WHERE U.S. OFFSHORE WIND CAN GO AND HOW

U.S. Offshore Wind Energy: A Path Forward
October 2009 (U.S. Offshore Wind Collaborative)

SUMMARY
This moment is incredibly exciting for U.S. offshore wind. Installations have been built in Western Europe and China is starting to build but nothing but controversy has gone up in the this country. After years of infighting between vested interests, however, it is clear wind turbines are going to emerge off the Atlantic coast and on the Great Lakes.

U.S. Offshore Wind Energy: A Path Forward, from the U.S. Offshore Wind Collaborative, describes a coming together of political will, public interest, and technological advances and an understanding of the near ocean environment that all together constitute new opportunity and a bright future for offshore wind.

The report also foresees, on the other hand, “a complex network of stakeholders” (federal agencies, state governments, industry, academic researchers, nongovernmental energy and environmental organizations and the public) who will have to engage and agree for offshore wind projects to begin generating electricity.

Working offshore is a big undertaking. (click to enlarge)

The paper describes 5 areas in which progress is exciting and agreement must be reached: (1) Regulation and government policies, (2) Technology development, (3) Economic and financial viability, (4) Environmental and marine use compatibility, and (5) Leadership and coordination. In each area it offers an overview and a discussion of developments and other relevant factors.

It concludes that the time is ripe for offshore wind. The potential and the need are great. But leadership will be needed to coordinate all the players and win policies that will support the offshore wind industry’s emergence. Advances are needed in technology, in industry economics, and in the handling of environmental controversies in order to build public trust and investor confidence.

The landmark report’s authors: Steven Clarke of the Massachusetts Department of Energy Resources, Fara Courtney of the U.S. Offshore Wind Collaborative, Katherine Dykes of MIT, Laurie Jodziewicz of the American Wind Energy Association and Greg Watson of the Massachusetts Executive Office of Energy and Environmental Affairs and
Massachusetts Technology Collaborative.

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COMMENTARY
“Vast and plentiful:” The U.S. Department of Energy (DOE) estimates that U.S. coastal and Great Lakes wind resources could provide 900,000 megawatts (MW) of electricity annually. That is almost as much as present total U.S. generating capacity.

In the right place: The biggest offshore wind resources are just off the coasts of the biggest U.S. population centers where the demand is greatest and the cost of electricity is already high.

The European Union (EU): The EU began building pilot offshore projects in 1990. By the end of 2008, its world leading offshore capacity amounted to over 1,470 megawatts. Projects now under construction will bring that up to 1,800 megawatts.

The EU intends to install offshore wind as fast as it can make the turbines. (click to enlarge)

China: China recently began building its first offshore wind project, the 34-turbine, 100-megawatt Shanghai Donghai Bridge Offshore Wind Farm, 8 miles off Shanghai. Both China and Japan are aggressively developing sturdier, out-sized turbines for the offshore environment.

Better late than never: The U.S. is finally getting busy. The Obama administration is pushing to create the necessary policy/administrative environment that will facilitate the development of energy resources on the Outer Continental Shelf.

No more Cape Winds: The goal is to prevent what happened to Massachusetts' Cape Wind from ever happening again. Cape Wind was to be the first U.S. offshore wind installation. It was to be built off Cape Cod. It was initially proposed in 2001. Fought for and against fiercely, it still has not been green-lighted (but soon will be).

The U.S. Offshore Wind Collaborative (USOWC): A working group made up of GE, the Massachusetts Technology Collaborative (MTC—a quasi-state agency that manages the Massachusetts Renewable Energy Trust), DOE, the University of Massachusetts, the Massachusetts Institute of Technology (MIT) and the Woods Hole Oceanographic Institution, USOWC is funded by MTC, GE and DOE. Its intent is to develop a comprehensive and anticipatory approach to the challenges offshore wind faces and iron out problems like the ones encountered by Cape Wind before they become problems.

The first product of the Collaborative was A Framework for Offshore Wind Energy Development in the United States (September 2005). It anticipated environmental and socioeconomic concerns and called for a “robust partnership” among the concerned government, industry, academic, and nongovernmental groups to meet challenges with conciliation and to mitigate by design.

Members of the collaborative (MTC, GE, DOE) also funded 5 research projects that were completed in 2005 and provided insight into policy issues, technical considerations, economics and environmental impacts. They subsequently moved away from offshore wind but came together again as an outgrowth of the 2008 American Wind Energy Association (AWEA) Offshore Wind Workshop with a bigger vision.

USOWC is currently pursuing state and federal coordination between Northeast, Mid-Atlantic, and Great Lakes states and federal agencies including the Department opf Interior (DOI) Minerals Management Service (MMS), the National Oceanic and Atmospheric Administration (NOAA), the Army Corps of Engineers and the Environmental Protection Agency (EPA) and exploring ways to work with DOE.

-Overview on regulation and government policies:

The offshore wind industry will benefit enormously from the settlement of jurisdiction between the DOI’s MMS and the Federal Energy Regulatory Commission (FERC) earlier this year. (See U.S. GREENLIGHTS OFFSHORE WIND)

Meanwhile, building on the 2005 work by the USOWC, project siting issues are becoming progressively more well defined.

Improved government policies and regulations, based in part on policies and regulations applied to offshore oil and gas exploration, will facilitate further research, investment, and development. That in turn will signal the viability of the sector.

Greater federal support for offshore wind, similar to the support provided to offshore oil and gas, will add to growth.

Trends and drivers that have emerged in the last few years include:
(1) Global Climate Change, which seems to be accelerating more rapidly than expected, calls for disruptive new sources of non-greenhouse gas (GhG) emitting energy such as offshore wind.
(2) Electricity demand is anticipated to grow at the rate of 1.1% per year and be 29% greater in 2030.
(3) State Renewable Electricity Standards (RESs), which require regulated utilities to obtain significant portions of their power from New Energy sources, are driving them to invest in big sources of New Energy such as offshore wind that are viable and will not necessarily be delayed by the lack of transmission.
(4) Emerging GhG-capping systems put a hjigher priority on emissions-free generation. The national cap&trade system proposed by pending Congressional legislation may not become law immediately but it is likely to eventually. The Regional Greenhouse Gas Initiative (RGGI) caps (and trades) GhGs in the 10-state electricity sector (Connecticut, Delaware, Maine, Maryland, Massachusetts, New Hampshire, New Jersey, New York, Rhode Island, and Vermont) immediately adjacent to the sweet spot in U.S. ocean offshore wind potential.

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(5) State initiatives in Maine, Massachusetts, Rhode Island, New York, New Jersey, Delaware, Virginia, Georgia, South Carolina, Texas and the Great Lakes states (New York, Ohio, Wisconsin and Michigan) are not waiting for national policy to exploit their rich offshore assets.
(6) International development in the UK, Germany, Denmark, Spain, Belgium, Ireland and The Netherlands are driving competition and building economies of scale.

Three patterns are emerging: (1) A diversity of approaches; (2) A widespread growing interest; and, (3) Falling project prices, rising electricity prices and government policies as drivers.

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- Overview on technology development:

Ever better and bigger technology is driving the growing impression that offshore wind is truly viable. The unique technological challenges (transmission, compatibility with the offshore environment, means of construction) are finding solutions. R&D in the EU has provided proofs of concepts.

Remaining to be resolved:
(1) Siting and project design;
(2) Accurate assessment of resource;
(3) Understanding the variables of the offshore environment;
(4) Technical demands for hardware, including high costs, corrosion, hurricane-level weather, reliability far from servicing, shelter and safety of maintenance personnel, electrical infrastructure, and decommissioning.

In the offshore environment, towers and tower foundations face unique threats to stability in a potentially unstable seabed. The turbines face extreme and corrosive conditions, making blades, drivetrains, control systems and transmission infrastructure far more vulnerable than in the onshore environment. Installation and maintenance in the offshore environment are likewise problematic.

A further frontier is in deepwater technology which includes highly speculative floating turbine technologies.

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- Overview of economic and financial viability:

Offshore wind projects are much more expensive to build and maintain than onshore systems: ~$2,400/kiloWatt (kW) (2006 dollars) vs. ~$1,650/kW, according to DOE.

Another estimate puts the fully installed costs (turbines, installation and maintenance) at €3,300/kW ($4,600/kW) vs. €1,700/kW ($2,400/kW).

Benefits for paying the higher price: Much stronger, more consistent wind allowing ever-more-powerful turbines (developers are aiming for 10 megawatts) and bigger installations with more turbines and capacities (developers are thinking about 1,000-to-3,000-megawatt projects).

Realizing such numbers would, theoretically, produce economies of scale that would at
least partially offset higher capital requirements.

Like onshore wind, offshore wind has the particular benefit of eliminating risks associated with volatile fuel costs because the wind is always free. Built projects have a zero cost for fuel.

And, as previously mentioned, projects off the shores of big population centers on the Atlantic seaboard and Great Lakes would require very little expenditure for new transmission whereas projects on the Great Plains will.

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- Overview of environmental and marine use compatibility:

The oceans and Great Lakes are irreplaceable public trusts and must only be developed with great care. Fortunately for the growth of offshore wind, there has been great progress in understanding marine and aquatic ecosystems.

The wind industry has a great track record for growing while “doing the right thing the right way.” Environmental compatibility and risk mitigation, therefore, are priorities for the offshore wind industry. It seeks to use improved technology and best-siting practices to build projects in ways that are compatible with ecosystems and human uses.

EU experiences in monitoring and mitigation have contributed to being able to do so more effectively.

Trends, opportunities, and challenges: Relative risk assessment, ocean management planning, investment in baseline data acquisition, collaborative planning and research, and adaptive management.

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- Overview of leadership and coordination:

Public opinion, policies and regulations as well as technological advances are all improving the prospects of the New Energies in general and offshore wind in particular.

Leadership, driving the prospect for more offshore wind, has emerged wherever there is potential.

State and local governments: In most of the Coastal and Great Lakes states, there are initiatives to attract, incentivize and plan offshore projects.

Federal government agencies: MMS now has adopted a regulatory framework and begun leasing sections of the Outer Continental Shelf, with a special focus on the New England and Mid-Atlantic regions.

The private sector: Big players have upped their deepwater R&D and are spending money to push and advance proposed installations.

The Obama Administration: DOE and DOI have repeatedly called for more New Energy in general and offshore energy in particular.

Academia: Institutions are quickly funding and developing research and a body of current literature on the technical and environmental aspects of offshore wind.

The public debate: Climate change and New Energy development continue to be front and center in the political debate and have for the entire year of 2009 been second only to health insurance reform as domestic issues.

USOWC-identified keys to advancing offshore wind:
1-Initiating collaboration between government, academics, and project developers to fund R&D in technology, policy, and environmental impacts.
2-Creating an Internet clearinghouse for the offshore wind industry.
3-Bringing states together to create regional coalitions that will streamline planning and regulatory policies.
4-Coordinate bigger and more ambitious economic analysis for future financing and infrastructure requirements.
5-Bringing together U.S. and EU players to prevent reinventing the wheel on both sides of the Atlantic.
6-Bringing in all stakeholders, especially those not yet at the table, to advance development.

The future: Deepwater floating turbines. (click to enlarge)

QUOTES
- USOWC Mission Statement: “The mission of the USOWC is to address the technical, environmental, economic, and regulatory issues necessary to catalyze the sustainable
development of offshore wind energy in the waters of the United States.”
- From the report: “Offshore wind energy has great potential to address he United States’ urgent energy and environmental needs; however, this game-changing domestic renewable energy source remains untapped…”
- From the report: “Some of these actions may be taken independently by governments, industry, academia, or other stakeholders; however, most require deliberate, coordinated effort among all these sectors. By taking strategic actions to move the whole offshore wind industry forward, the U.S. can maximize the benefits of collaboration in accelerating innovation and in leveraging both public and private investment…”

Norway's StatOil is using its experience in North Sea oil drilling to develop floating deepwater turbines. But that future is a long way off. (click to enlarge)

- From the report: “The time is ripe for the U.S. to make significant advances in its offshore wind energy industry. With effective leadership, communication, and multi-sector coordination, the U.S. can create a supportive policy context that would foster the industry’s sustainable growth. This context must establish opportunities to coordinate technological, economic, and environmental advances, along with the chance to build public trust and investor confidence in the potential that offshore wind energy holds for the nation. The potential is great, and so is the need. The U.S. must seize the opportunity to nurture and develop what the Obama Administration has identified as one of the technologies that can lead the nation to a clean energy future.”