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Renewable Energy Vision

EDITOR’S NOTE: On May 17, ACORE is hosting a State of Industry Webinar entitled “Is the U.S. Primed for an Offshore Wind Boom?” More information and registration details are available here:

Proponents of renewable energy in the U.S. have watched as a growing number of once promising innovations—from solar and onshore wind farms to geothermal and distributed generation—have increasingly achieved commercial scale around the country. Yet the development of large-scale offshore wind projects has lagged that of its renewable counterparts in the U.S., as well as the development of offshore wind in Europe. The latter comparison was made all the more evident by last month’s successful bids by Danish company Dong Energy and German utility EnBW to construct separate offshore wind farms in Germany without the aid of federal subsidies, a significant benchmark in the ascension of the world’s offshore wind industry.

There is a lot to like about the prospects for offshore wind development in the U.S. The basic ingredients are all there: higher sustained wind speeds offshore with the potential to increase electricity output by 50 percent compared to onshore wind farms, coupled with the added advantage that winds tend to blow strongly during late summer afternoons, when electricity consumption is peaking; technological advances leading to larger turbines with higher power ratings; and a cost structure that has seen significant improvement in the more mature European offshore wind industry as increasing efficiencies and scale have taken hold.

A path-breaking federal lease sale off the coast of Long Island, New York in December 2016 reflected the growing industry optimism. Norwegian energy giant Statoil paid USD $42.5 million for the rights to develop a 79,350-acre offshore site. The lease comprises an area that could potentially accommodate more than 1 GW of offshore wind, sufficient to power roughly 700,000 homes. In a company press release issued at the close of the auction administered by the U.S. Department of the Interior's Bureau of Ocean Energy Management (BOEM), the company declared, “The US is a key emerging market for offshore wind – both bottom-fixed and floating – with significant potential along both the east and west coasts.”
What will it take to realize that potential? The future trajectory of offshore wind in the U.S. ultimately depends on the interplay of a number of factors:

  • Federal government: With many of the most appealing offshore lease sites sitting in federal waters, the willingness of the Interior Department to identify, study and ultimately auction off potential lease areas is critical. Under President Obama, the BOEM held six competitive lease sales for offshore wind tracts, helping to seed future development. Will the Trump Administration continue to facilitate access to offshore wind tracts?

    Early indications seem encouraging. When Avangrid Renewables placed the high bid for a 122,405 acre site offshore Kitty Hawk, North Carolina on March 16, 2017, the Interior Department put out a press release that included a supportive quote from Secretary Zinke, who said, “Renewable energy, like offshore wind, is one tool in the all-of-the-above energy toolbox that will help power America with domestic energy, securing energy independence, and bolstering the economy.”

    As seasoned Washington observers are aware, an official expression of support from a Cabinet secretary marks a deliberate statement of policy that, in this case, suggests offshore wind has been included in the government menu under the new Trump Administration.

  • State government: Just as critical as federal support, if not more so, is the extent to which state governments view offshore wind as a policy imperative that they are willing to help facilitate, particularly if it aligns with a broader political goal, as is the case with New York Governor Andrew Cuomo’s commitment that 50 percent of the state’s electricity will come from renewable energy sources by 2030.

    The Kitty Hawk lease offers an illustration of the counter-factual case. The lease site, which is roughly 42,000 acres larger than the New York offshore lease, sits in an area well known for its steady wind conditions. Yet Avangrid, a subsidiary of Spanish energy company Iberdrola, bid just over $9 million for the rights to the lease, less than one-fourth of what Statoil put up in New York.

    The pivotal difference? While population density played a role, with Kitty Hawk located comparatively far from the nearest urban centers, the key factor is thought to be the North Carolina state government’s apparent lack of interest in facilitating purchase power agreements for offtake of an energy source that, at this point in the United States, remains substantially higher than competitors like natural gas and coal.

  • Cost curves: As the industry starts to take hold in the U.S., costs will eventually come down. The question is how much and at what pace. While it is impossible to predict future costs with certainty, it can be helpful to look at cost curves in analogous industry spaces. In the onshore wind market, for example, the American Wind Energy Association found that the cost of wind-generated electricity in the United States declined 66 percent from 2010 to 2016. Meanwhile, in the maturing European market for offshore wind, according to Bloomberg New Energy Finance, the cost of constructing offshore wind farms has fallen 46 percent in the last five years, and 22 percent alone in 2016.

    Challenges to cost declines in the U.S. include the development of a U.S.-based supply chain; uncertainty over revisions to the “Jones Act,” which has traditionally exempted the offshore energy industry from bans on the use of non-U.S. vessels for shipments to offshore installations; and broader issues such as a shortage of skilled workers that has long plagued America’s manufacturing industry.

  • Technology: Underpinning these numbers are technological developments. As larger wind turbines with higher capacity continue to take hold, costs decrease accordingly. Other technological gains, such as stronger, reinforced wind turbines suited to the higher wind speeds of the offshore, allow the industry to flourish in new locations.

    Perhaps the most significant technological leap just around the corner in offshore wind involves the arrival of floating wind turbines, a technology being pioneered by Statoil in a pilot project off the coast of Scotland. The advent of floating wind turbines is essential to the eventual build-out of wind farms offshore the U.S. West coast states and Hawaii, where the continental shelf drops sharply downward from the shore, in contrast to the more gently sloping outer continental shelf of the East coast and Gulf of Mexico.

August 6 -- When the US Department of the Interior last week awarded a Providence-based firm the right to develop wind-power projects in 257 square miles of federal waters between Martha’s Vineyard and Block Island, the prospect of additional renewable energy wasn’t the only benefit for New England. The plans by Deepwater Wind, which won the US government’s first lease competition for wind energy development rights offshore, to plunge up to 200 turbines into the ocean beginning in 2017 should also establish southern New England as a hub for wind energy equipment and services. Offshore wind energy, in short, isn’t just an environmental boon; it promises to be an economic one as well. >>View Article

July 22 -- In recent days, heated outcries have been made in these pages and in other Maine media outlets criticizing the action taken by the Legislature in directing the Maine PUC to reopen the process of accepting power purchase agreement proposals for offshore wind. We write here as the founding members, with the late Matt Simmons, of the Ocean Energy Institute, which in 2007 initiated the drive to determine the technical and economic practicality of offshore wind for Maine. >>View Article

July 12 -- The recent news that Statoil North America has decided to put its plans for a floating offshore wind project in Maine on hold is disturbing at many levels. The message Maine has just sent to the business community here and abroad is that we do not honor our commitments and therefore people cannot count on Maine as a place in which to make long-term investments. >>View Article

July 1 -- In the recent column Offshore wind: The enormously expensive energy alternative (Communities June 7, 2013) writer Steve Goreham states that “Unfortunately, offshore wind is enormously expensive. >>View Article

June 28 -- It’s been 12 years since the first offshore U.S. wind farm was proposed for the Massachusetts Nantucket Sound, but so far, not a single turbine has been put up. The struggles to get the Cape Wind project built stand in stark contrast to the torrid growth of the U.S.’s onshore wind industry — and the success of offshore wind in Europe. >>View Article

June 19 -- The Cape Wind offshore wind project has secured a $200 million investment from a Danish pension fund in what the wind farm’s president said Tuesday is a milestone for the long-delayed project. In a statement announcing the commitment, PensionDanmark’s chief executive Torben Moger Pedersen noted the fund has already invested in two offshore wind projects in Denmark and said it was “delighted to participate in the Cape Wind project.” >>View Article

Wednesday, 19 June 2013 15:52

Cape Wind is an historic opportunity

June 19 -- The Alliance for Business Leadership is a Bay State based non-profit public affairs community for CEOs, Investors and Entrepreneurs committed to greater social and environmental responsibility. More than 150 founders, CEOs, and managing principals of Massachusetts companies – the vast majority of which work outside of the Bay State’s burgeoning clean tech industry but including many of the state’s fastest growing companies large and small – participate in our Alliance. And the Alliance for Business Leadership is an enthusiastic supporter of Cape Wind. >>View Article

June 10 -- For more than four centuries, Maine has led the way in conquering the sea, from building the great sailing vessels of the past to the most advanced ships in the world today. Our state is again leading the world by turning the powerful offshore winds in the Gulf of Maine into a new era of clean, renewable energy and economic opportunity and jobs. >>View Article

June 3 -- One reason that offshore wind has not caught on in the United States is the steep cost of erecting a tower in the water, but researchers at the University of Maine tried another approach on Friday by launching a floating wind machine. It is the first offshore wind installation in United States waters, according to the Energy Department, which helped pay for it. >>View Article

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