By Michelle Froese | Senior editor
Windpower Engineering & Development
Check out this and other articles in our 2018 Renewable Energy Guidebook, now available here.
Now that the United States has tested the waters with its first offshore wind farm — the five-turbine Block Island Wind off the coast of Rhode Island — predictions vary about the future growth of the industry.
The U.S. offshore wind industry is in full swing. The States of Massachusetts, New York, and Rhode Island recently released three reports that set out the context for offshore wind development in the Northeast and reveal its potential economic development benefits. The reports are available for download here. (Photo: Val Stori, Clean Energy Group)
Bloomberg New Energy Finance has forecast that the U.S. will have a total installed offshore wind capacity of between 3 and 4 GW by 2030. A new report from renewable-energy consultants, BVG Associates, also predicts that the U.S. offshore market will develop rapidly from 2020 to 2030. It provides a more optimistic forecast where annual installed capacity surpasses 1 GW in 2026, and continues to increase annually with a cumulative 8.4 GW installed at the end of 2030.
With close ties to the sector, Elizabeth Burdock, Executive Director for the Business Network for Offshore Wind (Network), also expects the industry to grow fairly quickly. The not-for-profit organization, which she helped develop, has a direct hand in supporting the offshore wind industry in the U.S. “Now that offshore turbines are operating near Block Island, several Mid-Atlantic and Northeastern states are passing legislation and making purchase commitments resulting in a regional project pipeline totaling more than 5.4 GW,” she says. “And that number is only going to increase.”
The Network is actively engaged in a number of initiatives to expand the offshore market. For example, it was involved in passing the Maryland legislation in May 2017, which has set the course for two offshore projects totaling 368 MW. “When this legislation was first debated in 2013, the price point was estimated to be $230 MWh. Since then, that number has been nearly cut in half. The Maryland Public Service Commission’s approval of the U.S. Wind and Deepwater Wind projects set a $134 MWh price point, and that gives the industry a baseline price.”
Burdock credits this decision with moving the U.S. industry forward and is why she expects it to grow considerably over the next couple of years. “Until now, the cost of offshore wind in the country has always been speculative. Really, the most significant development in the U.S. offshore wind industry is that a price point has finally been set. So from here on out, we can expect project developments to move forward.”
She says that while the industry has been slow moving in the U.S., the country has and will benefit from lessons in the European market.
“As offshore wind has advanced over the last two-plus decades in Europe and gradually become less reliant on subsidies, investors have become more comfortable with and interested in the offshore wind industry’s movement into the global mainstream market. This comfort and interest is also lowering the cost of equity capital, which will directly contribute to the lower kilowatt-hour price for the ratepayer,” she says. Case in point: in the last four years, the industry has experience a $96 MWh reduction in the U.S., and that’s without one commercial-scale project in the water.
“What’s more is that by having the European offshore wind experience to learn from — with its 96,000 jobs to view as a precursor — the United States is benefitting from their cost-cutting project development measures, investments and advances in turbine technology, and examples of how an offshore supply chain works most efficiently. These are great advantages.”
Burdock predicts that during the next three to 12 months, the U.S. offshore wind industry will see new commitments from state Governors — such as Governor Carney in Delaware, who signed an Executive Order to establish a group for studying the potential environmental and economic benefits of offshore wind. She also expects the Department of Interior’s Bureau of Ocean Energy Management (BOEM) to hold additional federal lease auctions.
In March 2017, the BOEM formally executed the lease of 79,350 acres offshore New York to offshore company, Statoil. Statoil is evaluating the lease site including the seabed conditions, wind resources, and grid connection options. Currently, BOEM has committed to a minimum of one such lease per year.
“The federal process for approving permitting will likely be shortened within the next year, and supported by a new offshore wind standard-setting process,” says Burdock. “The intent to accelerate commercial-scale development in the U.S. will also attract more European developers and businesses to enter the market here.”
Although offshore wind is still higher in costs than solar and land-based wind, a number of organizations, such as the National Renewable Energy Laboratory and Annual Technology Baseline, predict project growth and substantial offshore wind cost reductions over the next 10 years.
“Going forward, there is no question that cost reductions will be key to the industry’s growth, and we intend to fully support the sector in its ongoing growth and development,” she says.
Indeed, in its most recent Offshore Wind Technologies Market Report, NREL principal engineer and lead author of the report, Walt Musial, stated: “Around the world, several events have transpired in parallel to demonstrate that offshore wind is a viable U.S. market. These events include the Block Island Wind Farm, which became operational in 2016, the drop in offshore prices on the European market, which is driving U.S. interest in offshore development, and policies that have resulted in promotion and stimulation of offshore wind development by local and state governments. The offshore wind market today is the result of a long process of technology and market cultivation.”
Burdock agrees. “When you consider that electric cars will increase their market share and more aging coal and nuclear plants will go offline, the accelerated growth of the U.S. offshore wind industry will be essential to meeting the country’s electricity and clean-energy needs. This demand will also help drive offshore wind to deliver on its promise of reliable, clean energy and thousands of good, local jobs.”
Filed Under: News, Offshore wind, Policy, Projects
