior approval to begin building the Delaware Offshore Wind Park. It is also developing plans for projects off Rhode Island and New Jersey and has submitted proposals for New York City.

Interior’s approval is expected to follow completion of pending Minerals Management Service (MMS) environmental and regulatory procedures.

Further progress could be temporarily delayed by the present Congress’s failure to extend the wind industry’s production tax credits but the logic of developing of an energy resource as enormous as U.S. offshore wind is undeniable: The U.S. has more wind potential offshore than there is sand in the Arabian desert.

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Wind Power May Gain Footing Off Coast of U.S.; Federal Government Prepares to Lease Tracts for Turbines
Jeffrey Ball, September 3, 2008 (Wall Street Journal)
and
Shaking not stirring: Belly Dancers have little impact at lobbyist function
Leslie Brooks Suzukamo, September 3, 2008 (St. Paul Pioneer Press)

WHO
U.S. Department of Interior (Interior); Minerals Management Service (MMS); James Gallagher, senior vice president for energy policy for the New York Economic Development Corp.; Bluewater Wind; Babcock & Brown Ltd.

WHAT
Interior’s MMS has nearly completed the due diligence to allow Interior to conduct leasing of 10 tracts of the outer continental shelf for offshore wind installations. Bluewater Wind, recently purchased by Babcock & Brown, will develop projects or is planning projects off the Atlantic coast.

From the Wall Street Journal. (click to enlarge)

WHEN
- The public-comment period for MMS’s proposed offshore wind leasing plan ends August 8.
- Study of the outer continental shelf for wind energy development is very like the oil industry's offshore development process in the 1940s and 1950s.
- June 2008: The Delaware offshore wind project obtained a power purchase agreement that assures its development.
- By the end of 2008: The Rhode Island and New Jersey installations are expected to be decided.
- Pending MMS/Interior approval, it is likely to be 3 to 5 years before turbines will be installed.

WHERE
- The MMS/Interior evaluation process is in preparation for leasing section of the outer continental shelf.
- The first U.S. offshore wind development is likely to be off the Northeastern coast.
- The Delaware project will be 11.5 miles off the state's coast.
- Rhode Island and New Jersey are expected to develop sites after Delaware.
- New York City officials are evaluating sites in the Atlantic Ocean about 25 miles from Manhattan.
- Bluewater Wind is based in Hoboken, N.J.
- Babcock & Brown Ltd. Is based in Australia.

WHY
- Development of offshore wind projects on the outer continental shelf, where oil-drilling is largely banned, seems poised to begin.
- Offshore wind provides a far bigger potential energy source than onshore wind because offshore wind is typically stronger and more constant but the harsher environment presents greater challenges.
- MMS is completing environmental analyses. If approved, the sites will be leasesd and explored for turbine installation.
- Bluewater Wind, recently bought by Babcock & Brown Ltd., won the bid to develop the project off Delaware and got a power purchase agreement to finance it. It awaits word on its bid for Rhode Island and New Jersey projects and is among the companies talking with New York City.
- The Cape Wind project off Massachusetts’ Cape Cod has been a 7-year controversy but could be nearing approval.

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QUOTES
Wall Street Journal, referencing remarks by James Gallagher, senior vice president for energy policy, the New York Economic Development Corp.: “New York City officials are talking with wind-power developers about erecting turbines on a massive tract of the Atlantic Ocean about 25 miles from Manhattan. Offshore wind power seems likely to be the largest source of renewable energy for the city…The New York City plan also envisions installing smaller wind turbines atop buildings. But…offshore wind provides a far bigger potential energy source.”